The West Virginia Constitution tightly controls property taxes, which are the main revenue source for counties and their public school systems. Amid a debate over amending that strict language, lawmakers have granted 5 percent or salvage-value rates to other categories of property such as for aircraft in 2008.
Ted Boettner, executive director of the West Virginia Center on Budget and Policy, estimated that a cracker plant in Kanawha County with a market value of $1 billion would enjoy a $13 million annual tax break. Boettner's nonprofit group scrutinizes such tax incentives while advocating that government spending can aid low- and moderate-income residents.
"Attracting good-paying jobs to the state is very important, but we should be very careful not to balance business tax cuts on the back of educating our children or other state residents," Boettner said Tuesday. He added that "while we support strategic state subsidies and development of the Marcellus Shale gas play, this could be viewed by conservatives as a case of government 'picking winners.'"
Revenue officials estimate that at salvage value, a cracker that qualifies for the break would still provide around $1.5 million in annual property taxes to its host county.
The timber tax break would continue a four-year exemption approved by lawmakers in 2009, to help the industry weather the recession. It's still needed, said Sen. Karen Facemyer, whose family is involved in timbering.
"It's an industry that's on life support," said Facemyer, R-Jackson. "Until the housing market comes back, it's an industry pretty much on hold. So, I'm very pleased to see the governor agreeing that we need to take some measures to protect the measure."
The severance tax on trees cut down by industry had provided revenues to the state Division of Forestry. The agency's share of general tax proceeds has actually increased since 2009, from $3.9 million to $4.3 million, though the number of full-time positions has dropped from 73 to 68, state budget figures show.
Timber would remain exempt until severance tax revenues on other extracted natural resources finishes paying off a debt left from when the state ran a workers' compensation system. That's expected by 2016.