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Introduced Version Senate Bill 419 History

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Senate Bill No. 419

(By Senators Tomblin, Mr. President, and Sprouse,

By Request of the Executive)

____________

[Introduced March 1, 2005; referred to the Committee

on Finance.]

____________



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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