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Senate Begins Second Session of 84th Legislature

Senate Floor Session

Madison Perdue

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January 8, 2020

Senate Begins Second Session of 84th Legislature

The Senate met at noon to begin the Second Session of the 84th Legislature. After adopting ceremonial resolutions to begin the session, Resolution 3 was adopted, which established the Select Committee for Children and Families. This committee will cover issues such as foster care and adoption, as well as other issues facing children and families in West Virginia.

Resolution 4 was also adopted, which would extend the time permitted for a senator to sponsor a bill until the final draft is presented to the clerk. It also allows senators to be removed from sponsorship until the bill is enrolled.

During session, Bills 1-149 were introduced to be considered in the 2020 legislative session and referred to the appropriate committees.

The Senate is now in recess until 6:45 PM this evening.

The Joint Judiciary Committee will meet tomorrow at 10:00 AM in room 208W.

Senate Finance will meet at tomorrow at 9:30 AM and again at 3:00 PM in room 451M.

House Convenes for the 2020 Legislative Session

House Floor Session

Juliet Thomas

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January 8, 2020

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House Convenes for the 2020 Legislative Session

This afternoon, the House has convened for the 2nd Regular Session of the 84th West Virginia Legislature. The House started off by adopting procedural resolutions.

HR-1 has been adopted, authorizing the employment of employees for this session. HR-2 has been adopted, authorizing printing and distribution of Acts of the Legislature and the Journals of the House. HR-3 has been referred to rules, amending the Rules of the House of Delegates.

House bills have been introduced for consideration, including HB2002 which relates to the Education Savings Account Act. Both carryover bills and new bills have been introduced.
The House is in recess until 6:50 p.m. today. The Governor will be delivering the State of the State address tonight at 7 p.m.

Economic Outlook: W.Va. Experiencing Concentrated Growth But Issues Remain

Around the Capitol

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January 8, 2020

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Economic Outlook: W.Va. Experiencing Concentrated Growth But Issues Remain

West Virginia’s economy has experienced some growth in the last few years but that growth has been concentrated in a few areas and there are other continued challenges the state faces, according to an economic forecast presented to legislators Monday.

John Deskins, director of the Bureau of Business and Economic Research, presented the West Virginia Economic Outlook 2020-2024 to legislators in the House Chamber Monday morning. Deskins said there are reasons to be positive in looking at West Virginia’s economy. However, he told legislators not to lose their sense of urgency.

“Growth is underway and it is continuing but I don’t want to be too excited because that improvement isn’t happening everywhere. It is concentrated in a couple of dimensions. We need to focus on getting that growth to broaden in several ways across our economy,” Deskins said.

“Despite that growth, we still have long-running challenges,” he later added.

Some of these challenges Deskins outlined included low workforce participation, the need for a thriving workforce, volatility in the economy, and the fact that growth is concentrated in a few counties.

West Virginia lost 26,000 jobs during the recession but has slowly improved since 2016. Deskins explained West Virginia has added 10,500 jobs since that time. However, most of that growth has been concentrated in seven counties.

“I’m happy we added 10,000 jobs but at the same time, we need to maintain that sense of urgency in working hard to make sure growth broadens out to the other counties in the state,” Deskins said.

Deskins highlighted the energy sector, saying coal production declined from 158 million tons to an expected 90 million ton range last year. He said he expected coal production to be stable in the short-term but decline in the longterm. Most of the loss of coal production came from the southern coal fields.

Natural gas, meanwhile, has grown at a healthy pace. Although there is no finalized data from 2019, Deskins estimated about 25% growth last year. The biggest issue facing natural gas, he said is infrastructure.

Deskins also emphasized the need to diversify West Virginia’s economy, primarily through entrepreneurship to find the right industrial mix that works in West Virginia.

West Virginia still lags the nation in income growth and labor force participation. Currently, West Virginians earn $75 for every $100 the average American earns, Deskins explained. The area of personal income growth that is growing more rapidly is transfer payments—such as Social Security, disability, or unemployment – while wage and salary income and small business income are growing at a much slower rate.

The state’s unemployment rate is higher than the national average—at 5%. However, Deskins said the unemployment rate does not capture West Virginia’s main issue. Labor force participation — which is a measure of the economy’s active workforce calculated by the sum of workers employed or actively seeking employment is divided by the working-age population — is still last in the nation at 54%. This is 9 percentage points below the nation. That number improved slightly to 55% to 2019 but is still last in the nation. A lagging labor force participation has been an issue since the 1940s, Deskins explained.

Part of the reason for a lagging workforce participation rate is the fact that West Virginia has an older population. However, numbers are still low for prime working-age adults. He said some of the reasons for this low figure is a need for education and training, the drug epidemic and West Virginia’s overall health. West Virginia has a higher mortality rate than the rest of the nation.

“This is one of the most important statistics to characterize West Virginia’s economy,” Deskins said. “We will never achieve economic prosperity if we have 9% of the adult population sitting on the sidelines, compared to the national figure.”

Geographically, growth has been concentrated in a few regions. Deskins said the eastern panhandle and the north central part of the state have been experiencing growth. The economy in the metro valley has been flat, and the southern part of the state has grown slightly but has not recovered from the decline experienced from the recession.

“We need to think positively because of the growth we have seen. The recession is over and we are moving in the right direction. However, realistically, we will continue to see challenges and a small scope of growth,” Deskins said.

Flood Committee Endorses Three Bills for Regular Session

Interim Report

Madison Perdue

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January 7, 2020

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Flood Committee Endorses Three Bills for Regular Session

During Tuesday’s Joint Committee meeting on flooding, there was discussion on the draft legislation that would allow for more flexible free-hiring practices for at-will workers in Emergency Management. The purpose of the bill is to instigate more effective methods of hiring and firing workers and reducing the time required for obtaining or removing employees.

Senator Baldwin of Greenbrier raised concerns regarding the potential removal of workers under this legislation, questioning what was to become of individuals under civil service protections and whether they would be removed, and if the incentive is to reduce the number of workers altogether.

Homeland Security and Emergency Management officers assured Baldwin that the purpose of the legislation is not to lay off workers but to reduce the time and resources spent on hiring and firing, and to tailor teams according to specific needs. This would involve potentially redirecting workers to other natural disasters. The legislation was adopted for the 2020 session with no new amendments.

The Joint Committee also approved two other bills to help facilitate response to natural disasters.

WVMA President Presents Tax Repeal

Interim Report

Juliet Thomas

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January 7, 2020

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The West Virginia Manufacturer’s Association gave a presentation to the Joint Economic Development Committee regarding the potential elimination of the business inventory tax.
Rebecca McPhail, president of the association, told the committee how eliminating of the tax on manufacturing machinery and equipment would create a more competitive economy for West Virginia.
She said the proposed tax repeal would create more manufacturing jobs in the state, and the industry is already a big part of the state’s economy. McPhail projects that the tax repeal would bring more people into the state and help the retention of state population by attracting manufacturers.
“We are at a critical time in developing the long-term future economy of West Virginia,” McPhail said.
West Virginia is one of two states with the business inventory tax. McPhail argued the tax makes West Virginia one of the worst states for capital intensive manufacturing.
The association proposed phasing the tax out over a number of years to be determined by the Legislature. A draft resolution presented Monday to the Joint Standing Committee on Finance proposed phasing out the tax over four years at a cost of $100 million which the state would have to backfill for counties.
There was concern from several legislators regarding the logistics of this bill. Delegate John Doyle, D- Jefferson, questioned how the hole in the budget from the tax repeal would be substituted without shifting the burden to other individuals and smaller businesses.
McPhail cited natural revenue growth, saying phasing out the tax over a few years would allow growth to offset the difference in the budget without shifting to other resources.
Doyle believes that replacement money needs to be found before relying on natural revenue growth to cover the difference.
This tax repeal has been proposed to legislators in previous years. The proposed resolution would be a constitutional amendment, requiring two-thirds approval from both chambers before going to voters in the next election to approve the measure.

Interim Government Organization Committee Adopts Draft Legislation

Interim Report

Juliet Thomas

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January 6, 2020

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Interim Government Organization Committee Adopts Draft Legislation

During Monday’s Joint Government Organization Committee meeting, there was some concern regarding the draft legislation that would initiate moving the contractors licensing board into Chapter 30.

This legislation would move contractors into their own separate board, separating contractors from the Division of Labor for inspection purposes.

The purpose of this legislation is to prevent multiple inspectors on each job site. Additionally, the bill would cut the cost of licensing for contractors. There was no figure to show the difference in licensing price with the proposed legislation.

Delegate Mike Caputo, D-Marion, questioned the purpose of the bill. He was concerned that by taking away inspectors from the Division of Labor and creating a new entity, qualified people would lose their jobs. As of now, there are only 17 inspectors working for the DOL.

Another cause of concern was the fact that the DOL Commissioner Mitchell E. Woodrum was not included in the drafting of the bill. Caputo believes that his expertise is vital in the success of this bill.

Several delegates voted down the bill, but it wasn’t enough for it to fail. Despite the concerns expressed, this legislation was adopted to be introduced for the 2020 session with no new amendments.

The Interim Government Organization Committee approved six other draft bills to be introduced in the 2020 legislative session.

Revenue Secretary Presents December Collections

Interim Report

Andrea Lannom

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January 6, 2020

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Revenue Secretary Presents December Collections

Total collections for December came in $6.9 million above estimate with personal income tax and sales tax up from last year.

However, collections for the 2020 fiscal year are still down about $33 million below estimates with a big shortfall in severance tax collections.

Revenue Secretary Dave Hardy presented December numbers to the Joint Standing Committee on Finance in its Monday morning meeting.

Cumulative personal income tax collections were about $33.6 million below estimate from last year and cumulative consumer sales tax collections were about $2.8 million below estimate from last year. However, cumulative collections for personal income tax were 1% ahead of last year and cumulative consumer sales tax was 1.6% above last year

“Consumer sales and personal income tax are in good shape,” Hardy said.

Last month, Hardy told the committee that numbers were improving, following a rough November. At that time, he told the committee there were no concrete plans for mid-year budget cuts. Personal income tax and sales tax were negatively affected in November due to timing but saw some growth starting in December.

December’s total collections came in at $428.2 million, which was 1.2% above last year, and $6.9 million above estimate.

Collections from July to December were $2.2 billion but about $33 million below estimates. Hardy said most of the shortfall was due to severance tax, which Hardy said was down 34.9% because of declines in natural gas prices and coal exports, along with pipeline construction shut down from federal court orders.

“Our report card is good but if we had severance tax where it could be, it would be an excellent report card,” Hardy said.

Corporate net income tax collections were about $2.6 million below estimates for December but relatively flat compared to last year.

Deputy Revenue Secretary Mark Muchow said tobacco tax collections benefited slightly from the carryover effect from November to December and were 1.9% ahead of last year. However, cumulative collections were 4% below last year. Muchow said the decline is estimated to continue because of people switching to other products such as e-cigarettes and also because of signed federal legislation, which increased the purchasing age from 18 to 21 years old.

The committee also heard a draft resolution regarding the business inventory tax. The proposed legislation would be a constitutional amendment, meaning voters would have to approve it. The resolution seeks to eliminate the tax on manufacturing inventory equipment. It would prohibit companies from reclassifying property not previously classified as manufacturing inventory just to receive the tax benefit.

PEIA Director Updates Legislators on Finances

Interim Report

Andrea Lannom

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December 17, 2019

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PEIA Director Updates Legislators on Finances

The director of the West Virginia Public Employees Insurance Agency told legislators there are no plans for premium increases or benefit cuts in the next plan year.

However, some legislators expressed concerns in Monday afternoon’s meeting of the Select Committee on PEIA Seniors and Long Term Care about the long term use of funds from PEIA’s Rainy Day Fund.

Director Ted Cheatham gave committee members an overview of PEIA’s finances and progress with implementing prior-authorization processes under House Bill 2531. He told committee members there are no planned premium increases for state employees or retirees for the next plan year and that money transferred from PEIA’s Rainy Day Fund will not go toward the 80/20 calculation.

Delegate John Kelly, R-Wood, said he was concerned about depleting PEIA’s Rainy Day Fund.

“If we don’t increase rates, we will continue to deplete what we have in the Rainy Day Fund and be back to where we started from. I don’t want to go in that direction,” Kelly said.

“I think we’re headed in the wrong direction,” Kelly later added.

Delegate Randy Swartzmiller, D-Hancock, also expressed concerns about depleting the balance, asking what would happen if money in the Rainy Day Fund ran out.

Cheatham said in that situation, he would have to come back before the Legislature to request more funding. He said PEIA needs about 50 million in new dollars every year to keep the program sustainable.

Cheatham went over PEIA enrollment and proposed changes. He explained PEIA’s enrollment has been relatively flat for the last five to six years. However, the number of retirees has been increasing, with an average of 3,000 new retirees every year. He said that increase has started to slow down with 2,500 new retirees this year.

He also mentioned benefit recommendations including adding two free chiropractic visits for back pain.

“Studies show the use of a chiropractor can avoid surgeries and more expensive care later,” Cheatham said.

Another proposed change is to align PEIA’s high-deductible Plan C with Plans A and B in having no out-of-network coverage out of state. Cheatham said PEIA also will explore providing coverage through alternative foundation funding to offset costs for some specialty medications.

PEIA also has tentative plans to launch two wellness pilots in January—one, called CAPPA, which is a diabetic prevention program; and the other, Naturally Slim, which is a weight control program.

Cheatham said the PEIA Trust Fund has more than $1 billion in funding for OPEB liability. He said OPEB liability is 31% funded and he hopes to see it fully funded between 2036 and 2038.

Cheatham also covered progress implementing House Bill 2351, which established procedures, forms, portals, and deadlines for electronic prior authorization submissions Cheatham said UMR is PEIA’s third party administrator and has an operational online portal. He said CVS also has an online portal for specialty drugs, which he said he hopes to see operational by July 1, 2020.

Lawmakers Recommend Voting Bill For People With Disabilities

Interim Report

Christopher Marshall

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December 17, 2019

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Lawmakers Recommend Voting Bill For People With Disabilities

On Monday during a meeting of the joint Judiciary committee, lawmakers voted to advance a bill to the full Legislature that would allow those with physical disabilities to vote via electronic absentee ballot.

The bill would change the current West Virginia code definition of “disability” to align with the Americans with Disabilities Act, which defines physical disability as “a physical impairment that substantially limits one or more major life activities and renders a person unable to vote in person, at the polls, without assistance.”

Current code requires those in West Virginia who want to vote absentee due to disability to be blind, have trouble using their hands, or be “totally and permanently disabled.”

Donald Kersey, counsel for the West Virginia Secretary of State, told lawmakers it’s the right thing to do, it’s the legally required thing to do, and it will eventually be required by order of a court.

Kersey explained to lawmakers that Maryland and Ohio both faced lawsuits from disability rights groups over similar voting laws. In both instances, disability rights advocates prevailed in court.

Though not specifically addressed in the bill, the lack of internet access for many West Virginians was discussed. Staff counsel mentioned that those without access may eventually be able to vote via public internet.

Revenue Secretary: No Plans for Mid-Year Budget Cuts

Interim Report

Andrea Lannom

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December 16, 2019

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Revenue Secretary: No Plans for Mid-Year Budget Cuts

West Virginia Revenue Secretary Dave Hardy told legislators there are no plans to make mid-year budget cuts at this time.

The Joint Standing Committee on Finance heard 2020 fiscal year budget issues and the possibility of eliminating the business inventory tax in Monday morning’s committee meeting.

Hardy told the committee that although December is only halfway over, numbers for the month are looking better after a rough November. Currently for December, the state is over estimates, Hardy said. However, the state is still about $29 million under estimate for the fiscal year.

“What happened in November is the last business day was Wednesday, November 27,” Hardy said. “We came in below estimates for November. The first week of December, revenue did come in.”

Previously, Hardy said the governor asked the Department of Revenue to consider making $100 million in cuts from General Revenue. However, there were no concrete plans in what, if any, cuts needed to be made. In Monday’s meeting, Hardy said there are no plans to do mid-year budget cuts, with the official mid-year point about two weeks away.

“Overall, the fiscal year is on target,” Hardy said. “This is a $4.7 plus billion budget and 1% of that budget is $47 million. We are two-thirds of a percentage point away from being exactly on target.”

Deputy Revenue Secretary Mark Muchow said November’s numbers were about what he expected but looked worse because of the way the calendar ended, as opposed to previous years.

“We should make that up a bit in December,” Muchow said.

Sales tax, corporate income tax, and insurance taxes were not as negatively affected by the timing. However, personal income tax, which still saw some positive growth, along with withholdings, and business and occupation taxes, were affected.

Tobacco taxes were also below estimates in part because of the timing. However, Muchow said one of the big reasons for the decline is because of a trend in substituting traditional tobacco products with other products.

Overall, November’s collections were at $322.9 million and were $7.2 million below estimate, and $40.3 million below estimate year-to-date. For the General Revenue budget, Muchow said he is hopeful to have a 1.1% decline rate this year.

“If we get to that level, we will be on estimate and be on budget,” Muchow said.

The committee also heard from the West Virginia Manufacturers Association and the West Virginia Development Office on the possibility of eliminating the tax on manufacturing inventory, machinery, and equipment.

Rebecca McPhail, president of the West Virginia Manufacturers Association advocated for a bill to eliminate the tax over an undetermined amount of time, and to provide protections for schools and municipalities by providing replacement revenues each year.

She and Michael Graney, executive director of the West Virginia Development Office, said they believed eliminating the tax would make West Virginia more competitive, especially with surrounding states. Both cited that West Virginia is one of seven states that has a business inventory tax and is one of two states without an opportunity to waive the tax.