HOUSE JOINT RESOLUTION NO. 15



(By Delegates J. Miller, Overington, Lane,

Sobonya, Blair, Porter, Schadler and Andes)

[Introduced February 18, 2009; referred to the

Committee on Constitutional Revision then Finance.]



Proposing an amendment to the Constitution of the State of West Virginia, amending article X thereof by adding thereto a new section, designated section 1d, relating to a taxpayer's bill of rights intended to reasonably restrain the growth of government; numbering and designating such proposed amendment; and providing a summarized statement of the purpose of such proposed amendment.

Resolved by the Legislature of West Virginia, two thirds of the members elected to each house agreeing thereto:
That the question of ratification or rejection of an amendment to the Constitution of the State of West Virginia be submitted to the voters of the state at the next general election to be held in the year 2009, which proposed amendment is that article X thereof be amended by adding thereto a new section, designated section 1d, to read as follows:
ARTICLE X. TAXATION AND FINANCE.

ยง1d. The Taxpayer's Bill of Rights.
Subsection A -- General Provisions

This section takes effect January 1, 2010, or as stated. Its preferred interpretation shall reasonably restrain most of the growth of government. All provisions are self-executing and severable and supersede conflicting state Constitutional, state statutory, charter, or other state or local provisions. Other limits on district revenue, spending and debt may be weakened only by future voter approval. Individual or class action enforcement suits may be filed and shall have the highest civil priority of resolution. Successful plaintiffs may be allowed costs and reasonable attorney fees, but a district is not, unless a suit against it be ruled frivolous. Revenue collected, kept, or spent illegally since four full fiscal years before a suit is filed shall be refunded with 10% annual simple interest from the initial conduct. Subject to judicial review, districts may use any reasonable method for refunds under this section, including temporary tax credits or rate reductions. Refunds need not be proportional when prior payments are impractical to identify or return. When annual district revenue is less than annual payments on general obligation bonds, pensions, and final court judgments, subdivision (1) of subsection D and subsection G shall be suspended to provide for the deficiency.
Subsection B -- Term Definitions

Within this section:
(1) "Ballot issue" means a nonrecall petition or referred measure in an election.
(2) "District" means the state or any local government, excluding enterprises.
(3) "Emergency" excludes economic conditions, revenue shortfalls or district salary or fringe benefit increases.
(4) "Enterprise" means a government-owned business authorized to issue its own revenue bonds and receiving under 10% of annual revenue in grants from all state and local governments combined.
(5) "Fiscal year spending" means all district expenditures and reserve increases except, as to both, those for refunds made in the current or next fiscal year or those from gifts, federal funds, collections for another government, pension contributions by employees and pension fund earnings, reserve transfers or expenditures, damage awards or property sales.
(6) "Inflation" means the percentage change in the United States Bureau of Labor Statistics Consumer Price Index for South, all items, all urban consumers, or its successor index.
(7) "Local growth" for a nonschool district means a net percentage change in actual value of all real property in a district from construction of taxable real property improvements, minus destruction of similar improvements, and additions to, minus deletions from taxable real property. For a school district, it means the percentage change in its student enrollment.
Subsection C -- Election Provisions

(1) Ballot issues shall be decided in a state general election, biennial local district election, or on the first Tuesday of November of odd-numbered years. Except for petitions, bonded debt, or charter or Constitutional provisions, districts may consolidate ballot issues and voters may approve a delay of up to four years in voting on ballot issued. District actions taken during such a delay shall not extend beyond that period.
(2) At least 30 days before a ballot issue election, districts shall mail at the least cost, and as a package where districts with ballot issues overlap, a titled notice or set of notices addressed to "All Registered Voters" at each address of one or more active registered electors. The districts may coordinate the mailing required by this paragraph (2) with the distribution of ballot or election information as otherwise required in order to save mailing costs. Titles shall have this order of preference: "NOTICE OF ELECTION TO INCREASE TAXES / TO INCREASE DEBT / ON A CITIZEN PETITION / ON A REFERRED MEASURE." Except for district voter-approved additions, notices shall include only:
(i) The election date, hours, ballot title, text and local election office address and telephone number.
(ii) For proposed district tax or bonded debt increases, the estimated or actual total of district fiscal year spending for the current year and each of the past 4 years, and the overall percentage and dollar change.
(iii) For the first full fiscal year of each proposed district tax increase, district estimates of the maximum dollar amount of each increase and of district fiscal year spending without the increase.
(iv) For proposed district bonded debt, its principal amount and maximum annual and total district repayment cost, and the principal balance of total current district bonded debt and its maximum annual and remaining total district repayment cost.
(v) Two summaries, up to 500 words each, one for and one against the proposal, of written comments filed with the election officer by 45 days before the election. No summary shall mention names of persons or private groups, nor any endorsements of or resolutions against the proposal. Petition representatives following these rules shall write this summary for their petition. The election officer shall maintain and accurately summarize all other relevant written comments. The provisions of this paragraph (v) do not apply to a statewide ballot issue, which is subject to the provisions of section 1 of article V of this Constitution.
(3) Except by later voter approval, if a tax increase or fiscal year spending exceeds any estimate in paragraph (iii), subdivision (2) of this subsection for the same fiscal year, the tax increase is thereafter reduced up to 100% in proportion to the combined dollar excess, and the combined excess revenue refunded in the next fiscal year. District bonded debt shall not issue on terms that could exceed its share of its maximum repayment costs in paragraph (iv) of subdivision (2) of this subsection. Ballot titles for tax or bonded debt increases shall begin: "SHALL (DISTRICT) TAXES BE INCREASED (first, or if phased in, final, full fiscal year dollar increase) ANNUALLY....?" or "SHALL (DISTRICT) DEBT BE INCREASED (Principal amount), WITH A REPAYMENT COST OF (Maximum total district cost),...?"
Subsection D -- Required Elections

Starting in the general election to be held in 2009, districts must have voter approval in advance for:
(1) Unless subsection A or subsection F applies, any new tax, tax rate increase, mill levy above that for the prior year, valuation for assessment ratio increase for a property class, or extension of an expiring tax, or a tax policy change directly causing a net tax revenue gain to any district.
(2) Except for refinancing district bonded debt at a lower interest rate or adding new employees to existing district pension plans, creation of any multiple-fiscal year direct or indirect district debt or other financial obligation whatsoever without adequate present cash reserves pledged irrevocably and held for payments in all future fiscal years.
Subsection E -- Emergency Reserves

To use for declared emergencies only, each district other than the state shall reserve for 2009 1% or more, for 2010 2% or more, and for all later years 3% or more of its fiscal year spending excluding bonded debt service. Unused reserves apply to the next year's reserve.
Subsection F -- Emergency Taxes

This subsection grants no new taxing power. Emergency property taxes are prohibited. Emergency tax revenue is excluded for purposes of subdivision (3) of subsection C and subsection G, even if later ratified by voters. Emergency taxes shall also meet all of the following conditions:
(1) A two-thirds majority of the members of each house of the Legislature or of a local district board declares the emergency and imposes the tax by separate recorded roll call votes.
(2) Emergency tax revenue may be spent only after emergency reserves are depleted, and shall be refunded within 180 days after the emergency ends if not spent on the emergency.
(3) A tax not approved on the next election date 60 days or more after the declaration shall end with that election month.
Subsection G -- Spending Limits

(1) The maximum annual percentage change in state fiscal year spending equals inflation plus the percentage change in state population in the prior calendar year, adjusted for revenue changes approved by voters after 2009. Population shall be determined by annual federal census estimates and the number shall be adjusted every decade to match the federal census.
(2) The maximum annual percentage change in each local district's fiscal year spending equals inflation in the prior calendar year plus annual local growth, adjusted for revenue changes approved by voters after 2009, and subdivision (2) of subsection H and subsection I reductions.
(3) The maximum annual percentage change in each district's property tax revenue equals inflation in the prior calendar year plus annual local growth, adjusted for property tax revenue changes approved by voters after 2009 and subdivision (2) of subsection H and subsection I reductions.
(4) If revenue from sources not excluded from fiscal year spending exceeds these limits in dollars for that fiscal year, the excess shall be refunded in the next fiscal year unless voters approve a revenue change as an offset. Initial district bases are current fiscal year spending and 2009 property tax collected in 2009. Qualification or disqualification as an enterprise shall change district bases and future year limits. Future creation of district bonded debt shall increase, and retiring or refinancing district bonded debts shall lower, fiscal year spending and property tax revenue by the annual debt service so funded. Debt service changes, reductions, subsection A refunds and subdivision (3) of subsection C refunds, and voter-approved revenue changes are dollar amounts that are exceptions to, and not part of, any district base. Voter-approved revenue changes do not require a tax rate change.
Subsection H -- Revenue Limits

(1) New or increased transfer tax rates on real property are prohibited. No new state real property tax or local district income tax may be imposed. Neither an income tax rate increase nor a new state definition of taxable income may apply before the next tax year. Any income tax law change after July 1, 2009, shall also require all taxable net income to be taxed at one rate, excluding refund tax credits or voter-approved tax credits, with no added tax or surcharge.
(2) Each district may enact cumulative uniform exemptions and credits to reduce or end business personal property taxes.
(3) Regardless of reassessment frequency, valuation notices shall be mailed annually and may be appealed annually, with no presumption in favor of any pending valuation. Past or future sales by a lender or government shall also be considered as comparable market sales and their sales prices kept as public records. Actual value shall be stated on all property tax bills and valuation notices and, for residential real property, determined solely by the market approach to appraisal.
Subsection I -- State Mandates

Except for public education through grade twelve or as required of a local district by federal law, a local district may reduce or end its subsidy to any program delegated to it by the Legislature for administration. For current programs, the state may require 90 days' notice and that the adjustment occur in a maximum of three equal annual installments.
Subsection J -- Revenue Shortfall Reserve Fund

(1) Notwithstanding other provisions of this section, the state shall maintain within the State Treasury a revenue shortfall reserve fund, to be funded from surplus revenues, if any, in the state fund, general revenue, as the surplus revenues may accrue from time to time, and be employed as provided in this subsection. Within 60 days of the end of each fiscal year, the secretary shall cause to be deposited into the revenue shortfall reserve fund, the first 50 percent of all surplus revenues, if any, determined to have accrued during 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 five 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 five percent of the state's General Revenue Fund budget for the fiscal year just ended, then there shall be no further authorization or obligation of the secretary under the provisions of this section to apply any surplus revenues as set forth in this subsection until such time as the revenue shortfall reserve fund balance is less than five percent of the total appropriations from the state fund, general revenue for the fiscal year just ended.
(2) 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 19, article VI of the West Virginia Constitution 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.
(3) 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.
(4) Prior to October 31, 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 may 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 90 days of their withdrawal.
Subsection K - - Budget Stabilization Fund

For any state fiscal year that commences on or after July 1, 2009, if revenue from sources not excluded from total state revenues exceeds the limit on total state revenue calculated in accordance with section three, for that fiscal year, the excess shall be reserved or refunded as follows:
(1) The State Treasurer shall first transfer the excess to the emergency reserve cash fund to the extent necessary to ensure that the balance of the fund at the end of the fiscal year is an amount equal to 10 percent of the total state revenues limit for the fiscal year as required by section three of this amendment. The State Treasurer shall transfer additional excess to the budget stabilization fund which fund is hereby created, to the extent necessary to ensure that the balance of the fund at the end of the fiscal year is an amount equal to ten percent of the total state revenue limit for the fiscal year. The State Treasurer shall not transfer any moneys other than the revenues in excess of the total state revenues limit to the fund. Interest or other income earned on the budget stabilization fund shall accrue to the fund.
(2) For any state fiscal year that commences on or after July 1, 2009, if the amount of the total state revenues is less than the amount of total state revenues for the prior fiscal year, the State Treasurer shall transfer money from the budget stabilization fund to the General Fund in an amount equal to the difference between the amount of total state revenues for the prior fiscal year and the amount of total state revenues for the fiscal year. Under no other circumstances shall the State Treasurer transfer moneys from the budget stabilization fund.
(3) Any excess that remains after the State Treasurer has made the transfers required by paragraph (ii) of this section shall be reserved in the current fiscal year and refunded during the next fiscal year through temporary income or sales tax rate reductions.
(4) On or after July 1, 2009, transfers of state cash fund principal from any state cash fund to the General Fund, other than transfers from the emergency reserve fund or the budget stabilization fund to the General Fund are prohibited. On or after July 1, 2009, state cash fund appropriations that either supplant any state general fund appropriation, or that, if not made would necessitate a state general fund appropriation are prohibited. For purposes of this paragraph (v), a state cash fund appropriation that is funded by user charges or fees imposed on goods or services that do not exceed the cost of the goods or services provided shall not be deemed to be an appropriation that supplants any general fund appropriation.
 Resolved further, That in accordance with the provisions of article eleven, chapter three of the Code of West Virginia, 1931, as amended, such proposed amendment is hereby numbered "Amendment No. 1" and designated as the "The Taxpayer's Bill of Rights Amendment" and the purpose of the proposed amendment is summarized as follows: "To reasonably restrain the growth of government by limiting the amount of revenues and expenditures."


NOTE: The purpose of this resolution is to restrain the growth of government by limiting the amount of revenues and expenditures.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.