by Jennifer Bundy

THE ASSOCIATED PRESS

CHARLESTON -- Huntington has imposed a fee on workers who commute into the city. Bluefield and Charleston have eliminated vacant positions in city government. Weirton and other towns are spending less.

Across West Virginia, city officials increasingly face tight municipal budgets they blame on falling tax revenue and rising health care, pension and other costs.

Some mayors say the business and occupation tax relied on by most cities to finance much of their budgets is antiquated and the Legislature should authorize cities to enact more taxes and fees.

Charleston Mayor Jay Goldman said the solution is to merge multiple city governments into a metro government as companies merge to cut costs.

"You can't afford to support 55 counties and all of these cities," Goldman said.

Leading legislators favor Goldman's idea and propose a solution of their own: A state-run pension system for municipal and county workers. They say city problems will be addressed in some fashion in the upcoming legislative session.

"We can't continue to put this thing on the back burner and hope the next guy resolves it," Weirton Mayor Dean Harris. "Right now, we are the next guy and we are going to have to resolve it."

The West Virginia Municipal League is preparing a report for release in February detailing falling municipal revenue and rising costs, said Lisa Dooley, executive director.

"The cities are at a critical point right now," she said. "We don't have the answer."

Goldman said cities have trouble controlling budgets that rely on the vagaries of business and occupation tax revenue linked to a percentage of gross revenue of companies operating in a city.

"We are tied to B&O taxes and fees," said Bluefield City Manager Ronald Crabtree.

Goldman also said employees' health care costs are difficult to control, particularly in a state with the nation's oldest median population.

Cities also are hostage to fuel costs and weather that drives up heating bills, road salt costs and overtime for highway crews.

Senate Finance Chairman Oshel Craigo, D-Putnam, and House Finance Chairman Harold Michael, D-Hardy, support Goldman's proposal to merge municipal governments.

Regional jails, which have saved cities and counties hundreds of thousands of dollars, have proved the value of merging operations, Craigo said.

Harris, mayor of Weirton, said that might work for Charleston, but not for Weirton or rural towns. Still, he said, "We are reaching the point where those are the type of measures cities need to look at."

Merging cities is not politically easy because few officials willingly give up power or jobs, Harris and others said.

Instead, Harris says municipalities must be more autonomous.

"The state Legislature has a responsibility to give cities another avenue to generate revenue," Harris said. "We need to be able to determine our own fate.

He supports a wage tax similar to a levy enacted by the Huntington City Council tht, beginning Jan. 1, imposes a $2 payroll tax on employees who work in the city 25 hours or more a week. The fee will decline to $1 weekly on July 1. Some have questioned whether the wage tax is constitutional.

Home rule, which would allow city government to levy more types of taxes, has never been popular in the Legislature, Michael said.

"I don't see any more support for it now than before," he said.

Home rule could prompt businesses and residents to abandon cities to avoid higher taxes, Michael said.

Another way to help cities is to fundamentally alter the state's tax structure, said Michael Hicks of Marshall University's Center for Business and Economic Research.

"Usually what you like in a tax system, if the economy dips a little bit, taxes don't dip a little bit. That's called stability. We perhaps don't have as stable a tax system as we should," Hicks said.

Cities need more stable taxes like income and sales taxes, Hicks said.

Hicks, who provided economic analysis for Gov. Cecil Underwood's tax restructuring plan, said some form of the plan should be enacted.

Still, each city has unique problems that a state-level solution won't help, he said. Weirton is hurt by problems in the steel industry. Bluefield is hurt by a downturn in the coal industry. Huntington's problem is a loss of population and the advancing age of those who remain, Hicks said.

Cities' biggest financial problem is the cost of their pension funds, Craigo and Michael said.

"There is no municipal pension fund I know of that is in a good financial position," Michael said. "Obviously, something is going to have to occur before things go completely bankrupt."

Craigo said the state should set up a pension fund that cities and counties could buy into, similar to the Public Employees Insurance Agency.

An independent board would set rates and benefits, relieving local politicians of the burden of making politically unpopular decisions, Craigo said.

The Legislature must face that issue next year, but it won't be easy, Michael said.

"When we get down there we will have a whole bunch of ideas and proposals," he said. "It's hard to reach a consensus."