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SB1001 SUB1 Senate Bill 1001 History

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COMMITTEE SUBSTITUTE

FOR

Senate Bill No. 1001

(By Senators Kessler (Acting President) and Hall,

                   By Request of the Executive)

____________

[Originating in the Committee on Finance;

reported August 3, 2011.]

____________

 

 

A BILL to amend and reenact §11-15-3a and §11B-2-20 of the Code of West Virginia, 1931, as amended, all relating generally to the consumers sales and service tax and the Revenue Shortfall Reserve Fund; specifying reduction in consumers sales and service tax on sales, purchases and uses of food and food ingredients intended for human consumption; specifying contingent reduction of the consumers sales and service tax on sales, purchases and uses of food and food ingredients intended for human consumption based on specified levels of funding in the Revenue Shortfall Reserve Fund; specifying contingent termination of the consumers sales and service tax on sales, purchases and uses of food and food ingredients intended for human consumption based on specified levels of funding in the Revenue Shortfall Reserve Fund; specifying maximum aggregate funding amount for the Revenue Shortfall Reserve Fund; and providing for effective dates.

Be it enacted by the Legislature of West Virginia:

    That §11-15-3a and §11B-2-20 of the Code of West Virginia, 1931, as amended, be amended and reenacted, all to read as follows:

ARTICLE 15. CONSUMERS SALES AND SERVICE TAX.

§11-15-3a. Rate of tax on food and food ingredients intended for human consumption; reductions of tax beginning July 1, 2008 and January 1, 2012.

    (a) Rate of tax on food and food ingredients. -- Notwithstanding any provision of this article or article fifteen-a of this chapter to the contrary,:

    (1) Rate Reduction -- the The rate of tax on sales, purchases and uses of food and food ingredients intended for human consumption after June 30, 2008, shall be three percent of its sales price, as defined in section two, article fifteen-b of this chapter:.

    Provided, That the (2) Additional Rate Reduction –- The rate of tax on sales, purchases and uses of food and food ingredients as defined in said that section that is intended for human consumption after December 31, 2011, shall be two one and one-half percent of its sales price, as defined in said that section.

    (3) Contingent Rate Reduction –- The rate of tax on sales, purchases and uses of food and food ingredients as defined in section two article, fifteen-b of this chapter that is intended for human consumption after December 31, 2012, shall be one percent of its sales price, as defined in section two, article fifteen-b of this chapter: Provided, That the reduction in tax after December 31, 2012, authorized by this subsection shall be suspended if the balance of funds as of June 30, 2012, in the Revenue Shortfall Reserve Fund established in section twenty, article two, eleven-b of this cosde does not equal or exceed twelve and one half percent of the General Revenue Fund budgeted for the fiscal year commencing July 1, 2012. Such suspension shall terminate, and the reduction in tax rate shall proceed, beginning on January 1 of any calendar year beginning after December 31, 2013, when the balance of funds as of June 30, of the preceding fiscal year in said Revenue Shortfall Reserve Fund equals or exceeds twelve and one half percent of the General Revenue Fund budgeted for the immediately succeeding fiscal year.

    (4) Contingent Termination of Tax on Food –- The tax on sales, purchases and uses of food and food ingredients as defined in section two, article fifteen-b of this chapter that is intended for human consumption shall cease after December 31, 2013, and no such tax shall be imposed on sales, purchases and uses of food and food ingredients so defined: Provided, That the cessation of tax after December 31, 2013, authorized by this subsection shall be suspended if the balance of funds as of June 30, 2013, in the Revenue Shortfall Reserve Fund established in section twenty, article two, chapter eleven-b of this code does not equal or exceed fifteen percent of the General Revenue Fund budgeted for the fiscal year commencing July 1. 2013. Such suspension shall terminate, and the cessation of tax shall proceed, beginning on January 1 of any calendar year beginning after December 31, 2014, which the balance of funds as of June 30, of the preceding fiscal year in said Revenue Shortfall Reserve Fund equals of exceeds fifteen percent of the General Revenue Fund budgeted for the immediately succeeding fiscal year.

    (b) Calculation of tax on fractional parts of a dollar. -- The tax computation under this section shall be carried to the third decimal place and the tax rounded up to the next whole cent whenever the third decimal place is greater than four and rounded down to the lower whole cent whenever the third decimal place is four or less. The seller may elect to compute the tax due on a transaction on a per item basis or on an invoice basis provided the method used is consistently used during the reporting period.

    (c) Federal Food Stamp and Women, Infants and Children Programs, other exemptions. -- Nothing in this section shall affect affects application of the exemption from tax provided in section nine of this article for food purchased by an eligible person using food stamps, electronic benefits transfer cards or vouchers issued by or pursuant to authorization of the United States Department of Agriculture to individuals participating in the Federal Food Stamp Program, by whatever name called, or the Women, Infants and Children (WIC) program, or application of any other exemption from tax set forth in this article or article fifteen-a of this chapter.

    (d) Effective date of amendments –- Amendments to this section enacted during the first extraordinary session of the Legislature in the year 2011, shall take effect immediately upon passage.

CHAPTER 11B.  DEPARTMENT OF REVENUE.

ARTICLE 2. STATE BUDGET OFFICE.

§11B-2-20. Reduction of appropriations; powers of Governor; Revenue Shortfall Reserve Fund and permissible expenditures therefrom.

    (a) Notwithstanding any provision of this section, the Governor may reduce appropriations according to any of the methods set forth in sections twenty-one and twenty-two of this article. The Governor may, in lieu of imposing a reduction in appropriations, request an appropriation by the Legislature from the Revenue Shortfall Reserve Fund established in this section.

    (b) A Revenue Shortfall Reserve Fund is hereby continued within the state Treasury. The Revenue Shortfall Reserve Fund shall be funded as set forth in this subsection from surplus revenues, if any, in the state fund, general revenue, as the surplus revenues may accrue from time to time. Within sixty days of the end of each fiscal year, the secretary shall cause to be deposited into the Revenue Shortfall Reserve Fund the first fifty percent of all surplus revenues, if any, determined to have accrued during the fiscal year just ended: Provided, That for fiscal years ending on and after June 30, 2011, the Revenue Shortfall Reserve Fund shall be funded continuously and on a revolving basis in accordance with this subsection up to an aggregate amount not to exceed fifteen percent of the total appropriations from the State Fund, General Revenue, for the fiscal year just ended. The Revenue Shortfall Reserve Fund shall be funded continuously and on a revolving basis in accordance with this subsection up to an aggregate amount not to exceed ten percent of the total appropriations from the state fund, general revenue, for the fiscal year just ended. If at the end of any fiscal year the Revenue Shortfall Reserve Fund is funded at an amount equal to or exceeding ten percent of the state’s General Revenue Fund budget for the fiscal year just ended, then there shall be no further obligation of the secretary under the provisions of this section to apply any surplus revenues as set forth in this subsection until that time the Revenue Shortfall Reserve Fund balance is less than ten percent of the total appropriations from the state fund, general revenue: Provided, That for fiscal years ending on and after June 30, 2011, if at the end of any fiscal year the Revenue Shortfall Reserve Fund is funded at an amount equal to or exceeding fifteen percent of the State’s General Revenue Fund budget for the fiscal year just ended, then there shall be no further obligation of the Secretary under this provisions of this section to apply any surplus revenue as set forth in this subsection until such time as the Revenue Shortfall Reserve Fund balance is less than fifteen percent of the total appropriations from the State Fund, General Revenue.

    (c) Not earlier than November 1, of each calendar year, if the state’s fiscal circumstances are such as to otherwise trigger the authority of the Governor to reduce appropriations under this section or section twenty-one or section twenty-two of this article, then in that event the Governor may notify the presiding officers of both houses of the Legislature in writing of his or her intention to convene the Legislature pursuant to section nineteen, article VI of the Constitution of West Virginia for the purpose of requesting the introduction of a supplementary appropriation bill or to request a supplementary appropriation bill at the next preceding regular session of the Legislature to draw money from the surplus Revenue Shortfall Reserve Fund to meet any anticipated revenue shortfall. If the Legislature fails to enact a supplementary appropriation from the Revenue Shortfall Reserve Fund during any special legislative session called for the purposes set forth in this section or during the next preceding regular session of the Legislature, then the Governor may proceed with a reduction of appropriations pursuant to sections twenty-one and twenty-two of this article. Should any amount drawn from the Revenue Shortfall Reserve Fund pursuant to an appropriation made by the Legislature prove insufficient to address any anticipated shortfall, then the Governor may also proceed with a reduction of appropriations pursuant to sections twenty-one and twenty-two of this article.

    (d) Upon the creation of the fund, the Legislature is authorized and may make an appropriation from the Revenue Shortfall Reserve Fund for revenue shortfalls, for emergency revenue needs caused by acts of God or natural disasters or for other fiscal needs as determined solely by the Legislature.

    (e) Prior to the thirty-first day of October, in any fiscal year in which revenues are inadequate to make timely payments of the state’s obligations, the Governor may by executive order, after first notifying the presiding officers of both houses of the Legislature in writing, borrow funds from the Revenue Shortfall Reserve Fund. The amount of funds borrowed under this subsection shall not exceed one and one-half percent of the general revenue estimate for the fiscal year in which the funds are to be borrowed, or the amount the Governor determines is necessary to make timely payment of the state’s obligations, whichever is less. Any funds borrowed pursuant to this subsection shall be repaid, without interest, and redeposited to the credit of the Revenue Shortfall Reserve Fund within ninety days of their withdrawal.

    (f) There is hereby created in the state Treasury the “Revenue Shortfall Reserve Fund – Part B.” The Revenue Shortfall Reserve Fund – Part B shall consist of moneys transferred from the West Virginia Tobacco Settlement Medical Trust Fund pursuant to the provisions of section two, article eleven-a, chapter four of this code, repayments made of the loan from the West Virginia Tobacco Settlement Medical Trust Fund to the Physician’s Mutual Insurance Company pursuant to the provisions of article twenty-f, chapter thirty-three of this code, and all interest and other return earned on the moneys in the Revenue Shortfall Reserve Fund – Part B. Moneys in the Revenue Shortfall Reserve Fund – Part B may be expended solely for the purposes set forth in subsection (d) of this section, subject to the following conditions:

    (1) No moneys in the Revenue Shortfall Reserve Fund – Part B nor any interest or other return earned thereon may be expended for any purpose unless all moneys in the Revenue Shortfall Reserve Fund described in subsection (b) of this section have first been expended, except that the interest or other return earned on moneys in the Revenue Shortfall Reserve Fund – Part B may be expended as provided in subdivision (2) of this subsection; and

    (2) Notwithstanding any other provision of this section to the contrary, the Legislature may appropriate any interest and other return earned thereon that may accrue on the moneys in the Revenue Shortfall Reserve Fund – Part B after June 30, 2025, for expenditure for the purposes set forth in section three, article eleven-a, chapter four of this code; and

    (3) Any appropriation made from Revenue Shortfall Reserve Fund – Part B shall be made only in instances of revenue shortfalls or fiscal emergencies of an extraordinary nature.

    (g) Subject to the conditions upon expenditures from the Revenue Shortfall Reserve Fund – Part B prescribed in subsection (f) of this section, in appropriating moneys pursuant to the provisions of this section, the Legislature may in any fiscal year appropriate from the Revenue Shortfall Reserve Fund and the Revenue Shortfall Reserve Fund – Part B, a total amount up to, but not exceeding, ten percent of the total appropriations from the state fund, general revenue, for the fiscal year just ended.

    (h)(1) Of the moneys in the Revenue Shortfall Reserve Fund, $100 million, or such greater amount as may be certified as necessary by the director of the budget for the purposes of subsection (e) of this section, shall be made available to the West Virginia Board of Treasury Investments for management and investment of the moneys in accordance with the provisions of article six-c, chapter twelve of this code. All other moneys in the Revenue Shortfall Reserve Fund shall be made available to the West Virginia Investment Management Board for management and investment of the moneys in accordance with the provisions of article six, chapter twelve of this code. Any balance of the Revenue Shortfall Reserve Fund including accrued interest and other return earned thereon at the end of any fiscal year shall not revert to the General Fund but shall remain in the Revenue Shortfall Reserve Fund for the purposes set forth in this section.

    (2) All of the moneys in the Revenue Shortfall Reserve Fund – Part B shall be made available to the West Virginia Investment Management Board for management and investment of the moneys in accordance with the provisions of article six, chapter twelve of this code. Any balance of the Revenue Shortfall Reserve Fund – Part B, including accrued interest and other return earned thereon at the end of any fiscal year, shall not revert to the General Fund but shall remain in the Revenue Shortfall Reserve Fund – Part B for the purposes set forth in this section.

    (i) Effective date of amendments –- Amendments to this section enacted during the first extraordinary session of the Legislature in the year 2011, shall take effect immediately upon passage.

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