Can a Home Rule Pilot Program city like Parkersburg start collecting a 1% sales tax on July 1 while still keeping the business and occupation tax in place until January 1 of the next year?

Plain-English summary

West Virginia's Municipal Home Rule Pilot Program lets participating cities take some actions outside the usual statutory limits, including imposing a 1% local sales tax. The trade-off in W. Va. Code § 8-1-5a(i)(14): the city may enact a municipal sales tax "if it reduces or eliminates its municipal business or occupation tax." (Senate Bill 323 (2015) recodified this provision; the analysis is the same.)

The City of Parkersburg passed two ordinances. The first imposed a 1% sales tax effective July 1, 2015. The second eliminated and reduced the City's business and occupation (B&O) tax, but only effective January 1, 2016. So for six months, both taxes would coexist. The Department of Revenue Cabinet Secretary, who chairs the Municipal Home Rule Board, asked the AG: is this allowed?

The AG said no.

Plain-meaning reading. "If you finish your homework, you may play outside" means homework first, play second. The Home Rule Pilot Program statute uses the same conditional structure: the sales tax is permitted "if" the city reduces or eliminates its B&O. That ordering requires reduction first, or at the latest simultaneously, not after.

Statutory-context support. § 8-1-5a(i)(14) also says: "if a municipality subsequently reinstates or raises the municipal business and occupation tax it previously reduced or eliminated under the Municipal Home Rule Pilot Program, it shall eliminate the municipal sales tax." That anti-backsliding rule confirms the Legislature designed the sales tax and the B&O regime to be mutually exclusive at any given time. Parkersburg's six-month overlap is exactly the scenario the structure forbids.

Strict construction of municipal taxing power. Even if there were ambiguity, the rule of strict construction of municipal taxing authority resolves it against the city. Hukle v. City of Huntington (1950): "[a] municipality has no inherent power to levy taxes" and "it can do so only by virtue of the authority delegated to it by the legislature"; the statute "must be strictly construed" with "all doubts . . . resolved against the city and in favor of the taxpayer" (citing City of Fairmont v. Bishop (1910)). Parkersburg has to "show that all conditions essential to the lawful exercise of power delegated to it have been complied with."

Why the delayed effective date does not save Parkersburg. Effective dates matter (State ex rel. Richey v. Hill (2004)). The B&O ordinance does not "reduce or eliminate" anything until January 1, 2016. Until then, the B&O regime is unchanged in fact. And a municipality can repeal an ordinance with another ordinance of equal dignity (State ex rel. Brown v. Corporation of Bolivar (2000), citing Bittinger v. Corporation of Bolivar (1990)), so a future council could repeal the B&O reduction before it ever takes effect, leaving the city collecting both taxes indefinitely. The Legislature's "if" condition forecloses that outcome.

Practical implication. Parkersburg had two paths to comply: (a) move the B&O reduction's effective date earlier so it took effect at the same time as the sales tax (July 1, 2015), or (b) delay the sales tax's effective date until the B&O changes took effect (January 1, 2016). Six-month coexistence was not an option.

Currency note

This opinion was issued in 2015. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The Municipal Home Rule Program has been substantially amended in subsequent legislative sessions, and additional cities have joined. Anyone working a current municipal-tax question under Home Rule should pull the present text of W. Va. Code § 8-1-5a and check for amendments to the sales-tax / B&O conditioning language.

Common questions

Q: What is the Municipal Home Rule Pilot Program?
A: A statutory experiment that lets a limited number of West Virginia cities adopt local ordinances and policies, including taxing structures, beyond the usual statutory authority. The program has been extended and expanded over time. Participating cities have to follow the program's specific conditions.

Q: Why does the order of the two tax changes matter so much?
A: Because the Legislature conditioned new sales-tax authority on the city actually giving up something old (the B&O burden). If the city collects both at once, even temporarily, the trade-off the Legislature bargained for is broken. Strict construction of municipal taxing power means the city does not get the benefit of the doubt on timing.

Q: Could Parkersburg have just made the B&O reduction effective July 1?
A: Yes. That would have aligned the two changes. The opinion does not foreclose that path; it forecloses the path Parkersburg chose, which delayed the B&O reduction by six months.

Q: What if a city wanted to phase out the B&O over years rather than eliminate it on day one?
A: The opinion does not directly address phasing. The statute requires reduction or elimination, so a phased reduction that takes effect concurrently with the sales tax (e.g., a step-down starting July 1) might satisfy the condition. The key question would be whether the B&O reduction begins as the sales tax does. Detailed planning should consult current statute and seek formal guidance.

Q: What about the broader question of whether a city can tax both sales and B&O at all?
A: Outside the Home Rule Pilot Program, this opinion does not address. The Home Rule program creates the trade-off because municipal sales-tax authority is otherwise unavailable to cities. The trade-off is a feature of the program, not a general rule.

Q: What is "strict construction" of a tax statute?
A: A canon that says when a statute creating taxing authority is ambiguous, the ambiguity is resolved in favor of the taxpayer and against the taxing entity. Hukle: this is "because of [the] limited taxing authority possessed by municipalities."

Q: What happens to the city if it nonetheless collects both?
A: Taxpayers would have grounds to challenge the sales tax as ultra vires. A successful challenge would likely produce refund liability and reputational harm. The opinion itself is non-binding but signals serious legal risk.

Background and statutory framework

Home Rule Pilot taxing condition. W. Va. Code § 8-1-5a(i)(14): a Home Rule city "may enact a municipal sales tax up to one percent if it reduces or eliminates its municipal business or occupation tax." The same provision contains an anti-backsliding rule: "if a municipality subsequently reinstates or raises the municipal business and occupation tax . . . it shall eliminate the municipal sales tax."

Recodification. Acts 2015, S.B. 323 (effective June 12, 2015) moved the provision from § 8-1-5a(k)(6) to § 8-1-5a(i)(14). The substantive condition is the same.

Plain-meaning canon. State ex rel. Cohen v. Manchin, 175 W. Va. 525 (1984) ("[u]ndefined words and terms . . . [must be given] their common, ordinary and accepted meaning").

Whole-act canon. In re Donald M., 233 W. Va. 416 (2014) (review the act in entirety to ascertain legislative intent), citing Fruehauf Corp. (1975).

Strict construction of municipal taxing power. Hukle v. City of Huntington, 134 W. Va. 249 (1950) (no inherent municipal taxing authority; statute must be strictly construed; all doubts resolved against the city); City of Fairmont v. Bishop, 68 W. Va. 308 (1910).

Effective dates. State ex rel. Richey v. Hill, 216 W. Va. 155 (2004) (a statute applies only after its effective date).

Ordinance repealability. State ex rel. Brown v. Corporation of Bolivar, 209 W. Va. 138 (2000), citing Bittinger v. Corporation of Bolivar, 183 W. Va. 310 (1990) (an ordinance "may usually be repealed by another ordinance or an instrument of equal dignity").

Citations

• W. Va. Code §§ 5-3-1; 8-1-5a(i)(14); Acts 2015, S.B. 323
• State ex rel. Cohen v. Manchin, 175 W. Va. 525 (1984)
• In re Donald M., 233 W. Va. 416 (2014)
• Fruehauf Corp. v. Huntington Moving & Storage Co., 159 W. Va. 14 (1975)
• Hukle v. City of Huntington, 134 W. Va. 249 (1950)
• City of Fairmont v. Bishop, 68 W. Va. 308 (1910)
• State ex rel. Richey v. Hill, 216 W. Va. 155 (2004)
• State ex rel. Brown v. Corporation of Bolivar, 209 W. Va. 138 (2000)
• Bittinger v. Corporation of Bolivar, 183 W. Va. 310 (1990)

Source

• Landing page: https://ago.wv.gov/media/17966/download?inline
• Original PDF: https://ago.wv.gov/media/17966/download?inline

Original opinion text

State of West Virginia
Office of the Attorney General
Patrick Morrisey
Attorney General

(304) 558-2021
Fax (304) 558-0140

June 30, 2015
Robert S. Kiss
Cabinet Secretary, West Virginia Department of Revenue
Chair, West Virginia Municipal Home Rule Board
State Capitol Complex
1900 Kanawha Blvd. E, Building 6, Room 553
Charleston, WV 25305

Dear Secretary Kiss:

You have asked for an Opinion of the Attorney General about whether a municipality participating in the West Virginia Home Rule Pilot Program may collect municipal sales tax on certain goods and services before a reduction or elimination in the municipal business or occupation tax goes into place. This Opinion is being issued pursuant to West Virginia Code § 5-3-1, which provides that the Attorney General "shall give written opinions and advice upon questions of law . . . whenever required to do so, in writing, by . . . [a] state officer, board or commission." To the extent this Opinion relies on facts, it is based solely upon the factual assertions set forth in your correspondence with the Office of the Attorney General.

Your letter concerns the proposed imposition of a sales tax in the City of Parkersburg (the "City") while the City continues to collect a business and occupation tax for six months. According to your letter, the City has passed an ordinance that would provide for the collection of a sales tax beginning on July 1, 2015. See Ordinance to Amend the Ordinances for the City of Parkersburg, West Virginia, by Enacting a New Chapter, "Article 778: Consumer Sales and Use Tax," to Impose a One Percent Consumer Sales and Use Tax. The City also intends to eliminate and reduce business and occupation taxes, but only after one full cycle of collections of the sales and use tax. See Ordinance Amending and Re[e]nacting Portions of Article 779: Business and Occupation Taxes in the City of Parkersburg. Thus, you explain, the City's separate ordinance to eliminate or reduce business and occupation taxes is not scheduled to take effect until January 1, 2016, six months after the implementation of the new sales tax.

Your letter raises the following legal question:

Under West Virginia Code § 8-1-5a, can a municipality impose a sales tax before a reduction in the business or occupation tax goes into effect?

We begin with the ordinary meaning of the words of the statute, which we believe require the business and occupation tax reductions to occur prior to or simultaneous with the imposition of the sales and use tax. West Virginia Code § 8-1-5a(i)(14) provides that a municipality participating in the Municipal Home Rule Pilot Program "may enact a municipal sales tax up to one percent if it reduces or eliminates its municipal business or occupation tax." Giving these "[u]ndefined words and terms . . . their common, ordinary and accepted meaning," Syl. Pt. 6, in part, State ex rel. Cohen v. Manchin, 175 W. Va. 525, 527, 336 S.E.2d 171, 173 (1984), we read the conditional language to mandate that reduction or elimination in the business or occupation tax precede or coincide with the implementation of a new sales tax. For example, if a parent tells a child that he may play outside "if you finish your homework," the ordinary and accepted meaning of this instruction is that the child must finish his homework before playing outside. An ordinary person would not understand the instruction to mean that the child may play outside so long as he commits to completing his homework within a reasonable time after playing outside.

Other parts of the statute support this ordinary reading of the text. It is well established that courts "review [an] act or statute in its entirety to ascertain legislative intent properly." Syl. Pt. 2, in part, In re Donald M., 233 W. Va. 416, 758 S.E.2d 769, 771 (2014) (quoting Syl. Pt. 5, Fruehauf Corp. v. Huntington Moving & Storage Co., 159 W. Va. 14, 14, 217 S.E.2d 907, 908 (1975)). West Virginia Code § 8-1-5a(i)(14) provides that "if a municipality subsequently reinstates or raises the municipal business and occupation tax it previously reduced or eliminated under the Municipal Home Rule Pilot Program, it shall eliminate the municipal sales tax enacted under the Municipal Home Rule Pilot Program." This requirement, which prohibits backsliding by a municipality, is further proof that the Legislature did not intend to allow a new municipal sales tax to coexist with the previous business and occupation tax regime.

To the extent there is any ambiguity in the statute, our reading is compelled by several long-standing rules of construction that require municipal taxing power to be read narrowly. As the West Virginia Supreme Court of Appeals has explained, "[a] municipality has no inherent power to levy taxes," and "it can do so only by virtue of the authority delegated to it by the legislature." Syl. Pt. 1, in part, Hukle v. City of Huntington, 134 W. Va. 249, 249, 58 S.E.2d 780, 781 (1950) (quoting City of Fairmont v. Bishop, 68 W. Va. 308, 313, 69 S.E. 802, 803 (1910)). Because of this limited taxing authority possessed by municipalities, a statute that vests a municipality with authority to impose a tax "must be strictly construed" and "all doubts should be resolved against the city and in favor of the taxpayer." Id. A municipality that seeks to impose a tax "must show that all conditions essential to the lawful exercise of power delegated to it have been complied with." Hukle, 134 W. Va. at 255, 58 S.E.2d at 783 (quoting Bishop, 68 W. Va. at 313, 69 S.E. at 803). Under these rules of construction, any ambiguity must be construed to limit the taxing power and, thus, to require that the reduction or elimination of the business or occupational tax be effective prior to or concurrent with the collection of the new sales tax.

Accordingly, we do not believe that the City's proposed course of action comports with the law. By delaying the effective date of the ordinance reducing or eliminating the business and occupation taxes, the City will not have actually changed those taxes until well after the sales tax goes into effect. See State ex rel. Richey v. Hill, 216 W. Va. 155, 166 n.16, 603 S.E.2d 177, 188 n.16 (2004) (noting that a statute applied only after its effective date). Indeed, because an ordinance may usually "be repealed . . . by another ordinance or an instrument of equal dignity," the City may never reduce or eliminate business or occupation taxes. Syl. Pt. 3, in part, State ex rel. Brown v. Corporation of Bolivar, 209 W. Va. 138, 140, 544 S.E.2d 65, 67 (2000) (quoting Syl. Pt. 3, Bittinger v. Corporation of Bolivar, 183 W. Va. 310, 311, 395 S.E.2d 554, 555 (1990)). For all the reasons explained above, we do not believe this is consistent with the Legislature's intent.

Sincerely,

Patrick Morrisey
Attorney General

Elbert Lin
Solicitor General

Gilbert C. Dickey
Assistant Attorney General