Lawsuits challenge constitutionality of occupation tax

By Kyla Asbury | Jun 23, 2011


CHARLESTON – A lawsuit regarding Huntington's notorious 1 percent occupation tax has been filed days before the tax is to go into effect.

The plaintiffs, which are the Cabell County Commission, Steel of West Virginia, Cabell County Commissioner Bob Bailey, Service Employees International Union District 1199 and Tommie L. Kelley Sr., are challenging the constitutionality of the tax and the state board that approved it, according to five complaints filed June 22 in Kanawha Circuit Court.

The Municipal Home Rule Board; Emmett S. Pugh III, chairman; Floyd McKinley Sayre III; Brian Jones; Christopher M. Fletcher; Herbert Snyder; James Morgan; Angel Moore; and the City of Huntington were named as defendants in the suits.

Huntington's occupation tax is set to go into effect on July 1. It has been a controversial topic because it applies to the wages and salaries of people who work in Huntington, regardless of where they live. The city will also not tax salaries and wages above $125,000, according to the city ordinance that was adopted by Huntington City Council in 2010.

Along with imposing the 1 percent occupation tax, the city would remove its $3-per-week user fee. A 1 percent sales and use tax is also set to be implemented on Jan. 1, 2012, and Huntington would then eliminate or reduce the Business and Occupation tax for certain businesses.

The Municipal Home Rule Board approved the revised home rule plan for Huntington to impose an income tax and a sales and use tax on March 17. The plan included amendments to the city's business and occupation tax ordinance.

The plaintiffs claim the tax violates the equal rights component of Article VI of the state constitution, the uniformity component of Article X and the separation of powers provision of Article V.

The plaintiffs also claim the Municipal Home Rule Board does not have the authority to determine which laws may be enacted or adopted by home rule program municipalities.

The Municipal Home Rule Board was created in 2007 and the pilot program was meant to give four West Virginia cities greater freedom to decide their own destinies, according to the suits. The other cities are Bridgeport, Charleston and Wheeling.

Bailey said he believes the tax to be unconstitutional because those who work in the city are taxed, so one person will have to pay the tax, but their neighbor—who might work in a different city—would not be taxed.

Steel of West Virginia Vice President John O'Connor said although the company's taxes would be reduced if the occupation tax goes through, he believes it is not fair to put the taxes onto the employees.

The plaintiffs are seeking an injunction to stop the tax package before it takes effect July 1. They are also seeking a writ of mandamus to be issued and declaratory judgment that the tax is unconstitutional.

A hearing has yet to be set. If one is set before July 1, the occupation tax will be delayed, but if not, the tax will be put into effect on July 1.

Charleston attorney Ramonda Lyons said two more complaints will be filed in the near future on behalf of another individual and Teamsters Local 505.

The plaintiffs are being represented by William T. Watson.

The City of Huntington has hired Michael J. Farrell to represent it.

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