HOUSE JOINT RESOLUTION NO.20
(By Delegates Overington, Lane, Armstead,
Blair, Porter, Schadler, Louisos, Evans, Eldridge and Wakim)
[Introduced March 25, 2005; referred to the
Committee on Constitutional Revision then the Judiciary.]
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 two thousand six, 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.
§1D. The Taxpayer's Bill of Rights.
Subsection A -- General Provisions
This section takes effect January 1, 2007, 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 four 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 (7.5) 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 2006, 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 2006 1% or more, for 2007 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 sixty 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 2006. 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 2006, 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 2006 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 2006 property tax collected in
2006. 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, 2006, 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 12 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 ninety
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 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.
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 the first day of November 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 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
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 ninety days of their withdrawal.
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."
Subsection K - - Budget Stabilization Fund
For any state fiscal year that commences on or after
July
1, 2006
, if revenue from sources not excluded from total state
revenues exceeds the limit on total state revenue calculated in
accordance with section 3, 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 ten percent of the total state revenues limit for the
fiscal year as required by section 3 of this act. 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, 2006, 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, 2006, 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, 2006, 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.
NOTE: The purpose of this resolution is to restrain the growth
of government by limiting the amount of revenues and expenditures.
This section is new; therefore, strike-throughs and
underscoring have been omitted.