Senate Bill No. 419
(By Senators Tomblin, Mr. President, and Sprouse,
By Request of the Executive)
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[Introduced March 1, 2005; referred to the Committee
on Finance.]
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A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto nine new sections, designated §7-23-1, §7-23-2,
§7-23-3, §7-23-4, §7-23-5, §7-23-6, §7-23-7, §7-23-8 and
§7-23-9, all relating generally to establishing a pilot
program that allows certain counties and municipalities
certain additional taxing authority and provides all counties,
municipalities and county boards of education a pilot waiver
program pursuant to which allowable relief may be obtained
from certain policies, rules, regulations and statutory
provisions; and providing for pilot program to end on
specified date.
Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto nine new sections, designated §7-23-1, §7-23-2,
§7-23-3, §7-23-4, §7-23-5, §7-23-6, §7-23-7, §7-23-8 and §7-23-9, all to read as follows:
ARTICLE 23. PILOT PROGRAM LOCAL GOVERNMENT FLEXIBILITY ACT.
§7-23-1. Short title.
This article may be cited as the "Pilot Program Local
Government Flexibility Act of 2005." No inference, implication or
presumption of legislative construction shall be drawn or made by
reason of the location or grouping of any particular section,
provision or portion of this article. No legal effect shall be
given to any descriptive matter or heading relating to any part,
section, subdivision or paragraph of this article.
§7-23-2. Legislative intent and findings.
(a)
Legislative intent. -- It is the intent of the Legislature
in enacting this article to provide a framework within which new
ideas can be explored to see if they can or should be implemented
on a statewide basis.
(b)
Legislative findings. -- The Legislature finds and
declares that:
(1) County commissions and municipalities have no inherent
authority to levy taxes and have only that authority expressly
granted to them by the Legislature; and
(2) County commissions, municipalities and county boards of
education today face numerous challenges managing their budgets and
other resources and delivering services required by federal or
state law or demanded by their constituents.
(3) In enacting this pilot program, the Legislature is
cognizant of certain inequities faced by counties and
municipalities in this state that are located in close proximity to
out-of-state municipalities that may impose different tax burdens
than those imposed by the laws of this state. These tax
disparities may operate to provide a disincentive to persons who
would otherwise cross the border into West Virginia to settle,
work, vacation or open a business.
(4) The purpose of this pilot program is twofold. First, the
flexibility offered by this pilot program may enable government
units in this state to test various taxes and thereby induce
persons located in border areas outside West Virginia to come to
this state to live, work, vacation or open a business. Second,
this program is designed to act as a testing mechanism for the tax
programs contained herein in anticipation that the Legislature may
in the future decide to apply some or all of these programs to all
counties and municipalities in this state. To achieve these goals,
this article establishes a pilot program that provides certain
government units in this state with additional taxation flexibility
during a twenty-four month period ending the thirtieth day of June,
two thousand seven.
(5) Primary to this pilot program is the division of the
counties in this state into seven regions based upon their
geography. Counties that share a border with the states of Kentucky, Maryland, Ohio, Pennsylvania or Virginia are divided into
six border regions while the interior counties are placed into a
seventh region. This pilot program differentiates between counties
based on their geography because: (A) The Legislature finds that
it is prudent to test and analyze the results of the tax package
contained herein on a limited scale before allowing all counties
and municipalities to impose these taxes, in order to determine if
the program would be successful on a statewide level; and (B) the
Legislature finds that counties located along the borders of this
state will experience a more observable change as a result of the
tax package contained herein than counties located on the interior
of this state because of the greater likelihood of attracting new
persons and businesses from out-of-state areas that are adjacent to
this state, thereby allowing the Legislature to get a more complete
and undiluted picture of the success or weaknesses of the pilot
program during its two-year term.
(6) Local units of government are sometimes restricted by
policies, rules, regulations and statutory provisions that prevent
them from carrying out their duties and responsibilities in a cost
effective, efficient and timely manner. To address this concern,
this pilot program includes a waiver program whereby county
commissions, municipalities and county boards of education may
apply to the Governor for waiver of a specific policy, rule,
regulation or statutory provision.
§7-23-3. Pilot program.
(a)
Description. -- Additional taxing authority provided in
this article shall be granted to seven counties and the
municipalities located in those seven counties for a period of
twenty-four months, which period shall begin the first day of July,
two thousand five, and end the thirtieth day of June, two thousand
seven, unless the Legislature extends the program, enacts
legislation giving additional taxing authority to all counties and
municipalities or sooner terminates the pilot program.
(b)
Application for pilot county designation. -- Counties
desiring to be designated a pilot county shall make written
application to the Secretary of Commerce by the first day of May,
two thousand five. The application shall include such information
as the Secretary of Commerce may require.
(c)
Certification of pilot counties. -- The Secretary of
Commerce may certify no more than six border counties and no more
than one interior county to participate in the pilot programs
established in sections six and seven of this article. These
counties shall each come from one of the regions defined in section
three of this article. No region may have more than one designated
pilot county.
(d)
Criteria for selecting pilot counties. -- If more than one
county has applied to be designated a pilot county in each region,
the designation for that region shall first be offered to the applicant with the greatest population as reported in the latest
United States decennial census of population. If within seven days
after being offered the designation, the president of that county
commission does not accept the offer, the Secretary of Commerce
shall offer the designation to the applicant with the second
highest population in that region. If the president of the county
commission of that county does not accept the offer, the offer
shall be made to the applicant with the third highest population in
that region. The process shall continue until it is accepted or
all applicants from that region have declined the offer by not
timely accepting it.
§7-23-4. Definitions.
For purposes of this article the following words and terms
have the meanings ascribed to them in this section unless the
context in which they are used clearly requires a different
meaning:
(1) "Border county" means a county of this state that shares
a common border with the state of Kentucky, Maryland, Ohio,
Pennsylvania, or Virginia;
(2) "Designated county" means, and it is limited to one of the
six border counties designated as a pilot county pursuant to this
article and the one interior county designated as a pilot county
pursuant to this article;
(3) "Interior county" means a county of this state that does not share a common border with the state of Kentucky, Maryland,
Ohio, Pennsylvania, or Virginia;
(4) "Pilot county" means one of the seven counties designated
as a pilot county pursuant to this article;
(5) "Region" means, depending on the context in which the term
is used, the region one border counties, the region two border
counties, the region three border counties, the region four border
counties, the region five border counties, the region six border
counties or the region seven interior counties;
(6) "Region one border counties" means and includes
Greenbrier, McDowell, Mercer, Monroe and Pocahontas counties;
(7) "Region two border counties" means and includes Cabell,
Wayne and Mingo counties;
(8) "Region three border counties" means and includes Jackson,
Mason, Pleasants and Wood counties;
(9) "Region four border counties" means and includes Brooke,
Hancock, Marshall, Ohio, Tyler and Wetzel counties;
(10) "Region five border counties" means and includes
Monongalia, Preston and Tucker counties;
(11) "Region six border counties" means and includes Berkeley,
Grant, Hampshire, Hardy, Jefferson, Mineral, Morgan and Pendleton
counties;
(12) "Region seven interior counties" include all counties
that are not border counties;
(13) "Secretary of Commerce" means the Secretary of the
Department of Commerce established in section two, article one,
chapter five-f of this code, as amended and reenacted in the year
two thousand five; and
(14) "This code" means the Code of West Virginia of one
thousand nine hundred thirty-one, as amended.
§7-23-5. Pilot authorization to impose additional hotel occupancy
tax; rate of tax; use of proceeds.
(a) A designated pilot county, or a municipality within a
designated pilot county, that imposes the tax authorized by section
two, article eighteen of this chapter may impose an additional
hotel occupancy tax, subject to the following rules:
(1) The rate of the additional hotel occupancy tax may not
exceed three percent;
(2) The measure of the additional hotel occupancy tax shall be
the consideration paid by the occupant or another person for the
use or occupancy of a hotel room:
Provided, That the measure of
the tax shall not include the amount of taxes imposed on the
transaction pursuant to section two, article eighteen of this
chapter, or under article fifteen, chapter eleven of this code, or
charges for meals, valet service, room service, telephone service
or other charges or consideration not paid for use or occupancy of
a hotel room;
(3) The additional hotel occupancy tax must be imposed by order of the county commission, or ordinance of the municipality,
as a separate tax;
(4) The additional hotel occupancy tax shall not apply to
consideration paid for any days of hotel occupancy prior to the
first day of July, two thousand five, or such later date specified
in the order of the county commission or ordinance of the
municipality imposing the additional hotel occupancy tax;
(5) The additional hotel occupancy tax, or a change in rate of
a hotel occupancy tax, shall first apply to occupancy of a hotel
room on the first day of a calendar month that begins thirty days
after the ordinance is adopted by the governing body of the
municipality, or such later first day of a calendar month specified
in the order or ordinance imposing the tax or changing the rate of
tax; and
(6) The additional hotel occupancy tax shall be collected and
remitted at the same time, in the same manner and from the same
persons, as the tax imposed pursuant to section two, article
eighteen of this chapter.
(b) Notwithstanding any provision of article eighteen of this
chapter to the contrary, the net proceeds of the additional tax
collected and remitted to the taxing authority pursuant to this
section may, after appropriation by the governing body, be expended
for any purpose for which general revenues may be spent by the
county or municipality imposing the additional tax authorized by this section.
(c)
Expiration of tax. -- The additional taxes authorized by
this section expire at the end of the day on the thirtieth day of
June, two thousand seven, except as otherwise provided in this
article. Expiration of the tax does not affect the liability of
any person who owes the tax for a hotel occupancy during the pilot
period that is paid after the thirtieth day of June, two thousand
seven. Additionally, expiration of the tax does not relieve the
vendor from collecting the tax on days a hotel room was occupied
before the first day of July, two thousand seven, or from paying
over the amount of tax collected for the occupancy, or that should
have been collected for the occupancy, to the county or
municipality that imposed the tax.
§7-23-6. Authorization to pilot counties to impose temporary
occupational privilege tax.
(a)
Authority to impose occupational privilege tax. -- Each
designated pilot county has the plenary power and authority to
impose, by order, a temporary occupational privilege tax on taxable
employees working within the corporate limits of the county. A
county occupational tax imposed pursuant to this section shall meet
the following requirements:
(1) The tax shall be imposed at a rate of two percent or less;
(2) The tax shall be imposed at a uniform rate;
(3) The tax rate shall be applied only to salaries, wages, commissions and other earned income of taxable employees that is
subject to social security taxes for the year, without regard to
the social security base cap, to the extent that income is
attributable to an employee's services rendered within the
corporate limits of the county imposing the tax. When an
employee's duty station is located within the corporate limits of
the county imposing the tax, it is presumed that the salaries,
wages and other earned income paid by the employer to the employee
is for employee services rendered within the corporate limits of
the county; and
(4) The tax may not be applied to other forms of income
including, but not limited to, intangible income and net profit
from a business.
(b)
Allocation of collected tax. -- Within thirty days after
each periodic collection of a tax imposed pursuant to this section,
the county administrator, or other person designated by the county
commission, shall allocate the amount collected among the
municipalities in the county and the county commission based upon
where residents of the county reside as reported in the latest
United States decennial census of population, without regard to the
origin of the tax collected:
Provided, That in counties where one
or more municipalities in the county have a population greater than
twenty-five thousand people, the population of each municipality
that has a population in excess of twenty-five thousand people shall be increased by fifty percent for purposes of making this
allocation.
(c)
Expenditure of tax. -- The share of tax paid over to each
municipality and the share retained by the county may, after
appropriation by the governing body, be expended for any lawful
purpose for which general revenue of the governing body may be
expended.
(d)
Withholding and remittance of tax. -- Each employer with
a taxable employee working within the corporate limits of the
county shall, during each pay period, withhold from the taxable
employee's salary the amount of the tax as computed by applying the
appropriate tax rate to the taxable employee's salary, wages and
other earned income payable to the employee during that pay period
and remit the withholdings to the appropriate taxing authority.
(e)
Expiration of tax. -- The tax of a county that imposes an
occupational privilege tax pursuant to this section expires at the
end of the day on the thirtieth day of June, two thousand seven,
except as otherwise provided in this article. Expiration of the
tax does not affect the liability of any employee to pay tax on
salary, wages and other employee compensation earned or accrued
after the thirtieth day of June, two thousand five, but before the
first day of July, two thousand seven, and expiration does not
affect the liability of any employer to pay over to the county
imposing the tax, tax on salaries, wages and other employee compensation earned or accrued after the thirtieth day of June, two
thousand five, but before the first day of July, two thousand
seven.
(f)
Election by county commission. -- The county commission of
a pilot county shall, within thirty days after being designated a
pilot county, decide whether it will impose an occupational
privilege tax pursuant to this section. If the county commission
decides to not impose an occupational tax, or fails to decide the
question within thirty days after the county is designated a pilot
county, the municipalities in the county may then decide to impose
an occupational privilege tax as provided in section seven of this
article. If a municipality within the county imposes an
occupational privilege tax, the county commission may not impose
such a tax.
§7-23-7. Authorization for municipalities in designated pilot
counties that do not impose occupational privilege
tax to impose the tax.
(a)
Authority to impose occupational privilege tax. -- When
the county commission of a designated pilot county does not elect
to impose a county occupational privilege tax, each municipality
located within the designated pilot county has the plenary power
and authority to impose, by ordinance, a temporary occupational
privilege tax on taxable employees working within the corporate
limits of the municipality. A municipal occupational tax imposed pursuant to this section shall meet the following requirements:
(1) The tax shall be imposed at a rate of two percent or less;
(2) The tax shall be imposed at a uniform rate;
(3) The tax rate shall be applied only to salaries, wages,
commissions and other earned income of taxable employees that is
subject to social security taxes for the year , without regard to
the social security base cap, to the extent that income is
attributable to an employee's services rendered within the
corporate limits of the municipality imposing the tax. When an
employee's duty station is located within the corporate limits of
the municipality imposing the tax, it is presumed that the
salaries, wages and other earned income paid by the employer to the
employee is for employee services rendered within the corporate
limits of the municipality; and
(4) The tax may not be applied to other forms of income
including, but not limited to, intangible income and net profit
from a business.
(b)
Withholding and remittance of tax. -- Each employer with
a taxable employee working within the corporate limits of the
municipality shall, during each pay period, withhold from the
taxable employee's salary the amount of the tax as computed by
applying the appropriate tax rate to the taxable employee's salary,
wages and other earned income payable to the employee during that
pay period and remit the withholdings to the appropriate taxing authority.
(c)
Expiration of tax. -- The tax of a municipality that
imposes an occupational privilege tax pursuant to this section
expires at the end of the day on the thirtieth day of June, two
thousand seven, except as otherwise provided in this article.
Expiration of the tax does not affect the liability of any employee
to pay tax on salary, wages and other employee compensation earned
or accrued after the thirtieth day of June, two thousand five, but
before the first day of July, two thousand seven, and expiration
does not affect the liability of any employer to pay over to the
county imposing the tax, tax on salaries, wages and other employee
compensation earned or accrued after the thirtieth day of June, two
thousand five, but before the first day of July, two thousand
seven.
§7-23-8. Other flexibility for county commissions, municipalities
and county boards of education.
(a)
Application for waiver of policies, rules, regulations and
statutes. --
(1) The purpose of this section is to provide a procedure by
which county commissions, municipalities and county boards of
education may apply for waiver of a policy, rule, regulation or
statutory provision they believe is preventing them from carrying
out their duties and responsibilities in the most cost efficient,
effective and timely manner.
(2) The chief executive officer of a county commission,
municipality or county board of education may file with the
Secretary of Commerce an application for waiver of a policy, rule,
regulation or statutory provision they believe is preventing them
from carrying out their duties in the most cost efficient,
effective and timely manner.
(3) The application shall be made in writing and be in the
form prescribed by the Secretary of Commerce for that purpose. The
application shall, at a minimum, require the applicant to provide
the official citation of the policy, rule, regulation or statutory
provision for which waiver is sought. If there is no official
citation, a copy of the policy or letter from which a waiver is
sought shall be attached to the application. The applicant shall
describe in sufficient detail the problem created by the policy,
rule, regulation or statutory provision for which waiver is sought
and describe in sufficient detail how the waiver will allow the
applicant to carry out the applicant's duties in the most cost
efficient, effective and timely manner.
(b)
Review by Secretary of Commerce. -- Upon receipt of an
application as provided in subsection (a) of this section, the
Secretary of Commerce may conduct an investigation or inquiry to
gather any additional information that may be necessary to evaluate
the application. The Secretary of Commerce shall periodically
submit to the Governor a written report summarizing the applications and any recommendations for applications the Secretary
of Commerce determines in his or her discretion to forward to the
Governor for disposition in accordance with this section. The
Secretary of Commerce is granted no authority under this section to
issue any waiver.
(c)
Review by Governor. -- Upon receipt of the summary and
recommendations of the Secretary of Commerce, the Governor may take
any action he or she deems to be appropriate under the
circumstances that is within the authority granted to the Governor
by the laws of this state. Whenever the Governor believes a
statutory change is needed, the Governor shall bring the matter to
the attention of the Speaker of the House of Delegates and the
President of the Senate.
§7-23-9. Termination of pilot program; report to Legislature.
(a)
Expiration date. -- The pilot program authorized by this
article expires and has no force or effect beginning the first day
of July, two thousand seven, except as otherwise provided in this
article, unless the program is ended earlier by a subsequent act of
the Legislature.
(b)
Report to Legislature. -- No later than the twentieth day
of the legislative session in the year two thousand seven, the
Governor shall submit to the Legislature the Governor's
recommendations on whether the pilot program set forth in this
article should be allowed to end or whether one or more aspects of the pilot program should be made permanent on a statewide or other
basis, either in their then current form or after amendment by the
Legislature.
NOTE: The purpose of this article is to establish a pilot
program that provides certain units of government with additional
flexibility during a twenty-four month period ending June 30, 2007.
The four aspects of this program include dividing the counties that
share a border with the states of Kentucky, Maryland, Ohio,
Pennsylvania or Virginia into six border regions and including all
of the interior counties in a seventh region.
A designated pilot county in each region would be authorized
to impose an additional hotel occupancy tax on hotel occupancy
after June 30, 2005, but before July 1, 2007, the proceeds of which
may be used for any lawful purpose. A designated pilot county may
also impose an occupational privilege tax measured by employee
compensation paid to persons employed within the county. The
amount of tax collected by the county is shared with municipalities
located in the county.
Municipalities located within a county designated as a pilot
county may also impose an additional hotel occupancy tax. If the
county commission of a designated pilot county elects to not impose
a county occupational privilege tax, then each municipality in the
that county may impose an occupational privilege tax.
To address concerns that local units of government are
hamstrung by policies, rules, regulations and statutory provisions
that prevent them from carrying out their duties and
responsibilities in a cost effective, efficient and timely manner,
this pilot program includes a waiver program whereby county
commissions, municipalities and county boards of education may
apply to the Governor for waiver of the policy, rule, regulation or
statutory provision.
§§§7-23-1, 7-23-2, 7-23-3, 7-23-4, 7-23-5, 7-23-6, 7-23-7,
7-23-8 and 7-23-9, are new; therefore, strike-throughs and
underscoring have been omitted.
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