ENROLLED

COMMITTEE SUBSTITUTE

FOR

Senate Bill No. 357

(Senators Boley and Burdette, Mr. President,

original sponsors)

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[Passed March 10, 1994; in effect from passage.]

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AN ACT to amend and reenact section nine, article three, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended; and to amend and reenact sections two-d, two-m and two-n, article thirteen of said chapter, all relating to taxation of municipally-owned property; and making it clear that the property tax exemption for property owned by political subdivisions of other states applies only if such property is used for West Virginia public purposes and that business and occupation taxes for municipally-owned power generating facilities is applied to municipalities established under the laws of this state.

Be it enacted by the Legislature of West Virginia:
That section nine, article three, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted; and that sections two-d, two-mand two-n, article thirteen of said chapter be amended and reenacted, all to read as follows:
ARTICLE 3. ASSESSMENTS GENERALLY.

§11-3-9. Property exempt from taxation.

All property, real and personal, described in this section, and to the extent herein limited, shall be exempt from taxation, that is to say: Property belonging to the United States, other than property permitted by the United States to be taxed under state law; property belonging exclusively to the state; property belonging exclusively to any county, district, city, village or town in this state, and used wholly for public purposes: Provided, That property belonging to such subdivision prior to the effective date of amendment of this section enacted by the Legislature during its regular session in the year one thousand nine hundred ninety-four shall be exempt from taxation if such property is used in whole or in part for public purposes as otherwise provided in this code; property located in this state, belonging to any city, town, village, county or any other political subdivision of another state, and used wholly for public purposes of this state or any subdivision thereof; property used exclusively for divine worship; parsonages and the household goods and furniture pertaining thereto; mortgages, bonds and other evidence of indebtedness in the hands of bona fide owners and holders hereafter issued and sold by churches and religious societies for the purposes of securing money to be used in the erection of church buildings used exclusively for divine worship or for the purpose of paying indebtedness thereon; cemeteries; property belonging to, or held in trust for,colleges, seminaries, academies and free schools, if used for educational, literary or scientific purposes, including books, apparatus, annuities and furniture; property belonging to, or held in trust for, colleges or universities located in West Virginia, or any public or private nonprofit foundation or corporation which receives contributions exclusively for such college or university, if the property or dividends, interest, rents or royalties derived therefrom are used or devoted to educational purposes of such college or university; public and family libraries; property used for charitable purposes and not held or leased out for profit; property used for the public purposes of distributing water or natural gas or providing sewer service by a duly chartered nonprofit corporation when such property is not held, leased out or used for profit; property used for area economic development purposes by nonprofit corporations when such property is not leased out for profit; all real estate not exceeding one-half acre in extent, and the buildings thereon, and used exclusively by any college or university society as a literary hall, or as a dormitory or clubroom, if not leased or otherwise used with a view to profit; all property belonging to benevolent associations, not conducted for private profit; property belonging to any public institution for the education of the deaf, dumb or blind or any hospital not held or leased out for profit; house of refuge, lunatic or orphan asylum; homes for children or for the aged, friendless or infirm, not conducted for private profit; fire engines and implements for extinguishing fires, and property used exclusively for the safekeeping thereof, and for the meeting of fire companies; allproperty on hand to be used in the subsistence of livestock on hand at the commencement of the assessment year; household goods to the value of two hundred dollars, whether or not held or used for profit; bank deposits and money; household goods (which term is deemed for purposes of this section to mean only personal property and household goods commonly found within the house and items used to care for the house and its surrounding property) when not held or used for profit and personal effects (which term is deemed for purposes of this section to mean only articles and items of personal property commonly worn on or about the human body or carried by a person and normally thought to be associated with the person) when not held or used for profit; dead victuals laid away for family use and any other property or security exempted by any other provision of law; but no property shall be exempt from taxation which shall have been purchased or procured for the purpose of evading taxation, whether temporarily holding the same over the first day of the assessment year or otherwise: Provided, That real property which is exempt from taxation by this section shall be entered upon the assessor's books, together with the true and actual value thereof, but no taxes shall be levied upon the same or extended upon the assessor's books.
Notwithstanding any other provisions of this section, however, no language herein shall be construed to exempt from taxation any property owned by, or held in trust for, educational, literary, scientific, religious or other charitable corporations or organizations, including any public or private nonprofit foundation or corporation existing for the support of any college or university located in West Virginia, unless suchproperty, or the dividends, interest, rents or royalties derived therefrom, is used primarily and immediately for the purposes of such corporations or organizations.
The tax commissioner shall, by issuance of regulations, provide each assessor with guidelines to ensure uniform assessment practices statewide to effect the intent of this section.
ARTICLE 13. BUSINESS AND OCCUPATION TAX.

§11-13-2d. Public service or utility business.

(a) Upon any person engaging or continuing within this state in any public service or utility business, except railroad, railroad car, express, pipeline, telephone and telegraph companies, water carriers by steamboat or steamship and motor carriers, the tax imposed by section two of this article shall be equal to the gross income of the business derived from such activity or activities multiplied by the respective rates as follows:
(1) Street and interurban and electric railways, one and four-tenths percent;
(2) Water companies, four and four-tenths percent, except as to income received by municipally-owned water plants;
(3) Electric light and power companies, four percent on sales and demand charges for domestic purposes and commercial lighting and four percent on sales and demand charges for all other purposes, and except as to income received by municipally-owned plants producing or purchasing electricity and distributing same: Provided, That electric light and power companies which engage in the supplying of public service butwhich do not generate or produce in this state the electric power they supply shall be taxed on the gross income derived from sales of power which they do not generate in this state at the rate of three percent on sales and demand charges for domestic purposes and commercial lighting and three percent on sales and demand charges for all other purposes, except as to income received by plants owned by a municipality, as defined in section two, article one, chapter eight of this code: Provided, however, That the sale of electric power under this section shall be taxed at the rate of two percent on that portion of the gross proceeds derived from the sale of electric power to a plant location of a customer engaged in a manufacturing activity, if the contract demand at such plant location exceeds two hundred thousand kilowatts per hour per year, or if the usage of such plant location exceeds two hundred thousand kilowatts per hour in a year: Provided further, That the sale of electric power under this section shall be exempt from the tax imposed by this section and section two of this article if it is separately metered and consumed in an electrolytic process for the manufacture of chlorine in this state, or is separately metered and consumed in the manufacture of ferroalloy in this state, and the rate reduction herein provided to the taxpayer shall be passed on to the manufacturer of the chlorine or ferroalloy. As used in this section, the term "ferroalloy" means any of various alloys of iron and one or more other elements used as a raw material in the production of steel: And provided further, That the term does not include the final production of steel;
(4) Natural gas companies, four and twenty-nine hundredthspercent on the gross income: Provided, That the sale of natural gas under this section shall be exempt from the tax imposed by this section and section two of this article to the extent that the natural gas is separately metered and is gas from which the purchaser derives hydrogen and carbon monoxide for use in the manufacture of chemicals in this state, and the full economic benefit of the exception herein provided to the taxpayer shall be passed on to such purchaser of the natural gas: Provided, however, That there shall be no exemption for the sale of any natural gas from which the purchaser derives carbon monoxide or hydrogen for the purpose of resale;
(5) Toll bridge companies, four and twenty-nine hundredths percent; and
(6) Upon all other public service or utility business, two and eighty-six hundredths percent.
(b) The measure of this tax shall not include gross income derived from commerce between this state and other states of the United States or between this state and foreign countries. The measure of the tax under this section shall include only gross income received from the supplying of public service. The gross income of the taxpayer from any other activity shall be included in the measure of the tax imposed upon such other activity by the appropriate section or sections of this article.
(c) Beginning the first day of March, one thousand nine hundred eighty-nine, electric light and power companies shall determine their liability for payment of tax under this section and sections two-m and two-n of this article. If for taxable months beginning on or after the first day of March, one thousandnine hundred eighty-nine, liability for tax under section two-n of this article is equal to or greater than the sum of the power company's liability for payment of tax under subdivision (3), subsection (a) of this section and section two-m of this article, then the company shall pay the tax due under section two-n of this article and not the tax due under subdivision (3), subsection (a) of this section and section two-m of this article. If tax liability under section two-n of this article is less, then tax shall be paid under subdivision (3), subsection (a) of this section and section two-m of this article and the tax due under section two-n of this article shall not be paid. The provisions of subdivision (3), subsection (a) of this section shall expire and become null and void for taxable years beginning on or after the first day of January, one thousand nine hundred ninety-eight.
§11-13-2m. Business of generating or producing electric power; exception; rates.

(a) Upon every person engaging or continuing within this state in the business of generating or producing electric power for sale, profit or commercial use, either directly or through the activity of others, in whole or in part, when the sale thereof is not subject to tax under section two-d of this article, the amount of the tax to be equal to the value of the electric power, as shown by the gross proceeds derived from the sale thereof by the generator or producer of the same multiplied by a rate of four percent, except that the rate shall be two percent on that portion of the gross proceeds derived from the sale of electric power to a plant location of a customer engagedin a manufacturing activity, if the contract demand at such plant location exceeds two hundred thousand kilowatts per hour per year, or if the usage at such plant location exceeds two hundred thousand kilowatts per hour in a year.
(b) The measure of this tax shall be the value of all electric power generated or produced in this state for sale, profit or commercial use, regardless of the place of sale or the fact that transmission may be to points outside this state: Provided, That the gross income received by a municipality, as defined in section two, article one, chapter eight of this code, from plants owned by the municipality and generating or producing electricity shall not be subject to tax under this article.
(c) Beginning the first day of March, one thousand nine hundred eighty-nine, every person taxable under this section shall determine their liability for payment of tax under this section and under subdivision (3), subsection (a), section two-d of this article and section two-n of this article. If for taxable months beginning on or after the first day of March, one thousand nine hundred eighty-nine, such person's liability for payment of tax under this section and subdivision (3), subsection (a), section two-d of this article is less than the amount of such person's liability for payment of tax under section two-n of this article, then such person shall pay the tax due under section two-n and not the sum of the amount of tax due under this section and under subdivision (3), subsection (a), section two-d of this article. If the tax due under section two-n of this article is less, then the amount of tax due under this section and subdivision (3), subsection (a), section two-d of thisarticle shall be paid. The provisions of this section shall expire and become null and void for taxable years beginning on or after the first day of January, one thousand nine hundred ninety-eight.
§11-13-2n. Business of generating or producing or selling electric power; exemptions; rates.

(a) Rate of tax. -- Upon every person engaging or continuing within this state in the business of generating or producing electricity for sale, profit or commercial use, either directly or indirectly through the activity of others, in whole or in part, or in the business of selling electricity to consumers, or in both businesses, the tax imposed by section two of this article shall be equal to:
(1) Twenty-six hundredths of one cent times the kilowatt hours of net generation available for sale that was generated or produced in this state by the taxpayer during the taxable year, except that this rate shall be five hundredths of one cent times the kilowatt hours of net generation available for sale that was generated or produced in this state by the taxpayer and sold to a plant location of a customer engaged in manufacturing activity if the contract demand at such plant location exceeds two hundred thousand kilowatts per hour per year or if the usage at such plant location exceeds two hundred thousand kilowatts per hour in a year: Provided, That in order to encourage the development of industry to improve the environment of this state, the tax imposed by this section on any person generating or producing electric power and an alternative form of energy at a facility located within this state substantially from gob or other minerefuse shall be equal to five hundredths of one cent times the kilowatt hours of net generation or production available for sale. The measure of tax under this subdivision shall be equal to the total kilowatt hours of net generation available for sale that was generated or produced in this state by the taxpayer during the taxable year, regardless of the place of sale or use, or the fact that transmission may be made to points outside this state.
(2) Nineteen hundredths of one cent times the kilowatt hours of electricity sold to consumers in this state that were not generated or produced in this state by the taxpayer, except that the rate shall be five hundredths of one cent times the kilowatt hours of electricity not generated or produced in this state by the taxpayer which is sold to a plant location in this state of a customer engaged in manufacturing activity if the contract demand at such plant location exceeds two hundred thousand kilowatts per hour per year or if the usage at such plant location exceeds two hundred thousand kilowatts per hour in a year. The measure of tax under this subdivision shall be equal to the total kilowatt hours of electricity sold to consumers in this state during the taxable year, that were not generated or produced in this state by the taxpayer, to be determined by subtracting from the total kilowatt hours of electricity sold to consumers in the state the net kilowatt hours of electricity generated or produced in the state by the taxpayer during the taxable year.
The West Virginia public service commission shall, upon application of a public utility, allow an immediate pass-throughto the utility's customers in this state in the form of a rate surcharge the increase enacted by the Legislature during its third extraordinary session, one thousand nine hundred ninety, in the tax imposed by this article upon electricity generated or produced in this state and sold to consumers in this state and upon electricity not generated or produced in this state that is sold to consumers in this state.
(b) Exemptions. -- The provisions of this section shall not apply to:
(1) Kilowatt hours of electricity generated and sold, or purchased and resold, by a plant owned by a municipality, as defined in section two, article one, chapter eight of this code.
(2) Kilowatt hours of electric power that are separately metered and consumed in an electrolytic process for the manufacture of chlorine.
(3) Kilowatt hours of electric power that are separately metered and consumed in the manufacture of ferroalloy. As used in this subdivision, the term "ferroalloy" means any of the various alloys of iron and one or more other elements used as a raw material in the production of steel but shall not include electric power used in the production of steel.
(4) The full economic benefits provided to the taxpayer by subdivisions (2) and (3) of this subsection shall be passed on to the manufacturer of the chlorine or ferroalloy.
(c) Credit. -- Any person taxable under subdivision (2), subsection (a) of this section shall be allowed a credit against the amount of tax due under that subdivision for any electric power generation taxes paid by the taxpayer with respect to suchelectric power to the state in which such power was generated or produced. The amount of credit allowed shall not exceed the tax liability arising under subdivision (2), subsection (a) of this section with respect to the sale of such power.
(d) Transition rule. -- Beginning the first day of March, one thousand nine hundred eighty-nine, electric light and power companies shall determine their liability for payment of tax under this section and sections two-d and two-m of this article. If for taxable months beginning on or after the first day of March, one thousand nine hundred eighty-nine, liability for tax under this section is equal to or greater than the sum of the power company's liability for payment of tax under subdivision (3), subsection (a), section two-d and section two-m of this article, then the company shall pay the tax due under this section and not the tax due under subdivision (3), subsection (a), section two-d and section two-m of this article. If tax liability under this section is less, then tax shall be paid under subdivision (3), subsection (a), section two-d and section two-m of this article and the tax due under this section shall not be paid. The provisions of this subsection shall expire and become null and void for taxable years beginning on or after the first day of January, one thousand nine hundred ninety-eight.
(e) Effective date. -- The amendments to this section made in the year one thousand nine hundred ninety shall take effect on the first day of October, one thousand nine hundred ninety: Provided, That as to calendar months ending before such date, the tax rates specified in this section, as then in effect, shall be fully and completely preserved.