West Virginia-2018-HJR106-Introduced

WEST virginia legislature

2018 regular session

Introduced

House Joint Resolution 106

By Mr. Speaker (Mr. Armstead) and Delegate Miley

[Introduced January 19, 2018; Referred to the Committee on Finance then Judiciary]

By Request of the Executive

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, generally relating to the Just Cut Taxes and Win Amendment; providing a purpose for the amendment; clarifying the ad valorem taxation of current tangible industrial machinery, equipment and inventory personal property directly used in industrial business activity, and such components thereof, will be reduced and ultimately eliminated; clarifying tangible industrial personal property of public service companies will continue to be taxed; defining certain terms; exempting from ad valorem taxation new tangible industrial machinery, equipment and inventory personal property directly used in industrial business activity, and such components thereof, except for that imposed on the tangible industrial personal property of public service companies, purchased on and after July 1, 2019; freezing the assessed value of tangible industrial machinery and equipment personal property directly used in industrial business activity, and such components thereof, except for the assessed value of the tangible industrial personal property of public service companies; stepping down the assessed value and ultimately eliminating the ad valorem taxation of tangible industrial machinery and equipment personal property directly used in industrial business activity, and such components thereof, except for the assessed value and tax on tangible industrial personal property of public service companies; replacing revenue to the schools, municipalities, counties, the State, other levying bodies and levies reduced because of the assessed value stepdown and ultimate elimination of the ad valorem tax on tangible industrial machinery and equipment personal property directly used in industrial business activity, and such components thereof; requiring the Governor to annually provide in the budget bill, the Legislature to annually preserve and appropriate in the budget bill, and prohibiting the Governor from line item vetoing or reducing replacement revenue in the budget bill required by this amendment for the schools, municipalities, counties, the State, other levying bodies and levies; clarifying why replacement revenue is needed and how it is distributed; permitting the Legislature to enact general laws required to carry out the provisions of this amendment; permitting agencies through rule-making authorized by general law approved by the Legislature to promulgate rules required to carry out the provisions of this amendment; preserving earned tax relief benefits; prohibiting the reinstatement of the ad valorem tax on tangible industrial machinery, equipment and inventory personal property directly used in industrial business activity, and such components thereof, after ultimate elimination; providing for primacy of this section over all other law in the West Virginia Constitution, West Virginia Code and West Virginia common law; numbering and designating the amendment; and providing a summarized statement of the purpose of the amendment.

Resolved by the Legislature of West Virginia, two thirds of the members elected to each house agreeing thereto:

Subsection A — Purpose

The purpose of this Just Cut Taxes and Win or JCTAW Amendment is to advance the public interest by igniting economic growth and job creation. This will be accomplished by reducing and ultimately eliminating the ad valorem tax on tangible industrial machinery, equipment and inventory personal property directly used in industrial business activity, and such components thereof, except for that imposed on the tangible industrial personal property of public service companies.

Subsection B — Definitions

For the purpose of this section, the following terms shall be defined as:

(1) “Industrial business activity” means any business activity in this State that is primarily manufacturing, mining, quarrying, oil extraction or natural gas extraction excluding any working interest in an oil or gas well.

(2) “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.

(3) “Tangible industrial machinery and equipment personal property” means and 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.

(4) “Tangible industrial machinery and equipment personal property” does not include furniture, fixtures, motor vehicles, trailers, rolling stock, or any other tangible personal property not directly used in the industrial business activity. “Industrial machinery and equipment” does not include barges, ships, railroad rolling stock or other railroad tangible personal property, or tangible personal property assessed as part of the working interest in an oil or gas well.

(5) “Tangible industrial machinery, equipment and inventory personal property” means tangible personal property of a business engaged in this State in the activities of manufacturing or coal mining in the form of machinery, equipment or inventory integrated as a functioning unit intended for assembling, processing and manufacturing of finished or partially finished products.

Subsection C — New Purchases

New tangible industrial machinery, equipment and inventory personal property directly used in industrial business activity, and such components thereof, not previously depreciated, except for the assessed value of tangible industrial personal property of public service companies, purchased on and after July 1, 2019, shall be exempt from ad valorem taxation.

Subsection D — Frozen Assessed Value, Stepdown & Elimination

Tangible industrial machinery and equipment personal property directly used in industrial business activity, and such components thereof, shall be assessed at the assessment value for fiscal year 2017, except for the assessed value of tangible industrial personal property of public service companies, and shall remain at the same assessed value for the purpose of ad valorem taxation.

For the fiscal year beginning on July 1, 2020, fiscal year 2021, the assessed value of 60 percent of actual value, on tangible industrial machinery and equipment personal property directly used in industrial business activity, and such components thereof, shall be reduced to the assessed values enumerated below over the following seven fiscal years and every fiscal year thereafter, except for the assessed value of tangible industrial personal property of public service companies:

For the fiscal year beginning on July 1, 2020 (Fiscal Year 2021)- 51.43%

For the fiscal year beginning on July 1, 2021 (Fiscal Year 2022)- 42.86%

For the fiscal year beginning on July 1, 2022 (Fiscal Year 2023)- 34.29%

For the fiscal year beginning on July 1, 2023 (Fiscal Year 2024)- 25.71%

For the fiscal year beginning on July 1, 2024 (Fiscal Year 2025)- 17.14%

For the fiscal year beginning on July 1, 2025 (Fiscal Year 2026)- 8.57%

For the fiscal year beginning on July 1, 2026 (Fiscal Year 2027 and every fiscal year thereafter)- 0%

Subsection E — Replacement Revenue

For the fiscal year beginning on July 1, 2020, fiscal year 2021, until and including the fiscal year beginning on July 1, 2026, fiscal year 2027, and every fiscal year thereafter, the Governor shall annually provide replacement revenue required and specifically enumerated by this subsection in the proposed budget bill submitted to the Legislature for introduction. In this introduced version of the budget bill, the Legislature shall preserve the same in the form of an annual appropriation in the budget bill. Notwithstanding the provisions of section fifty-one, article VI of this Constitution, the Governor shall not reduce or disapprove any of the executive’s original request for introduction and the Legislature’s subsequent preservation and annual appropriation of replacement revenue required by this subsection: Provided, That the Governor may veto a budget bill containing an appropriation of replacement revenue required by this subsection.

The replacement revenue required by this subsection shall replace the revenue reduction resulting from the assessed value stepdown and ultimate elimination of the ad valorem tax on tangible industrial machinery and equipment personal property directly used in industrial business activity, and such components thereof. The replacement revenue required by this subsection shall be directed to the schools, municipalities, counties, State, other levying bodies and levies and shall remain in the same proportion as allocated in fiscal year 2017. For the fiscal year beginning on July 1, 2026, fiscal year 2027, and every fiscal year thereafter, the $140 million replacement revenue required by this subsection shall be directed to the schools, municipalities, counties, state, other levying bodies and levies and shall remain in the same amount as allocated in fiscal year 2017.

The annual required replacement revenue is as follows:

For the fiscal year beginning on July 1, 2020 (Fiscal Year 2021)- $20 million

For the fiscal year beginning on July 1, 2021 (Fiscal Year 2022)- $40 million

For the fiscal year beginning on July 1, 2022 (Fiscal Year 2023)- $60 million

For the fiscal year beginning on July 1, 2023 (Fiscal Year 2024)- $80 million

For the fiscal year beginning on July 1, 2024 (Fiscal Year 2025)- $100 million

For the fiscal year beginning on July 1, 2025 (Fiscal Year 2026)- $120 million

For the fiscal year beginning on July 1, 2026 (Fiscal Year 2027 and every fiscal year thereafter)- $140 million.

Subsection F — General Law & Rules

The Legislature by general law and agencies through rulemaking authorized by the Legislature shall enact any laws and rules required to carry out the provisions of this amendment.

Subsection G — Preserving Earned Tax Relief Benefits

All tax exemptions, credits, deductions, discounts and other tax relief benefits, earned prior to the ratification of this amendment on tangible industrial machinery and equipment personal property directly used in industrial business activity, and such components thereof, except tax relief benefits for tangible industrial personal property of public service companies that are not affected, in effect on the date this amendment is ratified by the voters of this State shall be preserved and remain in effect until such tax is eliminated.

Subsection H — Prohibition Of Tax Reinstatement After Elimination

Thereafter the ultimate elimination of the ad valorem tax on tangible industrial machinery, equipment and inventory personal property directly used in industrial business activity, and such components thereof, reinstatement of such tax is prohibited, except the ad valorem tax on the tangible industrial personal property of public service companies which shall continue to be imposed under assessments made by the Board of Public Works.

Subsection I — Primacy

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, 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 proposed amendment is hereby numbered "Amendment No. 1" and designated as the "Just Cut Taxes and Win or JCTAW 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 such components thereof, 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 and Win or JCTAW Amendment" to the Constitution of the State to the people of the State for ratification or rejection at the general election of 2018.

Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.