WEST virginia legislature
2020 regular session
Introduced
Senate Joint Resolution 8
By Senator Carmichael, (Mr. President), Tarr, Azinger, Swope, Takubo, Cline, and Maynard
[Introduced January 21,
2020; referred
to the Committee on the Judiciary; and then to the Committee on Finance]
Proposing an amendment to the Constitution of the State of West Virginia, amending article X thereof, by adding thereto a new section, designated section one-d, relating to the manufacturing growth amendment; defining terms; prohibiting the reclassification of tangible manufacturing inventory, machinery, and equipment personal property for ad valorem taxation purposes; exempting new tangible manufacturing machinery and equipment personal property from ad valorem property taxation; providing phased-in reduction of taxation of tangible manufacturing inventory, machinery, and equipment personal property until fully exempted; providing phased-in increases of annual appropriations and annual appropriations into perpetuity of replacement revenues for proportional distribution to levying bodies; empowering the Legislature to enact general law to carry out the provisions of this amendment; establishing primacy of section; numbering and designating such proposed amendment; and providing a summarized statement of the purpose of such amendment.
Resolved by the Legislature of West Virginia, two thirds of the members elected to each house agreeing thereto:
That the question of ratification or rejection of an amendment to the Constitution of the State of West Virginia be submitted to the voters of the state at the next general election to be held in the year 2020, which proposed amendment is that article X thereof, be amended by adding thereto a new section, designated section one-d, to read as follows:
ARTICLE X.
§1d. Manufacturing Growth Amendment.
Subsection A. — Definitions.
For the purpose of this section, the following terms shall be defined as:
(1) “Manufacturing” means an action or series of actions performed upon tangible personal property, either by hand or machine, which results in that tangible personal property being reduced or transformed into a different state, quality, form, property, or thing. “Manufacturing” does not include retail operations, public service company operations, the generation or transmission of electricity, the production or transmission of information, computer programming, software production, the preparation of food for immediate consumption, the purification or transportation of water, or any other activity not generally recognized as manufacturing.
(2) “Manufacturing business” means any business primarily engaged in West Virginia in a manufacturing business activity that uses machinery or equipment to process or transform raw materials or other tangible personal property into a different product.
(3) “Manufacturing business activity” means any business activity in this State that is primarily manufacturing or any storage hub located in this State for the purpose of providing a hub for the storage, distribution, trading or use of natural gas liquids. “Manufacturing business activity” does not include mining and natural resource processing, quarrying, oil extraction, natural gas extraction including any working interest in an oil or gas well, or any business activity of a public service company.
(4) “Manufacturing inventory” means a manufacturer’s raw materials directly used or consumed in manufacturing tangible personal property, goods in the process of being manufactured, and finished goods that are the direct result of a manufacturing business activity. The term does not include any finished products held by the manufacturer in any retail store or other similar selling place operated by the manufacturer whether or not the retail establishment is located in the same building in which the manufacturer operates the manufacturing plant.
(5) “Manufacturing inventory, machinery and equipment” means, includes and is limited to inventory, machinery and equipment owned by the taxpayer that is directly used or consumed in a manufacturing business activity of the taxpayer in West Virginia, except for the tangible manufacturing inventory, machinery and equipment personal property of public service companies. “Manufacturing inventory, machinery and equipment” does not include:
(a) Furniture;
(b) Barges;
(c) Ships;
(d) Rolling stock; or
(e) Any other tangible personal property:
(i) Not directly used in the manufacturing business activity;
(ii) Assessed as part of the working interest in an oil or gas well; or
(iii) Manufacturing personal property of public service companies.
(6) “Manufacturing machinery and equipment” means machinery and equipment directly used in manufacturing business activity to engage in manufacturing by processing, reducing or transforming manufacturing tangible personal property from raw materials or other tangible personal property into a different state, quality, form, property, or thing.
(7) “Natural gas liquids” include all products separated from wet gas but does not include dry gas.
(8) “Public service company” means a corporation or other business entity which delivers services considered essential to the public interest that are regulated by the applicable federal or state regulatory body, including, but not limited to, businesses furnishing electricity, natural gas, telecommunications, water, transporting personal property or passengers, including, but not limited to, airlines, railroads, trucking and bus companies, and which are centrally assessed by the state for property tax purposes.
(9) “Replacement revenue” means the amounts provided in subsection (E) of this section.
(10) “Rolling stock” includes, but is not limited to, motor vehicles, trailers, wheel loaders, crawlers, wheel tractors, excavators, graders, lift trucks and any other tangible personal property designed to move tangible personal property or people from one place to another place.
Subsection B. — Prohibiting reclassification of tangible manufacturing inventory, machinery and equipment personal property for ad valorem taxation purposes.
Any inventory, machinery and equipment tangible personal property classified as non-manufacturing for ad valorem taxation purposes for any tax year prior to the ratification of this amendment by the voters of this state shall not be reclassified as manufacturing inventory, machinery and equipment for any subsequent tax year for ad valorem taxation purposes.
Subsection C. — Exemption of certain new personal property purchased on and after July 1, 2021, from ad valorem taxation.
New tangible manufacturing machinery and equipment personal property directly used in manufacturing business activity purchased on and after July 1, 2021, shall be exempt from ad valorem taxation in accordance with this section and other applicable provisions of this article not inconsistent with this section.
Subsection D. — Gradual reduction of assessed valuation of certain personal property beginning July 1, 2021, and elimination of taxation.
On and after July 1, 2021, the assessed value of:
(1) Tangible manufacturing machinery and equipment personal property directly used in manufacturing business activity purchased prior to July 1, 2021; and
(2) Tangible manufacturing inventory personal property directly used in manufacturing business activity:
Shall both be determined at the percentages of its value, as follows:
Personal property assessed as of July 1, 2021, shall be assessed at 45 percent of its value;
Personal property assessed as of July 1, 2022, shall be assessed at 30 percent of its value;
Personal property assessed as of July 1, 2023, shall be assessed at 15 percent of its value; and
On July 1, 2024, and thereafter, the personal property may be not assessed and shall be exempt from ad valorem taxation.
Subsection E. — Replacement Revenue.
(1) For the fiscal year beginning on July 1, 2022, and ending June 30, 2023, and each fiscal year thereafter, the Governor shall annually provide an item of appropriation for replacement revenue in the budget bill for the fiscal year submitted to the Legislature in the amount specified in this subsection. The Legislature may not reduce the item of appropriation for replacement revenue. After the budget bill is finally acted upon by the Legislature, the Governor may not reduce or disapprove the item or parts of the item of appropriation for replacement revenue: Provided, That the Governor may veto the budget bill, may reduce or disapprove other items or parts of items in the budget bill, or may act or refrain from acting in any other manner with respect to the budget bill otherwise consistent with the provisions of this Constitution.
(2) The replacement revenue required to be appropriated by this subsection shall be the amount specified for each fiscal year, as follows:
For the fiscal year beginning on July 1, 2022 and ending June 30, 2023 - $25 million;
For the fiscal year beginning on July 1, 2023 and ending June 30, 2024 - $50 million;
For the fiscal year beginning on July 1, 2024 and ending June 30, 2025 - $75 million; and
For the fiscal year beginning on July 1, 2025 and ending June 30, 2026, and for each fiscal year thereafter - $100 million;
(3) The replacement revenue appropriated each fiscal year as provided by this subsection shall be distributed to the levying bodies in the same proportions that personal property tax revenue collections attributable to tangible manufacturing inventory, machinery and equipment personal property directly used in manufacturing business activity were distributed to those levying bodies, during the fiscal year beginning July 1, 2019, and ending June 30, 2020.
Subsection F. — General Law.
The Legislature may enact such laws, not inconsistent with this section, as may be necessary and proper to carry out its provisions.
Subsection G. — Primacy.
Ad valorem taxation of tangible manufacturing inventory, machinery and equipment personal property directly used in manufacturing business activity shall be in accordance with this section and other applicable provisions of this article not inconsistent with this section. In the event of any express or implied conflict or inconsistency between the provisions of this section and any part of the common law, statutory laws of this State, or any provision of this Constitution, including, but not limited to, articles VI, VII, and X thereof, the provisions of this section shall prevail and supersede.
Resolved further, That in accordance with the provisions of article eleven, chapter three of the Code of West Virginia, 1931, as amended, such amendment is hereby numbered “Amendment No. 1” and designated as the “Manufacturing Growth Amendment” and the purpose of the proposed amendment is summarized as follows: “To amend the State Constitution by elimination from ad valorem taxation tangible manufacturing inventory, machinery and equipment personal property directly used in manufacturing business activity, and providing permanent replacement revenue for affected levying bodies and levies.”
NOTE: The purpose of this amendment is to submit the proposed “Manufacturing Growth Amendment” to the Constitution of the State to the voters of this State for ratification or rejection at the general election in 2020.
Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.