LB 2007 - 9
March 13, 2007

CAWV CONCLUDES ACTIVE LEGISLATIVE SESSION

This year's regular session of the 78th West Virginia Legislature concluded Saturday, March 10. Most of the issues promoted and followed by the CAWV were successfully addressed by lawmakers. Legislators will continue work this week to finalize the budget. Funding for the WV Division of Highways was a main topic of discussion as Governor Manchin and legislators looked for additional funding measures to address a nearly $200 million annual shortfall in revenues. Legislators could not find that much funding but they did make inroads into funding needs. New revenue will be about $35 million through actions taken by the governor and legislators. This is on top of the $63 million that will be available this year due to the 4.5 cents-per-gallon increase in the wholesale gas tax that went into effect January 1. The CAWV will continue working for additional funding resources in addition to the measures outlined in the article below.

After about a 10 year debate, legislators approved table games at the state's four race tracks. The measure provides for a county referendum to decide if the race tracks in Wheeling, Chester, Charles Town and Nitro can offer table games. If voters ratify the proposal, tracks have indicated they plan to invest millions in capital improvements at their facilities.

Funding for education facilities will continue to be at the forefront. The legislature will consider during the budget process additional funding for the School Building Authority of West Virginia. A bill that was introduced on the 59th day almost made it through the process that would have provided bonds totaling $79 million for facilities at the state's community and technical colleges.

Tax reform, originally thought dead on arrival, passed the Senate and was approved by the House in the final minutes of the session. A reduction in the state's business franchise tax will reduce the tax rate from 0.55 to .02 percent over five years, starting in 2009. This will save the business community $75 million annually.

The following is a synopsis of key legislation tracked by the CAWV during the 60-day session. A complete list of bills passed by the legislature is included with this Legislative Bulletin, or can be viewed by clicking here. For specific information on any bill, contact Mike Clowser at 304-342-1166 or mclowser@cawv.org.

HIGHWAY FUNDING MEASURES PASS

With Governor Manchin and legislative leadership support, the State Road Fund will receive additional funding. The nickel gas tax has been reauthorized until August 1, 2013 ( H.B. 2955 – $55 million); diversions to the highway fund were eliminated (H.B. 2877 – $15.5 million); and the consumer sales tax exemption will be restored for materials used in highway construction and maintenance projects (S.B. 690 – $13.5 million). Taking into account the wholesale gas tax that went into effect in January 1, 2007 ($63 million) and some administrative savings (about $50 million), the highway program fared pretty well this session. Last year, there was very little interest in the WV Division of Highways' funding problems. A lot of credit goes to West Virginians for Better Transportation for their work in educating legislators and the public about the funding crisis. Transportation Secretary Paul Mattox was also very eloquent when speaking on the need for additional funding.

The final vote on the gas tax reauthorization was 81 - 17 in the House and 30 - 3 in the Senate. Voting against the bill was Sen. John Unger, D-Berkeley, Sen. John Yoder, D-Jefferson, and Sen. John Pat Fanning, D-McDowell. Language which allowed legislators to control which projects in their districts would be funded was struck by a conference committee of House and Senate members. Legislators approved compromise language which requires the WVDOH to inform the Joint Committee on Government and Finance on how much money is collected and how it is being expended. Governor Manchin had threatened a veto if the original language was not struck from the bill.

H.B. 2775 also passed which will delete about $5 million annually in highway funds. The bill exempts new residents from paying the privilege tax upon showing that the applicant was not a resident of this state at the time the vehicle was purchased. The tax was sarcastically dubbed the "Welcome to West Virginia Tax" since people moving to West Virginia didn't know they had to pay a 5 percent privilege tax on their vehicles in order to register them. The bill does have a positive side benefit for the highway fund. It changes the privilege tax to a 5 percent sales tax. Other vehicles, such as ATVs, are now subject to sales tax, and the sales tax will have to remitted sooner than the privilege tax so the highway fund will benefit from the quicker return.

RAILROAD GAS TAXES REMAIN IN ROAD FUND

The legislature passed S.B. 569 which, as introduced, transferred gas tax revenues paid by railroads from the State Road Fund to the WV Port Authority. The bill was amended in the House Finance Committee to state that no transfer would take place until a study was completed relating to the feasability of the planning, development, construction and operation of the intermodal facility at Prichard. If the WV Public Port Authority concludes that the facility is sustainable, up to $4.3 million (the projected gas tax railroads pay annually) could have been deposited into the Special Railroad and Intermodal Enhancement Fund and transferred to the Public Port Authority. After much discussion and negotiations, the full House amended the bill to fund the Port Authority through the state's general fund and to keep the road fund intact. The Senate concurred with the House amendment. Senator Bob Plymale, D-Wayne, had pushed for the bill as a method to fund construction of the intermodal rail project at Prichard.

CETA BILL DIES ON FINAL DAY

S. B. 497, the Community Empowerment Transportation Act (CETA), introduced by Sen. John Unger, D-Berkeley, did not pass despite efforts by the senator to amend the measure into H.B. 2804, a bill pertaining to utility relocation on highway projects. Sen. Unger pushed the legislation which would have enabled counties to propose and provide funding for local projects. The CAWV supported the bill providing the projects were advertised and administered by the WVDOH. The House refused to amend S.B. 497 into H.B. 2804 and the senator agreed to withdraw his proposal, allowing the utility relocation bill to pass in the final hours of the session. The senator wants the governor to consider adding his bill to a future special session call.

SCHOOL FACILITY ISSUES PASS AND FAIL; FUNDING STILL UNDER REVIEW

S.B. 67, Governor Manchin's bill to improve school safety had a last minute amendment inserted that would restrict design fees for architects and engineers when there is a standardized prototype for school facilities. The architectural and engineering community was successful in deleting the amendment from the final version of the bill. The measure will provide $10 million to upgrade security measures at schools.

Work will continue this week during budget negotiations to find about $20 million for the School Building Authority of West Virginia. The money is to reimburse the SBA for approximately $19 million that was lost a few years ago when legislators and the previous administration needed funding for other programs. The $20 million, if it were made available, is probably a one time allocation. The SBA receives $19 million annually in excess lottery proceeds but this funding could be reduced if lottery revenues ever start to decline, which is predicted now that Pennsylvania has approved a video lottery. The SBA was receiving $25 million annually but this amount was reduced to $19 million after the legislature authorized $225 million for economic development projects throughout the state, including Cabela's in Wheeling and the ballpark in Charleston.

S.B. 84 did not pass. This bill would have allowed boards of education to enter lease-purchase agreements for school facilities. The CAWV supported the concept but the bill was very short on specifics as to what rules and procedures county boards of education must follow in a lease-purchase agreement. The bill will probably be reviewed and reintroduced next year.

S.B. 761, introduced and passed by the Senate on Friday, would have provided a $79 million bond issue that would have funded a series of infrastructure-related projects at community and technical colleges throughout the state, including a $12 million building at Blue Ridge CTC; $10 million at Marshall CTC, WV State CTC and New River CTC; about $8 million for two projects at WV Northern Community College; and $9 million for two projects at Southern WVCTC, among others. The House was willing to go along with the bill. However, the House would have had to pass a resolution to consider new bills. Leaders were concerned that if they suspended rules for S.B. 761, more contentious bills could be opened up for consideration that the leadership did not want advanced. Supporters hope the bill will be considered again and Joe DeLong, House Majority Leader, said he intends to send a letter to the governor to include it on a future special legislative session.

LEGISLATURE TO APPROVE PARKWAYS' TOLL INCREASES

Seven bills were introduced that limited powers or made changes to the West Virginia Parkways, Economic Development and Tourism Authority. The only bill that passed, and the one that has the most impact, is S.B. 738. This bill requires the Parkways Authority to present any proposed toll revisions to the Joint Committee on Government and Finance, and then, if the Authority still wants an increase in turnpike fees, the request would then be made to the full legislature for approval. The House stripped this provision stating it would hurt the state's bond rating. A conference committee the last day accepted the Senate version. Gov. Manchin has hinted a gubernatorial veto.

PLUMBERS, SPRINKLER PIPE FITTERS TO BE LICENSED BY JANUARY 1, 2009

H.B. 2747 requires plumbers and fire sprinkler pipe fitters to be licensed by January 1, 2009 in order to perform work. The Labor Division will license plumbers and sprinkler fitters will be governed by the State Fire Marshal. The bill provides for a number of construction activities to be excluded from the plumbers licensing provisions. In §21-14-3, the following language was inserted to address the concerns raised by contractors who perform some type of plumbing activity but only as an ancillary activity:

(5) A person who performs plumbing work while engaging in the business of installing, altering or repairing water distribution or drainage lines outside the foundation walls of a building, public or private sewage treatment or water treatment systems including all associated structures or buildings, sewers or underground utility services;

(6) A person who performs plumbing work while engaged in the installation, extension, dismantling, adjustment, repair, servicing or alteration of a heating ventilation and air conditioning (HVAC) system, air-veyor system, air exhaust system or air handling system; or

(7) A person who performs plumbing work located on property where coal is being processed or actively mined, or at manufacturing, industrial and natural gas facilities.

BUSINESS TAX REDUCTION PASSES

Businesses will see a further reduction of the Business Franchise Tax starting in 2009. S. B. 751, a bill that proposes phasing out the business franchise tax, was combined with S.B. 749, which establishes a combined reporting system. The tax will gradually reduce from 0.55 to 0.2 percent over five years. The bill will reduce business taxes by $75 million a year.

S.B. 631 EXTENDS SALES TAX EXEMPTION

During the November special legislative session, a bill was passed to allow contractors to be exempt from the state consumer sales tax (CST) when the materials purchased are used or consumed in the construction, alteration, repair or improvement of a new or existing building or structure to be used primarily by persons or entities exempt from the sales tax on purchases. Prior to passage of this legislation, if a company built a project that was used in the manufacturing process, the company could purchase the materials tax exempt but if a contractor purchased the material, the CST would have to be paid. S.B. 631, introduced by Sen. Brooks McCabe, D-Kanawha, extends the exemption to other businesses who would normally be exempt from the CST. The bill passed on the final day.

BILL CLARIFIES CONTRACTORS LICENSE REQUIRED PRIOR TO BIDDING

H.B. 3117 makes it clear that contractors must have a West Virginia contractors license prior to submitting a bid. This bill does not change existing law, it merely makes it definitive that a contractor has to secure a contractors license to bid work. This is to avoid bid protests, law suits and injunctions that have occurred when public agencies have taken the position that a license is required before a contractor can begin work but not required at the time of bid. The bill was made effective from passage. It should be clear that contractors working on public works projects must be licensed prior to submitting bids. This information will be shared with municipal and county governments so there will be no ambiguity on future bidding procedures.

S. B. 669 PROVIDES DOH FLEXIBILITY

S. B. 669 gives the WVDOH the ability to transfer cash surpluses among agency funds. This is helpful after last year when the DOH had to hold up nearly $30 million in payments to contractors because the Division couldn't transfer funds from various accounts into their construction accounts. The DOH and CAWV had to get a bill passed during a special session of the legislature last June in order for members to get paid.

SENATE COMMITTEE APPROVES UNAUTHORIZED WORKERS BILL

The Legislature passed a bill that would amend Chapter 21-1B of the W. Va. Code dealing with increasing penalties on employers who hire unauthorized workers. S.B. 70 originally dealt strictly with contractors and their subcontractors who hire undocumented workers. The bill was expanded early in the session to address all employers. The West Virginia Chamber of Commerce did a good job in their analysis of the legislation, noting it contained potentially unconstitutional language and included the possibility that both the employer and the State of West Virginia could be held liable for denial of workers' civil rights in discrimination actions under federal law. The bill provides a penalty of $100 to $1,000 for the first offense, $500 to $5,000 for the second offense, and $1,000 to $10,000 plus jail from 30 days to 1 year for the third offense. After the third offense, the Commissioner of the Division of Labor could permanently revoke or suspend "any" license held by the employer. A question has arisen as to whether the Labor Commissioner has the authority to suspend licenses other than those governed by the Labor Division.

APPRENTICESHIP TRAINING TAX CREDITS APPROVED

H.B. 2945, introduced by Dels. Klempa, Moore, Dan Poling, Rodighiero, Ellis, Iaquinta, J. Miller, Pethtel, Fragale and Hutchins, creates a tax credit for apprenticeship training in the construction trades. The bill provides a tax credit "in an amount equal to one dollar per hour multiplied by the total number of hours worked during the income year by apprentices, provided the amount of credit allowed for any income year with respect to each such apprentice may not exceed $1,000 or 50 percent of actual wages paid in such income year for such apprenticeship, whichever is less. For purposes of this section, a qualified apprenticeship training shall require at least 2,000 but not more than 10,000 hours of on the job apprenticeship training for certification of such apprenticeship by the U.S. Bureau of Apprenticeship and Training."

ASBESTOS/SILICA REFORM BILLS NEVER SEE ACTION

Legislation to require established medical criteria to be used in diagnosing asbestos or silica claims was left waiting action in both houses of the West Virginia Legislature. The measures, S. B. 374/H. B. 2762, would limit certain asbestos claims, provide for the fair and efficient judicial consideration of personal injury and wrongful death claims arising out of asbestos or silica exposure ensuring that individuals who suffer impairment, now or in the future, from illnesses caused by exposure to asbestos or silica, receive compensation for their injuries, and for other purposes. The trial lawyers and the business community could not reach agreement on language, which legislative leaders mandated was required in order for the measure to move forward. The business community proposed a legislative interim study be conducted this year in order to reach some conclusion prior to next year's legislative session.

MANDATORY HEALTH BILL DEFEATED IN COMMITTEE

A bill requiring contractors performing public works construction projects to show that at least 75 percent of the workers on a project over $500,000 have health insurance was defeated in the House Health and Human Resources Committee. H.B. 2438 was defeated on a tie vote of 11 - 11. The CAWV cited a number of reasons why the legislation was not necessary or constitutional.

A task force of contractors, subcontractors and insurance providers in 2005 concluded that construction workers probably have greater access to health insurance than other industries. Another issue the association cited is that since construction workers may work for more than one contractor, portability was a concern. The industry has repeatedly asked what other states have passed similar legislation that can be used as a model in West Virginia. States that have passed legislation, including Florida, have all had their laws struck down because they are in violation of the Employee Retirement Income Security Act (ERISA). Last year, the Maryland Assembly passed a law that required Maryland employers with 10,000 or more employees to pay 8 percent of their total payroll on employee health insurance. The 4th United States Circuit Court of Appeals ruled the law invalid. The bill never moved forward following action by the Health Committee.

BILL WOULD HAVE REQUIRED DEFINITE COMPLETION DATE ON CONSTRUCTION CONTRACTS

H.B. 2496, introduced by Dels. Caputo, Talbott and Hatfield, would have required that each state public works contract include a provision requiring a definitive completion date and that contractors awarded such contracts be required to meet the time restriction. Contractors not meeting the completion date would be assessed a penalty of $1,000 per day for every day late. Change orders could not be granted which exceed 20 percent of the contract price. Contractors could receive extensions only in the event of an unforeseeable emergency, for changes made by the public agency, or because of "fortuitous existence of extreme inclement weather conditions." The bill was referred to the Committee on Industry and Labor, Economic Development and Small Business then Government Organization. It was never debated in committee.

CONTRACTOR RECOVERY FUND BILL DIES

H. B. 3051, sponsored by Dels. Spencer, Fleischauer, Marshall, DeLong, Perdue, Caputo and Manchin, would have created a "Contractor Recovery Fund" within the WV Division of Labor to compensate people who have been harmed by a contractor who has engaged in "unsafe defective or unscrupulous conduct." The bill would set up a Board to oversee the fund and allow it employ staff to operate the program. Licensed contractors would pay $150 per year until the fund accumulates $3 million. The CAWV noted that there are current options for consumers to seek remedy if they feel they have been harmed by a contractor, including the WV Contractors Licensing Board, the state's Attorney General and the court system. Homebuilders also must abide by "right to cure" rules that address complaints before home owners have to seek legal redress. Since most CAWV members must provide performance and payment bonds, this legislation is added tax. The bill never saw legislative action.

CAPITAL PROJECTS INCLUDED IN BUDGET BILL

The West Virginia State Budget contains a listing of the capital improvement projects contemplated for the next several years. The listing contains many projects for all state agencies. Members can view the list at http://www.wvbudget.gov/. Click on "Governor's FY 2008 Executive Budget – Volume 1 Budget Report." The capital projects are on pages 151-202.