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Can West Virginia afford to drop its food tax now?

August 09, 2005

Cutting taxes is always popular and, for West Virginians, the tax on food is probably one of the most disliked levies in the state. That's why Gov. Joe Manchin is expected to rack up political points for his proposal to eliminate it.

But we share the unease over the proposal expressed by Senate Finance Committee Chairman Walt Helmick, D-Pocahontas. The food tax was eliminated previously, only to be reinstated in the 1980s when revenues fell short.

Manchin told The Associated Press he is confident that the state can eliminate the tax because the budget year that ended June 30 was a good one for state revenues.

But estimating future revenues based on one previous year's performance is a dangerous practice, given West Virginia's past. Those who remember the problems that resulted from poor revenue estimates during Gov. Arch Moore's administration should approach this new plan with caution.

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Manchin would ease the burden of the food tax with one of two proposals - cut the tax from its current level of 6 cents per $1 or offer a monthly tax-free holiday.

The tax holiday would cost West Virginia $25 million, but Manchin is counting on revenue increases to more than cover that.

The danger here - and one that Manchin is aware of - is that once the bill reaches the floor, lawmakers might try to amend it to make the food-tax repeal immediate, as opposed to the governor's incremental approach.

That would leave the state with even less revenue to deal with proposals to give extra pay to state employees in areas along West Virginia's borders, where the cost of living is higher, and to handle state pension systems' shortfalls.

Manchin's proposal to issue bonds to keep the annual amount of the general fund contribution to the pension debt at $350 million was defeated by voterds June 25. With no other solution, the annual bill could rise to $724 million by 2034.

The proposal was defeated in part because of a campaign by Don Blankenship, chairman of the Massey Energy Company.

Blankenship also called for an end to the food tax, but Manchin said the fact that he added that to his own agenda has nothing to do with the previous defeat.

Perhaps not, but happy talk about how good things are going now is not a substitute for a plan to pay the state's debts and to prevent state employees along West Virginia's borders from being lured away by states with more money to spend.

When skilled employees leave, they take the training West Virginians have paid for along with them and force the state to incur additional expenses to train new employees.

Winning feels good, as does telling people you're going to cut their taxes. But we urge the governor to make sure the tax cut he wants to make now won't have to be reinstated in a few years when the state faces another revenue shortfall.

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