WEST virginia legislature

2019 regular session

Introduced

Senate Joint Resolution 11

By Senators Carmichael (Mr. President) and Prezioso

[By Request of the Executive]

[Introduced January 30, 2019; 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 ad valorem property taxation; defining terms; exempting new tangible industrial machinery and equipment personal property from ad valorem property taxation; providing phased-in reduction of taxation of certain tangible industrial machinery, equipment, and inventory personal property until fully exempted; providing phased-in increases of appropriations and permanent appropriation of replacement revenues for proportional distribution to levying bodies; providing for general law; preserving tax exemptions, credits, deductions, discounts, and other tax relief benefits; establishing primacy of section; numbering and designating such proposed amendment; and providing a summarized statement of the purpose of such proposed 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. Just Cut Taxes & Win.

Subsection A. — Definitions

For the purpose of this section, the following definitions shall apply:

“Industrial business activity” means any business activity in this State that is primarily manufacturing, mining and natural resource processing, quarrying, oil extraction, natural gas extraction, or storage hubs located in this State for the purpose of providing a hub for the storage, distribution, trading or use of natural gas liquids. “Industrial business activity” does not include any working interest in an oil or gas well or any business activity of a public service company.

“Natural gas liquids” include all products separated from wet gas but does not include dry gas.

“Public service company” or “public service companies” 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, or water, or 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.

“Replacement revenue” means the amounts provided in subdivision (2), subsection (D) of this section.

“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.

“Tangible industrial inventory personal property” means and is limited to raw materials, goods in process and finished goods of a business located in West Virginia primarily engaged in an industrial business activity, except for the industrial personal property of public service companies.

“Tangible industrial machinery and equipment personal property” means, includes, and is limited to, machinery and equipment owned by the taxpayer that is directly used or consumed in an industrial business activity of the taxpayer in West Virginia, except for the tangible industrial machinery and equipment personal property of public service companies.

“Tangible industrial machinery and equipment personal property” does not include:

(1) Furniture;

(2) Barges;

(3) Ships;

(4) Rolling stock; or

(5) Any other tangible personal property:

(a) Not directly used in the industrial business activity;

(b) Assessed as part of the working interest in an oil or gas well; or

(c) Industrial personal property of public service companies.

Subsection B. — Exemption of certain new personal property purchased after July 1, 2020, from ad valorem taxation

Tangible industrial machinery and equipment personal property directly used in industrial business activity purchased after July 1, 2020, 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 C. — 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: (A) Tangible industrial machinery and equipment personal property directly used in industrial business activity purchased before July 2, 2020; and (B) tangible industrial inventory personal property directly used in industrial business activity shall be determined at the percentages of its value, as follows:

Personal property assessed as of July 1, 2021, shall be assessed at 52% of its value;

Personal property assessed as of July 1, 2022, shall be assessed at 43% of its value;

Personal property assessed as of July 1, 2023, shall be assessed at 34% of its value;

Personal property assessed as of July 1, 2024, shall be assessed at 26% of its value;

Personal property assessed as of July 1, 2025, shall be assessed at 17% of its value;

Personal property assessed as of July 1, 2026, shall be assessed at 9% of its value; and

On July 1, 2027, and thereafter, the personal property may be not assessed and shall be exempt from ad valorem taxation.

Subsection D. — 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 - $20 million;

For the fiscal year beginning on July 1, 2023, and ending June 30, 2024 - $40 million;

For the fiscal year beginning on July 1, 2024, and ending June 30, 2025 - $60 million;

For the fiscal year beginning on July 1, 2025, and ending June 30, 2026 - $80 million;

For the fiscal year beginning on July 1, 2026, and ending June 30, 2027 - $100 million;

For the fiscal year beginning on July 1, 2027, and ending June 30, 2028 - $120 million; and

For the fiscal year beginning on July 1, 2028, and ending June 30, 2029, and for each fiscal year thereafter - $140 million.

(3) The replacement revenue appropriated each fiscal year as provided by this section shall be distributed to the levying bodies in the same proportions that property tax revenue collections attributable to tangible industrial machinery and equipment personal property directly used in industrial business activity and to tangible industrial inventory personal property directly used in industrial business activity were distributed to those levying bodies, if any, during the fiscal year beginning July 1, 2019, and ending June 30, 2020.

Subsection E. — 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 F. — Preserving Earned Tax Relief Benefits

All tax exemptions, credits, deductions, discounts and other tax relief benefits, earned prior to and in effect on the date the ratification of this amendment for: (A) Tangible industrial machinery and equipment personal property directly used in industrial business activity purchased before July 2, 2020; and (B) tangible industrial inventory personal property directly used in industrial business activity shall be preserved and remain in effect until the property is exempt from ad valorem taxation in its entirety under this section.

Subsection G. — Primacy

Taxation of tangible industrial machinery, equipment, and inventory personal property directly used in industrial 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 or 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. 3” and designated as the “Just Cut Taxes and Win Amendment“ and the purpose of the proposed amendment is summarized as follows:  “To amend the State Constitution by stepping down the assessed value and ultimately eliminating from ad valorem taxation tangible industrial machinery, equipment and inventory personal property directly used in industrial business activity, and providing replacement revenue for schools, municipalities, counties, the State, other levying bodies and levies.“

 

NOTE: The purpose of this resolution is to submit the proposed “Just Cut Taxes & Win Amendment” to the Constitution of the State to the people of the State for ratification or rejection at the primary election of 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.