CLARKSBURG -- For years, city leaders across the state have railed against strict state laws that limit how municipalities can generate revenue.
Now, a new study commissioned by the West Virginia Municipal League has found that Mountain State cities rely more on municipal fees than cities in other Appalachian states.
Two major factors: West Virginia cities receive only a fraction of their revenue from property taxes and state law prohibits local income taxes.
While exact figures vary from city to city, in general less than 8 percent of a municipality's budget comes from property taxes, even though city residents pay about 34 percent of all property taxes in the state, according to the study.
And since state law limits cities' options for revenue sources, many city leaders are turning to increased service fees, business and occupation taxes and now worker service fees.
Last week, Charleston became the second city in West Virginia in recent months to approve a service fee levied against everyone who works within city limits. Earlier this year, Huntington passed a $2 per week fee. Charleston's is $1 per week.
"We've not looked at it. It's never even been discussed," Clarksburg Finance Director Frank Ferrari said of the service fee idea. "As a matter of fact, we even questioned whether it would stand up in court when Huntington did it."
Clarksburg's annual budget now stands at about $11 million. About $5 million of that comes from business and occupation taxes. If cities were allowed to institute local income taxes, that figure probably would come down, Ferrari said, because Clarksburg wouldn't need to rely as heavily on businesses for revenue.
Most other cities in the state are in the same boat, with business and occupation taxes making up anywhere from 40-50 percent of their yearly budgets.
"Businesses in the community are bearing the brunt of the cost of services for everyone," said Fairmont City Manager Bruce McDaniel. "It's not fair, and it really makes it hard to grow business."
The West Virginia Municipal League has for years been advocating the idea of home rule, where each city's leaders are permitted to decide whether local taxes should be collected. That notion has been rejected by the Legislature "because they think we'll take advantage of taxpayers" by immediately passing high taxes, Ferrari said.
But that argument doesn't hold water, he said, because councils still have to answer to the people on Election Day.
"West Virginia is very paternalistic in the treatment of financing for municipal governments," said Morgantown City Manager Dan Boroff. "We're probably the worst in the country in allowing cities to handle their own finances."
For some time, Fairmont has been looking for more fee-based revenue streams, rather than tax-based, McDaniel said. A worker service fee is "something we'll probably look at, but at the present time we have no ordinances on the books to do that."
Over the past couple of years, Morgantown and the Clarksburg/Bridgeport area both have been in growth modes. Fairmont, however, has been more static.
Therein lies the trick, McDaniel said: Not dedicating one-time special project business and occupation taxes to ongoing expenditures.
"We're just trying to be careful with our money," he said.
Staff writer Jim Fisher can be reached at 626-1446 or by e-mail at jfisher@exponent-telegram.com
