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Volume XXVIII, Issue 4 - March 10, 2017


Tax Reform Plans Taking Shape in Chambers

Fiscal Note Shows Projected Revenue Gap with Repeal of Income Tax


by REBECCA TURNBULL
The Senate Select Tax Reform Committee has taken a significant hit this week to a revolutionary tax plan they have been developing for the past month.

The tax reform bill, SB 335, would repeal the personal income tax over the course of four years and replace it with a general consumption tax that broadens the consumer sales tax by an additional two percent, getting rid of most sales tax exemptions.

However, as shown in a fiscal note detailing the financial impact of the bill to the state, the general consumption tax would not be enough to bridge the revenue gap.

Mark Muchow, deputy secretary of the state Department of Revenue, said he found that the proposed plan could result in a nearly $870 million drop in tax collections over the four-year phase out period.

Lead sponsor of the bill and Chair of the Tax Reform Committee, Senator Robert Karnes, R-Upshur, said this discovery does not come as a complete surprise or signify the bill’s failure.

“Nothing starts the way it finishes,” Karnes said. “What we do now is we go to work to figure out how the bill needs to be adjusted in order to meet the revenue needs of the state.”

Muchow acknowledged that he did not have the time or resources to yield completely accurate results for the fiscal note, which contains many variables that he said would require more time to study, such as how border counties might react to lower consumption tax rates in neighboring states.

Some believe this projected drop in funding, however, is enough to show that the state cannot handle a complete repeal of the income tax yet.

Senate Minority Leader Roman Prezioso, D-Marion, said the Legislature needs to focus on finding new sources of revenue and revamping infrastructure before it considers any tax plans that risk widening the budget gap further.

“We all realize we have a problem: our economy is not in the greatest shape,” Prezioso said. “So we’ve got to diversify our economy, and in order to do that, we’re going to have to have some money up front to get back in the ballgame. We’re going to have to get ourselves into a position for playing.”

Prezioso said this is the time for legislators to come together to form an effective tax strategy, instead of rushing to make a major, possibly “disastrous” change for the state.

“Let’s not draw a line in the sand,” Prezioso said. “Let’s study it. Let’s come to a mutual agreement.”

Karnes, however, believes enough time has been taken to try and study fiscal options for the state.

“We’ve spent the last two years studying in the Tax Reform Committee,” Karnes said to the committee. “If two years’ worth of study isn’t enough to get going, then I guess we can never change anything.” He said the Legislature has been studying major tax reform for the past 30 years overall, and nothing has been implemented since the 1980s.

Senate President Mitch Carmichael, R-Jackson, is supportive of Karnes’s initiative and said he shares his “vision” to eliminate the income tax in West Virginia.

Before the Tax Reform Committee began considering SB 335, Carmichael assured the members that they would be able to finally develop and send out a promising piece of legislation.

“I fundamentally believe that this is the most important committee of this session," Carmichael said. "This committee is about transforming the state."

As the Senate committee starts to revisit the bill in hopes of getting rid of the revenue gap it creates, the House of Delegates is preparing to introduce its own balanced tax reform bill, which would simply make adjustments to the income tax rather than repeal it outright.

House Finance Chairman Eric Nelson, R-Kanawha, said the House’s bill is based on discussion and research from Joint Committee on Tax Reform meetings in 2015 and 2016.

“A year or so ago, the Joint Tax Committee received a report from West Virginia University’s John Deskins on ways that we can reduce the categories of our personal income tax, if not go to a single bracket,” Nelson said. “I believe you’ll see legislation on that this week as a potential alternative.”

Nelson introduced HB 2934 as its lead sponsor in the House Friday, March 10, which would eliminate the tax brackets under the personal income tax and change the rate of the tax.

The Senate Committee on Tax Reform will meet Saturday, March 11 at 3 p.m. in room 451M at the Capitol.

Once SB 335 is approved by the select committee, the bill will be referred to the Senate Finance Committee.

The bill currently has 18 co-sponsors aside from the lead sponsor, Karnes. Those co-sponsors include Senate President Mitch Carmichael and Senators Mike Maroney, Ronald Mullins, Mark Maynard, Ryan Weld, Charles Clements, Ryan Ferns, Sue Cline, Randy Smith, Dave Sypolt, Mike Azinger, Chandler Swope, Craig Blair, Ed Gaunch, Tom Takubo, Greg Boso, Kenny Mann and Charles Trump.

 




Completed Legislation

Senate Bill 176 repeals an outdated article of the code. It was recommended in the 2017 Regular Session of the Legislature by the Legislative Oversight Committee on Health and Human Resource Accountability.

Senate Bill 188 corrects the definition of telehealth in the medication assisted treatment portion of the code.

House Bill 2740 makes a supplementary appropriation to the Department of Administration.




Bills Passed from the Senate

As of 4:00 p.m., Friday, March 10, 2017, the 31st day of the regular session of the 83rd Legislature, 577 bills have been introduced in the West Virginia Senate. Of those bills, 22 have passed this week along with 2 bills from the House, all of which have been sent to the House for further consideration. Among those:

Senate Bill 173 would provide exemptions that would differentiate autocycles from having to adhere to motorcycle requirements.

Senate Bill 185 would allow spending units to designate the fund which the proceeds from the sale of surplus property must be deposited when the fund that was used to purchase the property is no longer in existence.

Senate Bill 190 would eliminate bidding preferences for vendors bidding on state contracts for commodities or printing.

Senate Bill 206 would expand the definition of kidnapping to including taking or gaining custody of, confining or concealing another person by force or threat of force or by duress, fraud, deceit misrepresentation or enticement.

Senate Bill 209 would define the term “veteran” as that term pertains to veteran-owned businesses.

Senate Bill 220 would create a new felony offense for a drug delivery that results in the death of another person and providing a felony criminal penalty.

Senate Bill 221 would change the experience requirements for members and reduce the number of members of the Public Employees Insurance Agency Finance Board.

Senate Bill 224 would repeal the requirement for an employer’s bond for wages and benefits for certain designated employers and related requirements.

Senate Bill 235 would provide that after its initial registration the annual registration fees of motorcycles are owed in the same month as the original registration. The bill provides that, in that way, motorcycles would be treated the same as other motor vehicles.

Senate Bill 236 would establish limits applicable to the award of damages for medical monitoring.

Senate Bill 239 would protect an employee’s wages or salaries from being withheld or diverted for political activities without the express, written authorization of the employee.

Senate Bill 259 would require administrators of intestate estates to give bond and take oath.

Senate Bill 263 would create an exemption from certain contract and common carrier laws for motor vehicles used by contract carriers exclusively for the transportation of railroad personnel.

Senate Bill 365 would maintain the solvency of the Unemployment Compensation Fund and extend the time period for borrowing funds from the Revenue Shortfall Reserve Fund for the Unemployment Compensation Fund to September 1, 2018.

Senate Bill 392 would add a definition for “vested” to Municipal Police and Fire Retirement System and clarify duty/nonduty disability.

Senate Bill 400 would eliminate an unnecessary and contradictory provision concerning appointments to the West Virginia Infrastructure and Jobs Development Council.

Senate Bill 429 would allow the Division of Corrections to monitor inmate electronic communications.

Senate Bill 436 would allow investigators from the Attorney General’s office to carry firearms in the course of their official duties under certain circumstances

Senate Bill 442 would modify the definitions of “assault” and "battery", and “domestic assault” and "domestic battery" to conform with federal laws relating to firearms possession criminal offenses.

Senate Bill 445 would amend the definition of an “abused child” to include a child conceived as a result of an act of sexual assault.

Senate Bill 456 would correct a technical error in an original clause related to standards for termination of parental rights in child abuse and neglect case

Senate Bill 473 would clarify the circumstances in which naturally shed deer antlers may be lawfully collected, possessed and sold and to clarify that certain wildlife or parts thereof cannot be traded or bartered.

House Bill 2318 would strengthen and establish criminal offenses relating to human trafficking.

House Bill 2740 would expire funds to the surplus balance of General Revenue and supplement, amend, add, and increase any items of appropriation in the aforesaid accounts for the designated spending units for expenditure during the fiscal year 2017.



Additional Senate Bills

Senate Bill 2 would direct certain school funding to assist county boards of education with serving exceptional students with high-cost and/or high-acuity special needs.

Senate Bill 8 would require members of the Legislature to disclose contributions and fund-raising events while the Legislature is in session. The bill requires the information to be provide within 5 days of the event or receipt of contribution, and requires the Secretary of State to publish such information on the Secretary of State’s website within 1 day.

Senate Bill 11 would require that vacancies in certain elected offices are filled by a person of the same political party with which the previous officeholder was affiliated at the time of the preceding election.

Senate Bill 24 would repeal the article creating mandatory state inspections of motor vehicles.

Senate Bill 36 would allow school nurses to possess and administer opioid antagonists at school.

Senate Bill 55 would allow admission of evidence in a civil action of the use or nonuse of a safety belt on the issues of negligence, contributory negligence, comparative negligence and failure to mitigate damages.

Senate Bill 79 would provide judges with the flexibility to sentence controlled substance offenders to determinate sentences based on the severity of the offense.

Senate Bill 167 would allow law enforcement to obtain DNA samples, taken by buccal swab rather than drawing blood, from arrestees for certain criminal offenses. The bill also expands DNA sample collection to all those convicted of a felony offense.

Senate Bill 194 would increase the penalties for shoplifting.

Senate Bill 250 would establish a tax credit for physicians who are new graduates and locate in West Virginia to practice medicine for at least six years.

Senate Bill 256 would prohibit school personnel who have engaged in sexual misconduct with students or minors from being assisted to find new employment without having that misconduct reported to the appropriate authorities and investigated.

Senate Bill 285 would authorize the Commissioner of Highways or local authorities to establish minimum speed limits in certain congested areas and to assess fines for violating the minimum speed limit.

Senate Bill 309 would authorize counties to offer license plates customized to that particular county and the application procedures thereof.

Senate Bill 377 would create a fixed income tax credit for low income senior citizens.

Senate Bill 435 would prohibit mental health providers from engaging in, or referring a patient to, sexual orientation conversion therapy when such person is under eighteen years of age.

Senate Bill 479 would allow sales of liquor by retail licensees after 1 p.m. on Sundays. The bill would also transfer the authority to set the maximum wholesale markup percentage of all liquor, other than wine, from the commissioner to the Legislature.

Senate Bill 518 would help returning veterans and displaced coal miners to find meaningful employment through quality skills training using the apprenticeship model.

Senate Bill 524 would prohibit the implementation of Common Core academic standards in schools and require adoption and implementation of certain other academic standards to be effective for a minimum of five school years after the date of implementation.

Senate Bill 537 would provide exemptions from mandatory immunizations for certain students and employees.

Senate Bill 568 would make it a crime for doctors and lawyers to knowingly file a fraudulent claim for disability benefits or providing substantive information in support of a fraudulent claim.




Bills Passed from the House

As of 4:00 p.m., Friday, March 3, 2017, the 31st day of the regular session of the 83rd Legislature, 934 bills have been introduced in the West Virginia House of Delegates. Of those bills 23 have passed this week. Two of those are completed legislation and 21 of which have been sent to the Senate for further consideration. Among those:

House Bill 2526 adds drugs to Schedules I, II, IV, and V of controlled substances.

House Bill 2554 would transfer the West Virginia Contractor Act from administration and regulation by the Division of Labor to regulation under the provisions of professions and occupations in chapter thirty of code.

House Bill 2571 would require the State Department of Education and the Schools for the Deaf and the Blind to jointly select language developmental milestones from existing standardized norms for purposed of developing a resource for use by parents to monitor and track deaf or hard-of-hearing children's expressive and receptive language acquisition and developmental stage towards English literacy.

House Bill 2675 designs the placement of nonpartisan judicial offices on the primary election ballot.

House Bill 2706 would authorize legislative rules for the Higher Education Policy Commission regarding the West Virginia Higher Education Grant Program, Providing Real Opportunities for Maximizing In-state Student Excellence (PROMISE), Research Trust Fund Program, and Annual Reauthorization of Degree-Granting Institutions and to authorize legislative rules for the Council for Community and Technical College Education regarding the Annual Reauthorization of Degree-Granting Institutions, and Business, Occupational and Trade Schools.

House Bill 2726 would authorize home incarceration officers to arrest participants for violating the terms and conditions of his or her supervision with or without a court order.

House Bill 2731 would clarify that only civil actions with controversial amounts exceeding $7,500 must be heard in circuit court, except in actions relating to real estate installment sales contracts or actions confined exclusively by the Constitution to some other tribunal.

House Bill 2503 would update the rulemaking authority of the Board of Osteopathic Medicine.

House Bill 2540 would permit a person to practice his or her profession for seven days for a charitable function.

House Bill 2628 would clarify and strengthen the duties and powers of the Board of Medicine and the Board of Medicine with regard to evidence of serious misconduct by licensees and applicants for license under their respective jurisdictions.

House Bill 2367 would establish a criminal offense of organized retail crime.

House Bill 2579 would increase the penalties for transporting controlled substances.

House Bill 2674 would relate to access to and receipt of certain information regarding a Protected Person.

House Bill 2678 would change the amounts of prejudgment and post-judgement interest to reflect today's economic conditions.

House Bill 2691 would allow a person who is qualified by training to be a barber and a cosmetologist to elect to practice solely as a barber.

House Bill 2725 would restrict the authority of the Board of Barbers and Cosmetologists to regulate the use of commonly available retail beauty products.

House Bill 2459 would update regulations relating to health care, define terms, and add/clarify exemptions.

House Bill 2509 would permit a physician to prescribe certain controlled substances when using telemedicine technologies. This would allow people who live a distance from doctor to receive treatment.

House Bill 2590 would update the meaning of "federal taxable income" and certain other terms used in the West Virginia Corporation Net Income Tax Act by bringing them into conformity with their meaning for Internal Revenue Code's definitions and specifying effective dates.

House Bill 2594 would update the meaning of "federal adjusted gross income" and certain other terms used in the West Virginia Personal Income Tax Act and specify effective dates.

House Bill 2653 would extend the multistate real-time tracking system to June 30, 2023.



Additional House Bills

House Bill 2446 would require state agencies to maintain a website with their contact information, frequently asked questions, office hours, rules that govern the agency, and other information. All of the agencies already have websites and this bill would only require this certain information to be on them and for it to be updated. There was no fiscal note included in the bill. For those agencies that wouldn't comply, they would be audited.

House Bill 2427 would require that the state phone directory be updated with correct contact information. The timeframe for updates would be within 30 days of an employment change. This bill was drafted due to the state phone directory not being updated and having people who had passed away on it and new employees not being updated.

House Bill 2767 would allow undeliverable mail by the Secretary of State to be able to be emailed to circuit clerks. This bill's purpose is to speed up technical issues regarding lawsuits.

House Bill 2792 would require the Library Commission to do a survey of the libraries in the state and report back to Governor Justice and the Legislature regarding repairs and the status of the libraries, in order to make a plan of updating them. There was no fiscal not attached.

House Bill 2344 would transfer the assets of the Library Commission relating to the Library Television Network to the Educational Broadcasting Authority. This bill would improve the product of the Library Television Network from standard definition videos, bad quality, and minimal views on the internet to what West Virginia Public Broadcasting can give them.

House Bill 2591 would create a new article in the West Virginia Code. This article would create a tax credit for companies that have underneath 25 employees. The credit would be in the amount of $100,000 or under. The credit would be calculated by matching 50% of whatever the small business spends on advertising, marketing, and branding, up to the maximum amount. In order to be eligible, the business must also have its corporate headquarters in West Virginia. The bill would take effect after Dec. 31st, 2017 and is for any small businesses regardless of age. There is a fiscal note on the bill of $2,000 per year. A small business could also only take advantage of this tax credit for five consecutive years.

House Bill 2771 permits the state superintendent to issue temporary certificates to out of state teachers who are the spouses of members of the Armed Forces who are on active duty stationed in the state. The license would be a one-year license, which would be renewable each year.

House Bill 2704 would prohibit persons convicted of sexual offenses against children with whom they hold positions of trust from holding certification or license valid in public schools. The bill was amended previously by the education committee to only revoke the license but would not add fines or imprisonment.

House Bill 2781 would require a person desiring to vote to present documentation identifying the voter to one of the poll clerks. The valid IDs would include a West Virginia driver's license, passport, employee ID card produced by the state or institutions of the state, and military ID card. Those failing to provide those forms of identification would be able to vote under a provisional ballot. Those living in a residential care home would be exempt along with those who have a religious objection to photography. The bill would also repeal the automatic voter registration program. A fiscal note was requested in order to find out the cost of the free identification cards the DMV would be producing underneath the bill.

House Bill 2574 would create a special pilot program to introduce seventh and eighth grade students to career and technical education opportunities in the State of West Virginia. The program is designed to better prepare students for post-secondary education and participate in the workforce.

House Bill 2618 would remove the requirement that a student's body mass index be obtained in schools, which is done in physical education classes in public schools.

House Bill 2720 would permit the School Building Authority to transfer funds from the School Construction Fund into a special revenue account in the State Treasury.

Chamber Discussion
Tax Reform
Senator Robert Karnes chairs the Senate Select Tax Reform Committee created by Senate President Carmichael.
PHOTO: Will Price
Wrap-up, 2017 Edition:
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