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House takes a breather on fast-tracking package to seal business deal for executive branch

The West Virginia Legislature on Monday didn’t put the finishing touches on a package of bills in an incentive package for at least one out-of-state corporation to set up shop in the Mountain State.

The six-bill package sprinted through the Senate but moved more deliberately through the House of Delegates during Monday’s first day of a special legislative session.

Lawmakers were considering bills that established an investment of up to $315 million in taxpayer money, backfilling the state’s budget with funding from the federal American Rescue Plan, and providing at least $1 billion in tax exemptions for a company that tentatively is to make an almost $3 billion investment in West Virginia.

The Legislature has to pass the bills to help the state Economic Development Office uphold its end of a memorandum of understanding between West Virginia and an as-yet-unidentified company, Brian Abraham, Gov. Jim Justice’s chief of staff, said Monday.

The Senate and House of Delegates will reconvene at 9 a.m. Tuesday.

The West Virginia University College of Business and Economics estimated that the development would generate $25 billion in the economy over the next 10 years and $480 million in tax revenue, even with the exemptions the Legislature approved Monday, Abraham said.

“We think it’s a wise investment, and it’s the beginning, not the end,” Abraham said. “It’s a chance to bring companies of this caliber into West Virginia, and you’ll see that start to grow.”

Legislative leaders in the House and Senate took different approaches to considering the legislation.

The Senate considered and adopted all of the bills in about an hour Monday morning and adjourned until 9 a.m. Tuesday. Members of the House more slowly considered its bills during a House Finance Committee meeting Monday afternoon.

Justice called lawmakers in for a special legislative session two days before the start of the 2022 60-day regular legislative session.

The regular session begins Wednesday.

Justice, who is to give his annual State of the State address Wednesday, has teased a “big announcement” during his speech in the House of Delegates chamber.

In the Senate, the 31 senators who were present Monday unanimously adopted all but one of the bills. Sens. Mike Maroney, R-Marshall, Patricia Rucker, R-Jefferson, and Tom Takubo, R-Kanawha, were absent for Monday’s vote.

Sen. Owens Brown, D-Ohio, was the lone no vote on Senate Bill 1001, which established the West Virginia Industrial Advancement Act, which included the tax exemptions for certain manufacturers.

Brown said he could not see why the bills were being rushed through, and asked for lawmakers to use due diligence as this project is lifted off the ground.

Sen. Mike Woelfel, D-Cabell, also cautioned lawmakers about moving too quickly with legislation of this weight.

“The devil can be, and usually is, in the details,” he said.

Proceedings in the House comparatively were deliberative, and it was where lawmakers aired out most of the details of the package.

Delegates vetted the bills during a 90-minute House Finance Committee meeting, where tax and executive officials answered questions from committee members, who unanimously supported advancing the legislation.

During a session Monday evening, the House and Senate bills were advanced to the amendment stage, but the House did not vote on any of them.

All of the bills in the House and Senate are the same and culminate in the same result, if passed.

The Legislature passing the bills would help Economic Development officials adhere to the terms established in the memorandum of understanding with the unidentified company, Abraham said.

He described the deal as being one of the biggest in state history, both in terms of the investment from the company and the investment by the state into the company.

In effect, the six-bill package takes $315 million from the state Department of Health and Human Resources and the Department of Homeland Security.

In particular, the government is moving money through Homeland Security’s Division of Corrections and Rehabilitation and West Virginia State Police.

That $315 million goes into the Department of Economic Development’s closing fund, and it will be used as a roughly 10% match of the company’s investment in the state, Abraham said.

Next, the governor authorized, and the Legislature appropriated, $315 million in federal American Rescue Plan funding to backfill the budgets for Health and Human Resources, Corrections and Rehabilitation and the State Police.

State officials said that, based on opinions from their accounting firms and legal opinions about the uses for American Rescue Plan funds, they are using the funds appropriately by using them to backfill government entities dealing with public health and safety.

“We think we’re on solid ground,” Abraham said.

After approving the move of money through those departments, the Legislature also adopted a law that expands existing property and sales tax exemptions for manufacturing companies that meet certain criteria.

Under the proposed law, if a manufacturer invests at least $2 billion in property and business development and hires at least 500 full-time employees three years after it made its investment, the company would be eligible for a tax exemption worth 50% of its investment. That means, if a company invested the requisite $2 billion, it would be eligible for up to $1 billion in tax exemptions.

That would mean the unidentified company in question would have until December 2025 to hire 500 people, Abraham said.

Fitting the bill of what Abraham described is North Carolina-based Nucor Corp. That company announced in September that West Virginia was among three states in which executives were considering establishing a $2.7 billion steel recycling facility. Pennsylvania and Ohio were the other states.

Nucor manufactures steel and steel products and brokers certain steel components through The David J. Joseph Co., according to the company’s website.

The company has facilities in 23 states, including Virginia, Ohio and Kentucky. It is the largest recycler in North America, according to its website.

Justice is scheduled to give his State of the State address at 7 p.m. Wednesday in the House.


A pedestrian walks across Charleston’s Southside Bridge at dusk on Monday.


Energy_and_environment
WV legislators opt for new oil and gas tax property valuation rule

A rule that West Virginia tax officials came up with to more properly value oil and natural gas wells — and the process that led up to its enactment — have proven unpopular with the industry and with county governments.

So, state lawmakers have committed to coming up with another rule.

The Legislative Rule-Making Review Committee voted Sunday afternoon to not approve the rule that the State Tax Department adopted as an emergency measure in July under a law passed in the 2021 legislative session.

The law, House Bill 2581, directed the Tax Department to propose an emergency rule by July 1 on valuation of properties producing oil, natural gas and or natural gas liquids while providing for a tax on net profit by defining net proceeds for oil and natural gas as actual gross receipts based on sales volume minus royalties and operating costs for expenses including lease-operating, lifting, compression, processing and transportation.

The committee’s vote means the full Legislature will have to come up with a new rule providing a methodology for oil and natural gas property tax valuation.

But the agency-submitted emergency rule remains in place for tax year 2022.

Steve Stockton, an attorney with the Tax Department, told the committee it would be “logistically impossible” to go back to a previous version of the rule or for the Legislature to change the rule by Saturday, when Stockton said any new rule would have to be in place for the tax year.

“These rules ... make quite a bit of change to the way things are done, and the reality is that the property tax division now is a lot different than the property tax division [from] just two years ago, just in terms of the personnel involved and everything else,” Stockton said. “We’re kind of stuck.”

An impetus for the bill was a 2019 state Supreme Court ruling in which the court held that the Tax Department improperly imposed a cap on gas well operating expense deductions.

Leroy Barker, director of the Property Tax Division of the Tax Department told lawmakers during last year’s legislative session that counties could be found liable through litigation if the Legislature doesn’t better define its taxation rules.

The Tax Department’s emergency rule broadened the definition of actual expenses, eliminating a five-year survey of industry expenses that the Tax Department had previously used to value oil and gas wells and lowering the capitalization rate.

A capitalization rate is an estimate of the rate of return anticipated to come from a real estate investment property.

The Legislature approved House Bill 2581 in April, after state oil and gas industry objections that the Tax Department was failing to assess the actual value of wells, costing the industry.

But industry protests have persisted in response to the emergency rule, condemning the capitalization rate as too low and the Tax Department’s authority to determine whether a return or incomplete or unreasonable as excessive.

The capitalization rate used in the previous rule was about 15%, but the initial rate under the new rule has been around 12%. Since lower capitalization rates result in higher taxes, industry representatives have raised concern that the new rule will elevate costs to inaccurate tax levels and make the state less competitive in the regional market.

Delegate Brandon Steele, R-Raleigh, argued that the Tax Department had put on its “legislating hat” in crafting the rule and exceeded the scope of House Bill 2581.

Steele echoed the state oil and gas industry’s argument that the rule improperly allows the Tax Department to determine what is and is not reasonable in tax value calculations, noting that the statute on which the rule is based does not include a reasonableness standard.

“Who came up with this reasonableness test?” Steele asked.

“I think it’s reflective of the calculations that have to go into determining the actual fair value of the property,” Stockton replied. “Reasonable people can disagree about what the reasonable cost is associated with it. What the Tax Department needs is some sort of way to demand reasonableness when it comes to the returns filed by any taxpayer.”

Steele and Delegate Geoff Foster, R-Putnam, cited a memorandum sent Sunday by Rich Olsen, director of the Legislative Services Division, to Legislative Auditor Aaron Allred finding that the Tax Department’s rule goes beyond the scope of the statute on which House Bill 2581 is based.

The Legislative Services Division was created by the Joint Government and Finance Committee and provides legal services, research and statutory revision for the state’s standing and joint interim committees.

But county commissions in high oil- and gas-producing counties worry that the Tax Department’s rule would result in a drop in property tax revenue they receive from wells.

The Tax Department noted, in response to public comments filed by the Doddridge and Harrison county commissions voicing concern with the rule, that the projected resulting revenue change will be minimal.

West Virginia Association of Counties Executive Director Jonathan Adler said his organization, representing elected county officials, is frustrated at not being part of the rule formulation process.

“There just needs to be clarity,” Adler said. “There needs to be clarity for us. There needs to be clarity for industry. I know you want clarity, too, so I think we’re all in agreement there.”

County school boards and commissions would have absorbed most of a projected revenue loss of $9.1 million stemming from additional expenses allowed by a previous version of House Bill 2581, according to the Tax Department.

That estimate was rescinded after the bill was reworked into its final version.


Kanawha_valley
Trial for man accused in Charleston officer's slaying moved to March

The trial of a man accused of killing a Charleston police officer has been moved to late March. Kanawha County Circuit Judge Jennifer Bailey on Monday granted a motion to continue the murder trial of Joshua Phillips until March 28.

Phillips is accused of shooting Patrolman Cassie Johnson, 28, during an altercation on Garrison Avenue on Dec. 1, 2020. She died at Charleston Area Medical Center’s General Hospital two days later.

Kanawha County public defender Ronni Sheets, who represents Phillips, had asked Bailey to move the trial out of Kanawha County, citing media coverage in the case.

“There has been a great deal of media coverage and social media activity regarding this case,” Sheets and co-counsel John Sullivan wrote in the November motion. “This has included a live television broadcast of Officer Johnson’s funeral and ongoing coverage and publicity regarding memorial events. There has not only been media activity memorializing Officer Johnson, but a considerable amount of content portraying the defendant in a negative light and presuming his guilt.”

According to the motion, the defense planned to hire an expert to conduct a change-of-venue study in the case, to include social media research and a telephone survey of Kanawha County residents. The motion says the study was unlikely to be completed by an earlier pretrial date and possibly wouldn’t be complete by Monday’s trial date.

Phillips is charged with murder, conspiracy, drug charges and illegally possessing a concealed firearm. He has pleaded not guilty.

A pretrial hearing in the case is scheduled for March 15.


Health
Number of people in hospital from COVID infections on the rise

With 57 more people hospitalized for COVID-19 over the weekend — up to 815, the highest hospitalizations have been in West Virginia since Oct. 14 — the state now reports 15,124 active cases. That’s 1,144 more active cases than reported Friday, according to the state Department of Health and Human Resources’ coronavirus dashboard.

Of the people hospitalized, 224 are in an intensive care unit (23 more than Friday) and 133 are on a ventilator (18 more than Friday).

A majority of people in the hospital — 76% — report being unvaccinated. That increases to 83% unvaccinated for people in the ICU and 92% unvaccinated for those on ventilators.

To date, West Virginia has reported 360,269 total COVID-19 cases since the pandemic began in spring 2020, with 2,289 of those cases reported on Monday.

On average — and in total — the past week has seen more COVID-19 cases reported in West Virginia than any other since the pandemic began, according to the DHHR. Testing has increased across the state in recent weeks, but it still does not meet levels set during previous surges.

Deaths tied to COVID-19 totaled 5,445 Monday, with 24 of those reported over the weekend.

As of Monday, the U.S. Centers for Disease Control and Prevention reported every county in West Virginia — and every county in every state surrounding West Virginia — as having high transmission of COVID-19.

There are now at least 293 confirmed cases of the omicron variant in West Virginia, according to the DHHR, up from 82 reported last week. Early studies show omicron could cause less severe illness in some people who contract it, not accounting for underlying conditions, age or comorbidities.

West Virginia, on average, reports some of the highest rates of these conditions — which include diabetes, obesity, chronic heart and lung diseases and cancer, among many others — in the nation, according to the DHHR and the CDC.

Those who are fully vaccinated and boosted are most protected against the virus, according to health experts.

About 55% of eligible West Virginians — 939,569 people — are fully vaccinated against the virus. Another 8% of those eligible — 150,450 — report being partially vaccinated, according to the DHHR.

Vaccination rates are lowest in children ages 5 to 11, with 11% reporting to be fully vaccinated and 12-15, where 38% report being fully vaccinated.

Emerging research from other states shows children could be presenting more serious illness from omicron infections, as it targets upper respiratory systems, which are underdeveloped — and, therefore, more vulnerable — in children.

Last week, a CDC advisory panel approved administering Pfizer booster doses in children ages 12 and up.

Under new guidance, booster doses may be given five months after someone receives their initial mRNA round of the vaccine, or two months after receiving the Johnson & Johnson one-dose.

So far, about 37% of fully vaccinated people in the state — 354,654 residents — have received a booster dose of the vaccine.


FILE - In this Aug. 3, 2008, file photo, actor and roastee Bob Saget speaks at the "Comedy Central Roast of Bob Saget," in Burbank, Calif. Saget, a comedian and actor known for his role as a widower raising a trio of daughters in the sitcom “Full House,” has died, according to authorities in Florida, Sunday, Jan. 9, 2022. He was 65.


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