From the Well | Day 42

February 18, 2020

West Virginia Capitol Update

Day 42

All eyes were on the the Senate Finance Committee on Monday as its members unanimously passed sweeping changes affecting both the constitution and statute with regard to personal property taxation.

Committee Substitute for Senate Joint Resolution 9, to put a constitutional amendment on the November 2020 ballot, would give the Legislature the authority to eliminate or lower personal property taxes on one or more species of property. It would not allow the Legislature to raise property taxes beyond current constitutional limits.

Uniformity in taxation is eliminated and the Legislature may set different rates for different species of property. The Legislature would be allowed to classify property as real or personal, for purposes of taxation. While the concept of eliminating manufacturing equipment, inventory, and machinery has been discussed for years in various tax reform studies, the authority provided in SJR 9 was introduced only a couple of weeks ago.

An originating bill accompanied SJR 9 as a means to replace lost revenue. As explained by counsel, the bill’s primary goal is to provide a comfort level to address county concerns. The bill includes a legislative finding that the elimination of personal property taxation will stimulate the state’s economy. Personal property taxation is phased out over six years on manufacturing machinery, equipment, and inventory; automobiles and other motor vehicles; and retail personal property. A special revenue account is created to restore lost revenue to counties and calls for an increase:

·     from 6 cents per dollar to 6.5 cents per dollar on sales and use taxes,

·     on cigarettes from $1.20 per pack of 20 cigarettes to $2 per pack,

·     on other tobacco products from 12% of the wholesale price to 50% of the wholesale price, and

·     on E-cigarettes and vaping products from 7.5 cents per milliliter to 50% of the wholesale price.

Analysis from committee staff presented the “Reallocation Fund” as it would grow over the next decade. The Consumer Sales and Use Tax collections are estimated to increase by $116.5 million annually, $88 million of which would come from the tax on tobacco products.

Sen. Bill Ihlenfeld, D-Ohio, questioned what the fund balance would be in 2032 because by his calculation it would show a deficit. The analyst agreed that by 2032 there would be a deficit of $70-$80 million in the fund. Link to counsel’s presentation on both bills here.

Commerce Secretary Gaunch spoke to the bill and stated, “I’m 100% in favor of getting rid of personal property taxes.” Asked if he agreed with the originating bill, he responded, “This is the first time I’ve seen the numbers.” Senator Facemire stated, “You tell us that businesses tell you every day that they don’t like this tax. What tax do they tell you they like?”

WV Association of Counties director Jonathan Adler spoke to the bill, stating that counties had a great deal of fear and concern. “SJR 9 is more broad than what we discussed at any stakeholders meetings,” Adler said

Asked about WV’s competitiveness, Revenue Director Mark Muchow said WV is very competitive for smaller businesses and in the middle for large manufacturing firms. “Real property is very reasonably taxed in WV, ” said Muchow. He cautioned that no change in sales taxes should be effective immediately due to administrative issues.

Ted Boettner of the WV Center for Budget & Policy noted that when a similar initiative was done in Ohio, they actually lost jobs because providing incentives for new capital investment in machinery actually replaced people. He also pointed out that the bill provides no procedure to allocate the funds to counties, schools, and municipalities, and has no growth factor, making the reallocation of funds tied to 2021 revenue in perpetuity.

Senator Eric Tarr, R-Putnam, stated that if the tax killed investments and jobs in the state, the counties would likely benefit from what the bill is trying to give.

Several members of the committee raised concerns regarding the bill. Senator Doug Facemire, D-Braxton, asked whether this bill would simply give relief to corporations but cause citizens to suffer because of increased taxes.

Two amendments were proposed by the committee’s two members who are physicians. Sen. Tom Takubo, R-Kanawha, amended the bill to change the tax on vaping to increase, from 7.5 cents per milliliter to $1 per milliliter. Sen. Ron Stollings, D-Boone, proposed an amendment that $2 million per year retrieved from the tobacco tax be dedicated to tobacco addiction prevention and recovery programs. Both amendments were adopted by the committee. The committee unanimously advanced the bill to be reported to the full Senate with recommendation for passage.

The House Judiciary committee passed HB 2321, which provides workers compensation benefits to first responders if they are diagnosed with post-traumatic stress disorder. The bill now

heads to the full House for consideration.

Delegate David Kelly, R-Tyler, who spent 20 years in law enforcement, spoke in the favor of the bill during Monday morning’s committee meeting. Jeff Jenkins of WV Metronews filed a story with Del. Kelly’s comments on the news agency’s website. Read WVMetronews Story here.

In related news, HB 4039 was described as being similar to a bill from a couple of years ago regarding nuisance actions, but in this case relates to emergency and fire sirens. It would provide for limitations on nuisance actions against fire department and emergency medical services fixed sirens under certain circumstances depending on when a property is purchased. The bill passed and also will be reported to the floor.

Perhaps it’s because the last two legislative sessions have been so tumultuous, with the teacher strike, education reform and right to work bills creating controversy, but the 2020 session has seemed to be moving at a slower pace than years past.

A comparison of the bills introduced and passed over the last few years proves out that while the pace may seem slow, the numbers don’t back that up.

So far this year, the Senate has introduced 796 bills, which is 160 more than they had introduced this time last year, and 134 more than in 2016. As for the House, members have introduced an impressive 1,509 bills this year, which is 383 more than this time last year, and 421 than in 2016. (The Legislature’s website’s weekly wrap-ups did not track the number of bills introduced or passed from week to week in 2015.)

While both chambers have outpaced recent years for introducing bills, both are somewhat on par with the number of bills they have passed. At the end of last week, the Senate had passed 109 bills, compared to 110 in 2019 and 133 in 2016. The House had passed 117 bills compared to 108 in 2019 and 70 in 2016.

Legislation to end taxpayer funding of greyhound racing subsidies was held up Monday in the West Virginia Senate, in the face of Democrats who might vote as a bloc to try to kill the bill.

“There’s some credence to that,” Senate Minority Leader Roman Prezioso, D-Marion, said of rumors that the 14 Senate Democrats might vote together to oppose the bill, which would free up about $17 million in video lottery revenue that currently underwrites racing purses and breeders funds at the state’s two greyhound tracks.

“Our caucus is pretty adamant about not losing these jobs,” he said.

February 17th at the Capitol was a day honoring the 100th anniversary of the right to vote for women. The mission was begun by Susan Anthony and Elizabeth Cady Stanton but the civil war interrupted their goal. After the civil war, racial issues split the support of women between those who had supported slavery and those who did not. In 1890, forces were once again combined and the National American Women Suffrage Association was founded with 2,000 members. By 1920 it had grown to 2 million. Once again the movement was interrupted by war, but after WWI Congress passed the amendment on June 3, 1919. West Virginia was the 34th state to ratify the amendment and it passed by one vote from Senator Jesse Bloch of Wheeling, who traveled from California to break the tied vote in a special session of the WV Legislature. The day was marked at the Capitol with exhibits, presentations, & resolutions commemorating the anniversary.

Hartman Harman Cosco, Public Policy Strategists, LLC, (H2C) is a strategically assembled bipartisan lobbying firm comprised of legal, communications and policy professionals. H2C possesses the insight and intuition that only comes from decades of hands on experience leading community and statewide initiatives.

Hartman Harman Cosco, LLC | H2Cstrategies.com | 800-346-5127