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Budget & Policy Center: WV Does a Terrible Job Tracking Tax Breaks

West Virginia Center On Budget & Policy logo
West Virginia Center On Budget & Policy logo
October 19, 2012

CHARLESTON, W. Va. – According to the West Virginia Center on Budget and Policy, West Virginia does a terrible job tracking and evaluating the tax breaks intended to spark job growth. Sean O'Leary, policy analyst at the Center, says the state tax department doesn't report the total actual cost of all the tax breaks to lawmakers. They get even less information about which of the breaks are working, he adds.

"We could be throwing money away, or we could be missing opportunities to do more. Right now we can't even begin to answer that question."

The cost of each of the tax breaks in terms of lost revenue varies widely, from a few thousand dollars to tens of millions. O'Leary says they couldn't find out how much all of them together are costing. He notes many states are moving to a system that includes all tax breaks as part of the budget process, which he thinks would probably save the state a lot of money.

O'Leary says they found about two dozen different tax breaks in West Virginia state code, although the best report lawmakers see only monitors four of the larger ones. He says that analysis does little to evaluate the actual number of jobs created, and only reports its data every few years.

"It's usually between three and five years old by the time it's actually reported. And when it's actually reported, the data there doesn't tell you much. We have no idea if they're working at all."

He says some tax breaks may actually be more than paying for themselves by making the state's economy and tax base grow. But when Minnesota took a hard look at the tax breaks there, says O'Leary, it found 80 percent of the jobs credited to them would have been created anyway.

West Virginia local governments also give business tax breaks. O'Leary says many of these impact the state's budget, by changing how much local money is available for public education. But he says no one knows how much they total.

"There's pilot programs, there's property tax abatements, there's B&O tax breaks that happen all at the local level, and there's no, no accounting for those, no accountability for those."

The center has a report on the issue on its website.

Dan Heyman, Public News Service - WV