Progress Report: 2016 Legislative Session

June 2, 2016


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Progress Report: 2016 Legislative Session

The West Virginia State Legislature adjourned its 2016 session on March 12 after 60 days of discussion and debate and a three-day extended budget meeting. In this year’s session, the pressure was on as West Virginians anticipated the passage of legislation that would aid the state’s struggling economy and incentivize businesses to make the Mountain State home.

As the second session under a Republican majority rule, 2016 saw proposed legislation on popular topics such as ride-sharing, broadband access, alcohol sales and crowdfunding as well as controversial issues like right-to-work, prevailing wage and budget peril. In this post-legislative session review, West Virginia Executive asked leaders who have closely followed some of the more prominent bills to discuss the details, the victories and what’s next for the bills that died on the chamber floor.

SB 1: Right-to-Work

Senate: 17-16  House: 54-46
By Danielle Waltz

On February 12, 2016, West Virginia became the 26th state to pass a right-to-work law after an override of Governor Earl Ray Tomblin’s veto of the bill.

Senate President Bill Cole and Speaker of the House Tim Armstead made it clear that SB 1, known as the West Virginia Workplace Freedom Act, was a top priority for passage during the 2016 legislative session. While passage of the law was highly contested by unions as a wage-lowering measure, the law’s supporters primarily relied on a nonpartisan study by Dr. John Deskins of West Virginia University’s Bureau of Business and Economic Research that showed the positive effects of right-to-work laws on growth in the mining, construction and manufacturing sectors, all critical components of West Virginia’s economy.

Under SB 1, a person may not be required, as a condition of employment, to become or remain a member of a labor organization; pay any dues, fees, assessments or similar charges of any kind or amount to any labor organization or pay any charity or third party any amount that is equivalent to a pro-rata portion of dues, fees, assessments or other charges required of members of a labor organization in lieu of those payments.

The West Virginia Workplace Freedom Coalition and several other state and national groups supported passage of the law. The coalition consisted of several businesses, organizations and individuals committed to the passage of the legislation, including the West Virginia Business and Industry Council, the Associated Builders and Contractors of West Virginia, the West Virginia Manufacturers Association, Americans for Prosperity and the Cardinal Institute for West Virginia Policy.

During advocacy for the law, members of the coalition contended that without a right-to-work law, West Virginia was closing its doors to businesses that refuse to locate in states without such a law. Supporters hope passage of the law, which will take effect July 1, will pave the way for future economic prosperity in the Mountain State and provides an advantage in attracting businesses over border states without right-to-work laws.

HB 4005: Prevailing Wage

Senate: 18-16  House: 55-44
By Del. Daryl Cowles

After a summer study by the Joint Committee on Government and Finance; an analysis by WorkForce West Virginia, including input from Marshall University and West Virginia University; a temporary suspension of prevailing wage rate mandates; an exemption for projects under $500,000; an open debate at the state Capitol and Governor Earl Ray Tomblin’s veto, which was quickly followed by an override vote, the taxpayers of West Virginia will no longer be required to pay inflated wage rates for public works projects.

The repeal of prevailing wage is grounded in an effort to treat taxpayers fairly. Every dollar spent by state government comes from the pocket of a taxpayer. State government must make certain these dollars are spent wisely.

To understand the long journey of the prevailing wage law, one must first look at its history. The prevailing wage law in West Virginia in the 1930s required an artificial wage rate be paid to private sector construction tradesmen on government-funded projects. An inflated wage mandate has been required on not only state projects but also local projects across the Mountain State ever since.

A year ago, a similar bill to eliminate prevailing wage resulted in exempting projects under $500,000 along with a compromise to fairly recalculate the requirement over that threshold. That compromise effort fell apart late in the summer of 2015 when a bureaucratic stranglehold looked to preserve the status quo of misusing taxpayer money.

The full repeal, House Bill 4005, was introduced early in the 2016 legislative session. It represented a determined effort to make sure taxpayer-funded projects pay fair wages that are consistent with the market. Even more, the effort was to ensure a maximum value for each tax dollar and improve job growth. Complete repeal of the prevailing wage mandate will free up more money for additional public projects, lead to a better value for the taxpayer and result in more public works completed and additional job opportunities for construction workers.

HB 4005 passed the House of Delegates on a 55-44 vote and passed the Senate 18-16 before being sent to the governor. Concerns were expressed on the impact to wages, and requests were made for more economic study despite the wealth of information compiled during the previous year. Although the governor vetoed the bill, the Legislature quickly overrode the veto to implement the full repeal. On May 12, 2016, West Virginia joined 19 other states in ending government wage setting.

HB 2615: Crowdfunding

crowdfundingSenate: 98-0  House: 34-0
By Joe Carlucci

The West Virginia Small Business Capital Act, more commonly known as the intrastate crowdfunding bill, allows West Virginia businesses to sell equity investment or ownership to state residents via an online portal. The investor may be either unaccredited with a max cap of investment set at $10,000 or accredited if they comply with the U.S. Securities and Exchange Commission (SEC) definition of accredited. The businesses must be headquartered in West Virginia, and the investors must reside in the state, thus the intrastate name.

HB 2615 originated in 2015 with delegates Patrick Lane and Larry Faircloth and passed the House, but it was tabled by the Senate last year due to time constraints. It was reintroduced in 2016 by the same sponsors, with the addition of delegates Carol Miller, Cindy Frich and Eric Nelson as co-sponsors. The intrastate crowdfunding bill was also supported by numerous small business entities and advocates from across the state, as well as the Secretary of State and State Auditor’s offices. This year, the bipartisan bill passed through all committees in both the House and Senate with unanimous passage on both floors.

This new form of capital can be tapped by businesses that are just starting out or looking to expand. Locally vested funding like this allows consumers to buy stock or ownership in local businesses where they already shop through the online portal created by the bill. The more a person shops at the locations they’re invested in, the more profitable that location becomes and the more dividends the investor will receive in the end. It’s a great trickle-down effect that has enormous potential to organically change West Virginia’s economic landscape.

HB 2615 was signed into law by Governor Earl Ray Tomblin and will go into effect at the end of June. The next step is to complete an online portal that complies with the rules and regulations of the bill as well as the SEC JOBS Act’s Title III guidelines. Development and testing of the online portal are already underway in anticipation of the initial roll out in June.

SB 16 and SB 315: Broadband

broadbandBy Natalie Roper

According to the 2016 Federal Communications Commission report, West Virginia ranks 48th in the nation in broadband access. More than 544,000 West Virginians—about 30 percent of the state’s population—do not have broadband service. When looking only at the state’s rural areas, the number of residents lacking access rises to 48 percent.

People now depend on the internet for work, education, entertainment, health care and civic participation. Communities that lack this foundational infrastructure are unable to attract the businesses and industries needed to create jobs and expand opportunities. When given access to affordable internet, businesses once restricted to local markets can expand their market reach across the nation and even around the world.

In the 2016 legislative session, two bills were proposed in hopes of addressing the problem of poor internet access in the state.

SB 16 was proposed with the goal of addressing the last-mile problem by incentivizing providers to build out the last legs of the internet network that connect homes and businesses to the broader internet backbone, or middle-mile network. Rural communities are disproportionately affected because sparsely populated areas often lack the financial incentive for internet service providers to invest in costly high-speed broadband infrastructure when they can’t count on making their costs back in customer usage fees. This bill would have provided tax credits to telecommunications companies that bring high-speed internet service to homes and businesses that currently don’t have it. The companies would receive a $500 tax credit for each new area they would provide service to, and the state would award no more than $1 million a year in tax credits for all internet providers combined. These tax breaks were expected to cost the state about $6.1 million over the life of the program—about six years.

This bill represents the last-mile solution, providing an option to incentivize companies to build out internet from the off ramps of the middle-mile interstate system to individual homes and businesses. This solution would be like building the virtual equivalent of state and county roads. Unfortunately, although the bill passed the Senate 32-0, it was not taken up in the House.

SB 315 was proposed with the goal of addressing the middle-mile problem by facilitating the construction of an open-access middle-mile network to increase competition among telecommunications providers. When there is strong competition in broadband markets, it drives improvements in the quality and price of the product. This bill would have created a fund to expand broadband access in the state and allowed the state to receive federal grants and use performance bonds to construct this open-access middle-mile network.

Overseen by the West Virginia Water Development Authority, the middle-mile network would be constructed one segment at a time as private partners presented viable business plans to the state demonstrating their commitment to build out the last-mile infrastructure. While the network would be owned by the state, the private partner bringing the project to the state would be responsible for maintenance and construction of that segment. According to the bill, if grants weren’t received for the broadband enhancement fund or projects did not come forward that generated the proper cash flow to cover the costs, no fiber would be constructed. SB 315 passed the Senate 29-5 but was not taken up in the House.

While neither of these bills made it through the House in 2016, you can expect to see similar bills proposed next session. There is bipartisan agreement that our current levels of broadband access in the state are insufficient. In tight budget times, decision makers will have to continue to work on what the state’s role will be in addressing this problem in the most efficient and effective way possible.

SB 298: Brunch

Senate: 34-0  House: 82-13
By Parween Mascari

Until 2016, West Virginia had the most restrictive alcohol laws of any of its neighboring states, including prohibition-era blue laws that prohibited or restricted Sunday sales. SB 298, known as the brunch bill, allows voters in each county to decide whether they want to expand on-premise sales of alcohol on Sundays during peak brunch time. Voters can now choose to allow on-premise consumption during expanded Sunday hours by adding an additional three hours—from 10 a.m. to 1 p.m.—to the times when restaurants and private clubs can serve alcohol. Each county commission can independently determine whether to put this issue on the ballot, and SB 298 allows for that vote to take place, at the earliest, during the November general election, thereby allowing the issue to be decided at no extra cost or inconvenience to taxpayers. Several counties, including Kanawha and Jefferson, have already opted to place this issue on their November ballots.

All of West Virginia’s neighboring states allow for Sunday morning alcohol sales in some fashion, some by county option, and this legislation helps bring West Virginia in line with other states. This bill passed with strong bipartisan support with a vote of 34-0 in the Senate and 82-13 in the House and was signed into law by Governor Earl Ray Tomblin on March 29.

This is a direct revenue-generating quality of life and economic development bill that will be helpful to the state’s tourism industry and will provide economic benefits to its golf courses, resorts, restaurants and private clubs. Most importantly, this legislation will create the potential for additional jobs and opportunities for service industry workers throughout the state. With Sunday brunch being such a popular pastime in Washington, D.C., and other competing markets and with millennials reportedly putting more time into planning brunch than planning a date, this is definitely a step in the right direction for West Virginia. The West Virginia Chamber of Commerce estimates that an additional $20 million in revenue will be created each year in West Virginia from statewide brunch sales.

HB 4228: Uber

uberSenate: 94-4  House: 34-0
By Jason Webb

One of the most exciting developments of the 2016 legislative session was the passage of House Bill 4228, which authorizes ridesharing companies like Uber to begin operations in West Virginia on July 1, 2016.

Uber is a technology company whose smartphone app connects people who need a ride with a driver at the touch of a button. The Uber app is currently available in more than 400 cities in 67 countries.

The legislation was supported by overwhelming bipartisan majorities in both chambers. West Virginia now joins 28 other states and the District of Columbia in creating a regulatory framework for transportation network companies (TNCs).

Several provisions contained in the new law require TNCs to perform multistate and multijurisdictional background checks on potential drivers, have insurance in place at all times and maintain a zero tolerance for drug and alcohol use.

As a result of this statute, West Virginians will soon have additional safe, reliable and affordable transportation options. Business travelers and tourists will also be pleased to find this convenience accessible to them while visiting the Mountain State.

Moreover, ridesharing can improve the quality of life for students in cities like Morgantown, Huntington and Charleston, as it will help reduce DUI rates. Recently, Virginia’s DMV commissioner pointed to the availability of ridesharing services like Uber as contributing to an incredible 25 percent reduction in the number of alcohol-related motor vehicle fatalities.

Ridesharing will also create new job opportunities in West Virginia. Driver-partners are using the Uber platform in many different ways, from earning a full-time income to supplementing their salaries at other vocations. Drivers have complete flexibility and control over their use of the Uber app, so they can make money on their own time to meet their own unique goals. That’s the best part about Uber—the hours are perfect for anyone and any situation.

HB 4011 : Charter Schools

schoolsBy Lisa Grover

During the 2016 legislative session, HB 4011, an updated version of a bill introduced in the 2015 session that proposed the establishment of public charter schools across the state, was introduced. The 2016 version adhered to strict standards for learning, teaching and safeguarding public dollars while still allowing a high degree of autonomy from most state laws and regulations and from many West Virginia Board of Education policies.

This year, the bill failed to get even a hearing in the House or Senate due to a myriad of controversial bills that dominated much of the session. In 2015, efforts to move a public charter schools bill were more successful, as legislation passed the Senate, but time ran out before the House could follow suit. Like the 2015 session, this year’s public charter schools bill faced opposition from teachers’ union supporters who view public charter schools as a threat to the status quo rather than as an opportunity for parents at every income level to have a choice of where to send their children to school. While wealthier parents already have multiple school choices—they can choose private schools or move to another county to attend another public school—many parents in the Mountain State do not.

Results from public charter school classrooms so far are very good, especially for students who often aren’t served well in traditional public schools. A study by the Center for Research on Education Outcomes at Stanford University reports that “students in poverty, black students and those who are English language learners gain significantly more days of learning each year in both reading and math compared to their traditional public school peers.” In neighboring Indiana and the District of Columbia, public charter schools are increasing student achievement and offering many at-risk children a chance to attend a high-quality public school that best meets their needs.

West Virginia has the opportunity to enact a public charter schools law that combines the unique needs of the state with the lessons learned from the first quarter century of public charter schools in this country. In order for that to happen, though, parents and other citizens need to tell state lawmakers that the creation of innovative and accountable public schools, particularly for disadvantaged students, is critical to the future of the state.

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