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August 2, 2011

 

WEST VIRGINIA LEGISLATURE SPECIAL SESSION REPORT

 

Governor Earl Ray Tomblin called upon the West Virginia Legislature to convene in an Extraordinary Session beginning at noon, Monday, August 1.  There are seven items on the Governor’s proclamation. The main order of business will be to approve a redistricting plan for the West Virginia House and Senate and the U.S. House of Representatives.

 

The session will have a number of supplemental appropriations bills, which is normal during any special session.  Some will add money to construction projects (see below for details).  One item which was not widely anticipated is a bill to reduce the consumers sales tax on food by another half of one percent.  The legislature passed a bill during the regular session to reduce the current 3 percent food tax by one percent, effective January 1, 2012.  The Governor’s proposal would lower the rate to 1.5 percent. Republican lawmakers are insisting the remainder of the original 6 percent food tax be scrapped entirely.  Democratic lawmakers have indicated that phasing out the tax, as long as the state can still be financially responsible, is the best way to proceed.

 

The Senate and House have developed their own redistricting plan which is required every ten years following the completion of the census.  The Morgantown area and Eastern Panhandle have gained population while Southern West Virginia and Kanawha County have lost.  As a result, House and Senate districts must be redrawn.  A public hearing was held yesterday and most all speakers panned the House proposal which maintains many multi-delegate districts.  The business community and others have been pushing for more single-member delegate districts.  The speakers also criticized the fact that the draft plan for redistricting was released only 15 minutes before the public hearing began.  Kanawha County, which has two Senate districts, will now share a senator with Putnam County. In the House, the seven-member 30th District in Kanawha County remains intact while the 27th District in Raleigh County is split. 

 

In the Congressional districts, there was speculation that Charleston and Wheeling would be placed in a new First District which would pit the two Republican representatives, Shelley Moore Capito and David McKinley, against one another.  It appears that this will not be the case.  The Second District must give up population and the Third District must gain.  One proposal is to move Mason County from the Second District to the Third District.  This way, Reps. Capito, McKinley and Rahall will keep most of their districts in place.

 

One of the bills proposed would dedicate up to five percent of the tax attributable to the severance of coal back to coal-producing counties to give them a bigger share of the revenue.  This bill lost in the final hours of the regular session when the Senate and House could not reach agreement on who would control spending the dollars.  With this worked out, the bill is expected to pass this session.  The percentages will be phased in at one percent a year beginning July 1, 2012 until the full five percent is reached on July 1, 2016.  The distributed funds may only be used by the county commission for economic development projects and infrastructure projects.

 

For the purposes of the bill, “economic development project” means a project in the state which is likely to foster economic growth and development in the area in which the project is developed for commercial, industrial, community improvement or preservation or other proper purposes.  “Infrastructure project” means a project in the state which is likely to foster infrastructure improvements including, but not limited to, any water or wastewater facilities or any part thereof, storm water systems, steam, gas, telephone and telecommunications, broadband development, electric lines and installation, roads, bridges, railroad spurs, drainage and flood control facilities, industrial park development or buildings that promote job creation and retention.

 

The Governor has also introduced a number of supplemental appropriation bills that redistribute funds within the various state agencies.  Two building construction projects will receive funding.  A $15 million supplemental to the William R. Sharpe Hospital in Lewis County will fund a 50-bed expansion at the facility.  Legislators were told that facility was not built to accommodate the large number of forensic patients.  The State Police will receive $3.5 million to renovate the agency’s forensic lab.

 

A $62.5 million supplemental will reapportion funding within the West Virginia Division of Highways.  The division collected about $37 million in revenues over estimates for the fiscal year that ended June 30.  Another $26.5 million will be drawn down from the agency’s fund equity.  There was discussion earlier that there could be a transfer from the state’s general fund to the State Road Fund to help with contract paving and small bridge repair.  This $62.5 million does not include any outside funding for the highway fund. It redistributes funds already available in the fund.  Very few construction projects received funding from the transfer, with the exception of the East Beckley Bypass project in Raleigh County which received $8 million.

 

Routine maintenance line item would be increased by $26 million.  Much of this would go to WVDOH operational costs including insurance, salaries, annual plan and equipment.  The Contract Paving line gets $15 million but $10 million is for the I-79 project which was recently bid.  County Route 73  and WV Route 62, along with various other paving jobs that carried over into FY 2012, get funded.  They are rolling over $8 million in FY 2010 funds for cleaning and painting of the William S. Ritchie Bridge in Jackson County and the Arch A. Moore, Jr. Bridge (bid July 12) in Marshall County, and the Mount Gay Overpass Bridge replacement project in Logan County.  The $62.5 million also contains $2.5 million for the WVDOH’s equipment revolving line item and $3 million for network and equipment upgrades in the state’s Enterprise Resource Planning (ERP) project.

 

It is expected the special session will extend through the weekend, providing the redistricting bill does not get bogged down.

 

In a related issue on the federal level, if Congress approves the new agreement among the White House and congressional leaders on a framework to hike the debt limit and make cuts in the federal deficit, it will avert a federal default on its debt obligations.  The House approved the measure on August 1, on a 269-161 vote.  The Senate vote would be the next step.

 

Enactment of the bill would be a relief to business, including the construction industry, which feared a runup in interest rates and a curtailing in plans for building and infrastructure projects.  However, the construction industry will have to brace itself for a share in the spending cuts that would total about $1 trillion over 10 years as part of the package.  How deep the construction-related portion of those reductions will be is unknown so far.

 

For more on the federal bill and its potential impact on the construction industry, look for the August 5 CAWV Newsletter.