CHARLESTON, W.Va. -- As another result of the heavily amended bill to extend the state home rule pilot program, Mayor Danny Jones said he plans to scrap his plan to cut the business and occupation tax for retailers.
Jones first announced his proposal to roll back the B&O tax, and eliminate B&O taxes for manufacturers, two months ago as part of his plan to impose a half-cent sales tax to raise money for Civic Center improvements.
The state's Municipal Home Rule Board recently approved the sales tax as an amendment to Charleston's home plan. City Manager David Molgaard said he expects a bill to implement the tax will be introduced to City Council on Monday.
But in the two weeks since the Legislature passed the controversial bill that extends and expands the home rule program for another five years, city leaders have been trying to make sense of the 16-page document.
In addition to the much-publicized provision that forces cities like Charleston to repeal local laws that regulate the sale or carrying of handguns, they found language that seemed to be targeted specifically at Jones' tax plan.
A section of SB 435, which is still awaiting Gov. Tomblin's signature, says home rule cities can enact a municipal sales tax of up to 1 percent if they reduce or eliminate their B&O tax.
But it adds: "... if a municipality subsequently reinstates or raises the municipal business and occupation tax ... it shall eliminate the municipal sales tax enacted under the Municipal Home Rule Pilot Program."
The bill seems to be aimed at cities that join the home rule program after July 1, City Attorney Paul Ellis said, not the four cities such as Charleston in the original pilot program. City leaders hope to get the sales tax in place before July 1, under the original program.
"I think the language they put in here is unclear," Ellis said. "Does it reach back? The answer is 'I don't know.'"
While Charleston can impose a sales tax only through home rule, it can adjust B&O tax rates outside of the home rule program, Ellis and Molgaard said. "It appears the language tries to tie the two together, even if we pass it before July 1."
Molgaard said the B&O tax rollback, which would have saved retailers an estimated $2.25 million a year, is doubtful.
"That line seemed to have been inserted [into the home rule bill] based on our current plan," he said. "I think we need to be cautious on how we proceed.
"I know the mayor planned to roll back the B&O tax. I'm not sure that's a prudent course of action, in that we'd be binding future councils based on that.
"The problem is we lose flexibility under the new bill," Molgaard said. "As I read it, you can't increase your B&O tax once you've decreased it. That's not the flexibility we're seeking."