The House passed the budget by a vote of 63-37 and the Senate by 22-12.
Late Saturday night, the Governor held a press conference indicating that he and Senate President Mitch Carmichael were very close to a deal on the budget, but with only a few hours remaining in the session, language from their agreement did not pass. The House was not included in the negations of a deal.
OMEGA has sent a letter requesting the Governor sign this budget that is sound and responsible. Furthermore, we requested that he commission a complete tax study to get West Virginia on track. The piecemeal approach that has been taken in the past and also this year has not served our state well. We need a comprehensive study and legislation that is a true fix and will serve us long-term.
There does appear to be a few problems with the budget bill (HB 2018) that passed. It's about $31 million out of balance because some areas lawmakers thought they would gain some revenue, greyhounds and racetrack modernization fund, didn't happen. There's also an apparent issue about the effective date. There weren't enough votes to make the measure "effective from passage" so now the bill won't take effect until 90 days from passage which is July 8, which is a week after the new fiscal year begins.
At this time, we are uncertain whether or not the Governor will veto, sign or allow the budget to become law without signing.
His proposed budget included tax increases estimated to raise $450 million in revenue:
- New Commercial Activities Tax, which would charge two-tenths of a percent on gross business revenues. The proposed tax would raise an estimated $214 million in new revenue.
- Raising the Consumer Sales Tax by one-half of a percent, taking it up to 6.5 percent. This increase would raise an estimated $92.7 million.
- Eliminating the current tax exemptions for professional services (i.e. legal, accounting, advertising, etc.). The elimination of this exemption would generate approximately $87 million in new revenue.
- Raising the state's gasoline tax by ten (10) cents per gallon, raising an estimated $150 million in new revenue.
- Increasing DMV fees for motor vehicle titles and licenses from $30 up to $50. This increase is estimated to generate $33 million in new revenue.
- Increasing WV Turnpike tolls from $2 to $3 per toll booth.
- Raising the beer barrel tax from $5.50 up to $8, and raise the wholesale liquor markup from 28 percent to 32 percent. These increases will generate an estimated $5.6 million in new revenue.
- Ending subsidies from the General Revenue Fund to the State Road Fund, which is an estimated $11.7 million per year.
- Repealing the WV Film Tax Credit, saving roughly $3 million per year
- Withholding a scheduled payment to the state's Workers' Compensation Fund, saving approximately $38 million in the General Revenue Fund
The Governor made numerous changes to his proposal over the course of the 60-day session. In addition to an increased gas tax, the Governor also proposed taxes on food, a 1-cent tax per ounce on "sugary drinks" and a 50-cent per pack tax increase on cigarettes.
A special session could be in our future depending on what the Governor does with the budget.
Industry Specific Legislation Passed:
SJR 6 – Governor's Resolution- Roads to Prosperity Amendment of 2017 ($1 billion Road Bond). The purpose of this resolution is to provide for the improvement and construction of safe roads in the state. The bonds can raise $1.6 billion. The resolution says that when a bond is approved, the Legislature shall provide for a collection of taxes to pay for the bonds. The Governor will call for an election to place this amendment on the ballot. Note: Passage allows the Legislature to act on increases in fuel taxes, tolls, etc.
SB 419 - Creating special revenue fund sources for Division of Labor to meet statutory obligations. The purpose of this bill is to authorize the creation of special revenue accounts in the State Treasury for the deposit of Division of Labor fees, and to authorize the commissioner utilize excess funds in new and existing special revenue accounts to meet the division's funding obligations when necessary. OMEGA will be working with rules to keep our increases on fees to a minimum.
SB 533 - Relating to taxes on wine and intoxicating liquors. This bill was introduced by Senators Hall and Mullins and referred to Finance. The purpose of this bill is to provide that no wine or liquor excise tax will be collected on purchases of wine or intoxicating liquors in the original sealed package for the purpose of resale, if the final purchase of the wine or intoxicating liquor is subject to the excise tax. The bill also provides that no liter tax will be collected on wine sold in the original sealed package for the purpose of resale, if the subsequent sale of the wine is subject to the liter tax.
HB 2811 - Relating to the definition of above ground storage tanks was signed by the Governor on April 4th. It will become law on June 23, 2017. The purpose of this bill is to clarify, for purposes of this article, that tanks having a capacity of 210 barrels or less that contain oil or brine water are not regulated under this article. As a result of this amendment to the AST Act, devices having a capacity of 210 barrels or less, containing brine water or other fluids produced in connection with hydrocarbon production activities, along with devices having a capacity of 10,000 gallons or less, containing sodium chloride water for roadway snow and ice pretreatment, are no longer ASTs for purposes of the AST Act - meaning that they are exempt from the AST Act with certain limited requirements.
Notwithstanding the exemption, the designated devices must still meet (1) the registration imposed in § 4 of the AST Act; (2) the signage requirements imposed in § 11 of the AST Act, both of which are currently applicable to all ASTs designated by West Virginia Department of Environmental Protection as Register & Label ("R&L") only; and (3) the notice requirements contained in § 10 of the AST Act which expressly provides the "owner or operator of a regulated aboveground storage tank shall provide notice directly to the public water system and to state, county and municipal emergency response organizations of the type and quantity of fluid stored in the regulated aboveground storage tanks at the facility and the location of the safety data sheets (SDS) associated with the fluids in storage." (Section 10 also authorizes the use of Tier II inventory forms and applicable documents in lieu of the information described above). It is reasonable to expect that only those newly exempt devices that are located in a zone of peripheral concern ("ZPC") would be subject to the notice requirements of § 10.
The bottom line is that the only oil and gas industry tanks that continue to be subject to the full requirements of the AST Act and AST Rule are (i) ASTs of any capacity located in ZCCs and thus Level 1 regulated tanks, (ii) ASTs containing certain designated chemicals or ASTs greater than 50,000 gallons in capacity and thus Level 1 regulated tanks, and (iii) ASTs greater than 210 barrels in capacity located in ZPCs and thus Level 2 regulated tanks. These categories are estimated to include fewer than 2,000 tanks.
General Business Legislation Passed:
SB 222- Relating to disqualification for unemployment benefits. The purpose of this bill is to provide that an individual is disqualified for benefits for any week, or portion of a week, in which he or she left or lost his or her job as a result of a strike. The bill clarifies that a lockout is not a strike.
SB 239 - Limiting use of wages by employers and labor organizations for political activities. The purpose of this bill is to protect an employee's wages or salaries from being withheld or diverted for political activities without the express, written authorization of the employee.
SB 330 - Relating to WV Workplace Freedom Act. The purpose of this bill is to provide technical corrections to the definitions of the West Virginia Workplace Freedom Act and to repeal provisions relating to the statutory construction of the act. This legislation was vetoed by the Governor on March 28th. The Senate and House both voted to override the Governor's veto and the legislation completed action on April 7th.
SB 364 - Incorporating changes to Streamlined Sales and Use Tax Agreement. The purpose of this bill is to incorporate changes made to the Streamlined Sales and Use Tax Agreement and to specify effective dates.
SB 365 - Maintaining solvency of Unemployment Compensation Fund The purpose of this bill is to maintain the solvency of the Unemployment Compensation Fund; and extending the time period for borrowing funds from the Revenue Shortfall Reserve Fund for the Unemployment Compensation Fund to September 1, 2018.
SB 433 - Permitting counties increase excise tax on privilege of transferring real property. The purpose of this bill is to permit counties to increase the excise tax on the privilege of transferring real property.
SB 441- Establishing Municipal Home Rule Pilot Program - The purpose of this bill is to establish the municipal home rule pilot program as a permanent program, allow all municipalities to participate in the program, and allow municipalities who institute sales and use tax pursuant to the program to administer and collect the tax through their own municipal collector's offices.
HB 2678 - Changing the amounts of prejudgment and post-judgment interest to reflect today's economic conditions. Current law regarding judgment interest provides for compound interest to be calculated at a rate 3 points about the Fifth Federal Reserve discount rate. This legislation reduces that rate down to 2 points (instead of 3 points) above the Fifth Federal Reserve discount rate, and further provides that simple interest shall be calculated (instead of compound interest). This legislation also establishes new statutory minimum and maximum interest rates. The current statutory minimum rate is 7 percent, which has been in effect continuously since 2009. HB 2678 reduces the statutory minimum down to 4 percent. The bill also reduces the statutory maximum rate from the current 11 percent down to 9 percent.
HB 2857 West Virginia Safer Workplaces Act. The purpose of this bill is to create the West Virginia Safer Workplaces Act. The bill permits employers to test employees and prospective employees for drugs and alcohol. The bill defines terms. The bill declares public policy. The bill determines a collection of samples, scheduling of tests and testing procedures. The bill sets forth testing policy requirements. The bill provides for disciplinary procedures. The bill provides for sensitive employees. The bill provides for preemption. The bill provides protection from liability. The bill establishes causes of action. The bill provides exceptions. The bill provides for confidentiality. The bill provides for termination of employment. The bill provides for forfeiture of certain benefits. The bill requires employers to have drug and alcohol testing policies and procedures when implementing.
