West Virginia Chamber - 2021 Position Papers

Issue

A comprehensive plan to attract young workers must be put in place in order for West Virginia to take maximum advantage of the state’s economic potential.

Background

West Virginia’s civilian labor force participation rate is 53.2%. This means that out of all working-age West Virginians who are eligible for employment, just slightly over half are in the workforce. While this rate is up from a thirty-year low in 2015, it remains the lowest in the nation. It should be noted that the civilian labor force counts both people who are employed and people who are unemployed and actively seeking employment.

West Virginia’s low labor force participation rate is now leading to another issue – a lack of qualified people in the workforce who can fill available jobs. In 2009, at the height of the Recession, West Virginia had 4.2 unemployed people for every job opening. In 2019, there was one unemployed person for every job opening. In the past four years before the COVID-19 pandemic, West Virginia added over 30,000 jobs, helping to put more people back to work and get more people to re-enter the labor force. While coronavirus caused a significant uptick in unemployment, it has created new opportunities for attracting young talent that is eager to escape large urban areas.

The Chamber's Position

West Virginia has taken some positive steps towards attracting and retaining young workers. The Legislature passed Senate Bill 1 in 2019, which provides last-dollar-in funding for students to attend career and technical college in the state. This program is still in its infancy, but all signs are pointing towards it being a success and helping to provide students with the necessary skills for good-paying jobs. This program should be monitored and consideration should be given to expansion if it continues to be successful.

West Virginia should consider providing tax relief to workers who are saddled with student loans. According to Business Insider, the average West Virginia student-loan borrower owes over $30,000. Given that these loans frequently carry interest rates of 6%-7% or higher, they can take several years or decades to pay off, and typically burden younger workers who are recent college-graduates. Providing tax relief to responsible student-loan debt holders would be a major incentive to remain and work in West Virginia.

Remote work has become more normalized due to the COVID-19 pandemic, and many employers across the country have found that their workforce is just as productive when working from home as they are in the office. Major employers tell us that they don’t care where their employees live as long as they are able to remote connect to their jobs. West Virginia should place a heavy focus on attracting young families by highlighting its great quality of life and outdoor activities. Reliable, high-speed broadband connectivity is also key to attracting these individuals.

Lastly, K-12 public education improvement must remain a top priority for policymakers, students, parents and teachers. Ensuring that our children are equipped to succeed in the global marketplace regardless of their economic situation or background is essential to a developing economy. The West Virginia Chamber supports a wide array of measures that will help West Virginia students compete with their national and international peers.

Printable Version

Issue

In our ever-expanding digital world, broadband access has become a vital necessity for households and businesses alike. Broadband access has rapidly evolved into a critical infrastructure component. In recognition of this shift, many States have implemented broadband initiatives to remain competitive in attracting and retaining jobs. These broadband policy efforts have come to the forefront of State government efforts focused on economic development and job creation. It is abundantly clear that affordable, high speed broadband access is a dominant consideration for the business community, their employees, their customers, and their supply chains.

Background

Since the advent of the Broadband Internet era in 2000, telecommunications providers have collectively invested over $4 billion in building a fiber optic middle mile and last mile infrastructure for commercial and residential broadband services in West Virginia. This investment has resulted in a dramatic expansion of broadband availability in the state, however, there are many rural communities that still do not have access to broadband service at speeds that meet or exceed the new Federal Communications Commission (FCC) definition. The majority of these communities are sparsely populated and geographically removed from more populated areas of the State. Due to these factors, private sector investment in these markets is difficult because opportunities to receive a return on their investment are very limited, if they exist at all.

To help solve the dilemma of extending broadband service to sparsely populated areas of our country, the FCC recently completed an auction for its Rural Digital Opportunity Fund (RDOF). Nine companies successfully bid on a total of over $362 million to help subsidize the cost of expanding service in West Virginia. The largest winner in the auction, Frontier Communications, successfully bid on 68% of these funds, or $247,626,395. The RDOF funds will be distributed to these companies over the next ten years to subsidize the cost of expanding service into West Virginia’s most remote areas.

The Chamber's Position

Broadband services are clearly essential to economic development, healthcare, education, business and daily life in the 21st Century. While broadband providers have and are continuing to make substantial investments in improving and expanding the availability of services in the state, broadband investments in the most rural portions of our state will remain an economic challenge because of the high cost of deployment and low customer density. The Chamber supports any state policy that will incentivize the private sector to invest in unserved and underserved markets throughout the State. For example, the State should consider the use of tax credits for the provision of new broadband service in underserved and unserved markets, as well as the creation of a loan guarantee program, which will assist smaller companies by providing access to capital so that they can invest in these same geographic areas.

Broadband services are clearly essential to economic development, healthcare, education, business and daily life in the 21st Century. The COVID-19 pandemic has highlighted that broadband service is essential to the everyday life of citizens, especially as more and more employees must work remotely. The Chamber supports any state policy that will incentivize the private sector to invest in unserved and underserved markets throughout the State. For this reason, the West Virginia Chamber of Commerce strongly supports the efforts of the Federal Communications Commission through its Rural Digital Opportunity Fund. The West Virginia Chamber also strongly advocates for strict and thorough oversight of these funds to ensure that they are being properly used to connect West Virginians to high-speed internet. If winners of the RDOF bid are not using the funds as promised, the FCC should re-auction those dollars and allow other companies the opportunity to expand broadband service.

Printable Version

Issue

West Virginia has made significant progress in the past few years in adopting meaningful civil justice reform legislation. Many of the laws that made West Virginia stand out in a negative light have been resolved by the decisive actions of the 82nd, 83rd and 84th West Virginia Legislatures.

Thanks to the reforms that have been undertaken, legal experts both inside West Virginia and throughout the nation recognize that steps are being taken to ensure West Virginia will become a place with fair and consistent laws.

Despite the progress, some additional reforms must be passed to continue the goal of bringing West Virginia into step with the rest of the nation. Legislation that is still needed includes: medical monitoring, collateral source rule, phantom damages, fair mediation system, and seatbelt use admissibility.

These reforms are needed in order to continue towards the goal of “Making West Virginia Irresistible to Business.”

The Chamber's Position

Provided are the components necessary to enact additional legal reforms that will eliminate risks and impediments on West Virginia employers and revitalize the state so it truly can grow its economy.

• COVID-19 Liability Reform - The COVID-19 pandemic has exposed a wide array of businesses to liability, despite their best efforts at following all applicable rules and guidelines to safeguard public health. The West Virginia Legislature should pass a COVID-19 liability shield to protect these employers from lawsuits that threatened to put them out of business. For additional information, see the Chamber’s full position paper, COVID-19 Liability Issues.
• Full and Thorough Appeals - The West Virginia Chamber believes an appeal of right is fundamental to equal justice and due process. This includes an appellate process that provides a full and thorough review of cases that warrant appeal.
• Collateral source - Allow courts to consider amounts that plaintiffs have received as compensation from other, non-family sources to cover costs in determining damages. When juries are trying to determine how much economic loss a plaintiff has suffered for compensation, they should consider all sources, which offset that economic loss in determining a just verdict and avoid unfair double-dipping by jury award winners.
• Phantom Damages - Allow plaintiffs to recover only the amounts actually incurred for medical services, rather than the full sticker price that is listed before negotiations are completed.
• Online Case Management System - Continue the implementation of a statewide and uniform online system for case management of all circuit and family courts in West Virginia.
• Fair Mediation - Mediations are very successful in resolving civil cases without the expense of a trial. Some circuit court judges who will preside over a trial, however, opt to mediate the case themselves rather than assign it to a different judge or mediator. This can have a chilling effect on the ability of parties to speak candidly about issues. Legislation should be passed to require a mediator to be different than the judge would potentially preside over a trial.
• Seatbelt Admissibility - West Virginia law requires the use of a seatbelt in a moving vehicle. Failure to comply with this law can lead to increased risk of injury or death in the event of an accident. Legislation should be adopted that allows evidence of whether or not a seatbelt was worn to be admissible into court, thereby allowing a judge and/or jury to weigh all aspects of a case.
• Medical monitoring - In 1999, the West Virginia Supreme Court established a new cause of action, which allows an individual who has been exposed to a proven hazardous substance to recover damages for future medical monitoring when the individual has no physical injuries. This new cause of action exposes many of West Virginia’s businesses to potential liability even though there is no actual injury associated with the exposure. The Legislature should enact legislation to correct the Court’s decision.

This list of recommended provisions is offered as a series of additional legal reforms which would further bring West Virginia into the mainstream of other states in terms of rules and laws governing court proceedings.

Printable Version

The novel and unexpected COVID-19 pandemic of 2020 brought significant health and economic problems to West Virginia, the United States and the world. In an effort to avoid overwhelming hospitals with critically ill patients and fatalities, governments made quick decisions to close down certain sectors of the economy and issued stay-at-home orders to individuals which helped stem the spread of COVID-19. These actions led to high levels of unemployment, as many businesses were forced to make difficult choices and lay off or furlough employees. It put many companies, both large and small, at risk of financial ruin. First responders, hospitals and healthcare providers got ready for a potential onslaught of COVID-19 patients at substantial unexpected cost. Meanwhile, other sectors of the economy were deemed essential and had to quickly adapt to best protect the health of their employees and customers, also at substantial cost. At the same time, protocols for safe operations continued to evolve as more was learned about the spread of the virus.

As the economy re-opens and prepares to operate in a world with COVID-19, many employers may find themselves as the subject of lawsuits stemming from situations created by this pandemic. This position paper covers multiple topics and provides suggestions on what should be done to best protect jobs and our economy so that we can resume pre-coronavirus levels of commerce as soon as possible.

1. Mandating Business Interruption Insurance Coverage for Pandemic-Related Claims

Issue

Congress and state legislatures across the country are considering legislation that would force insurance companies to pay claims under business interruption insurance policies to businesses suffering lost income due to business closures or restrictions imposed by state governments in response to the COVID-19 pandemic. Many of these proposals would mandate business interruption coverage without regard to whether an insurance policy actually provides coverage for pandemic-related claims.

Background

Business interruption insurance is designed to cover financial losses to replace income for a defined time period, limited to covered events, known as perils, in which the cause of the temporary lost income is covered under the insurance policy contract. While insurance policies differ, generally this coverage is activated by a physical loss such as building damage.

Most business interruption policies do not cover business income losses caused by pandemics like COVID-19, absent an explicit policy endorsement. First, there is no coverage because a business likely will not suffer any physical damage due to a pandemic. Although forced closures and other restrictions on the operations of a business, such as only permitting restaurants to sell food for delivery or carry out, are arguably “interruptions” to business in the literal sense, no direct physical damage (i.e., a building fire) occurs to a business’s property from a business closure or operation restrictions.

Second, these policies often contain specific exclusions of coverage for pandemic or virus-related claims. The reason policies exclude these types of claims is simple: the shared and simultaneous impact upon nearly every person and every business, due to widespread incidents like pandemics, is too wide and too damaging to project. In other words, because insurers are unable to anticipate the business income losses that may result from such a widespread risk, they are unable to accurately price business interruption policy premiums to cover such risks.

Indeed, the West Virginia insurance Commissioner issued a Bulletin relating Business Interruption Coverage and COVID-19 on March 26, 2020. Bulletin No. 20-08 recognizes that The potential loss costs from such perils are so great that providing coverage would jeopardize the financial solvency of insurers and many businesses could not afford the premium costs to cover such catastrophic events even if they were covered perils. Global pandemics like COVID-19 usually fall into this category of risks or perils that are not covered.

The proposed federal legislation, H.R. 6494, would require any insurer that offers business interruption coverage to “make available, in all of its policies providing business interruption insurance, coverage for losses resulting from . . . any viral pandemic; [and] any forced closure of businesses . . . by law or order of any government or governmental officer or agency[.]” H.R. 6494 even goes so far as to completely void policy exclusions for losses resulting from a viral pandemic.

To date, seven (7) states have introduced similar legislation mandating business interruption policy coverage for COVID-19-related claims. Though the state legislation varies in scope, most of these proposals would apply to businesses who employ fewer than 150 people.

The Chamber's Position

The West Virginia Chamber of Commerce strongly opposes any legislation that would mandate pandemic-related business interruption coverage for policies that specifically exclude such claims.

First, insurance policies are contracts – in this instance, contracts between an insurer and a business owner. Both the insurer and the business owner contractually agreed to the terms of existing business interruption policies, including their exclusions for virus- or pandemic-related claims. Retroactively mandating coverage in the face of conflicting policy terms would fundamentally change contract law more generally and jeopardize any party’s ability to rely on the language of any contract in the future. That’s not good for business.

Second, small businesses will need both continued and future coverage for business interruption. If markets are forced to cover perils not stated in the policy, companies will either be unable to write any future business interruption coverage or will have to price it to any peril irrespective of the policy terms, resulting in a policy price above what many businesses can afford. This creates an untenable position for small businesses and others after a subsequent fire or storm. It is imperative that policyholders and insurers have the ability to continue to rely on contract terms that have been agreed to by the parties, approved by regulators, and repeatedly tested in courts.

Third, these legislative proposals would bankrupt insurance companies and cause a collapse of the insurance market. Proponents of the legislation often cite the estimated $800 billion “surplus” reserve held by insurers as justification for forcing business interruption coverage. However, this reasoning is misguided and inaccurate. If insurers are forced to pay for pandemic-related business interruption claims not contemplated by existing policies, this reserve will be quickly depleted, and insurance companies will become insolvent. This “run” on insurer reserves would inevitably result in insufficient resources to honor claims actually covered by business interruption policies, such as damage from hurricanes, fire, or tornadoes. Maintaining a vibrant, competitive, and solvent insurance climate in West Virginia is the only way to protect West Virginia businesses from future losses.

Further, this issue presents legitimate constitutionality concerns. Many legal experts agree that government-forced rewriting of insurance contracts is unconstitutional, and the passage of any such legislation would force insurers to vigorously defend their contractual and constitutional rights through costly litigation, further depleting resources available to pay claims.

West Virginia cannot afford to turn back the significant strides we have made in the civil justice reform landscape, which is precisely what this effort would do.

The only viable solution is for Congress to create the COVID-19 Business and Employee Continuity and Recovery Fund. As the United States adapts to COVID-19 and our economy fights for survival, insurers that provide coverage to West Virginia businesses, and businesses across the county are joining with retail partners and broad business groups to ensure that federal money is injected into the small-business community immediately and with the longevity necessary to save jobs and our future economic health. The proposed Recovery Fund, modeled after the September 11th Victim Compensation Fund, would permit the federal government to distribute federal relief money and liquidity to businesses and their employees impacted by the COVID-19 pandemic. Because of the seemingly-universal nature of this risk, it is critical that a remedy for impacted businesses be enacted at the federal level without jeopardizing the solvency of insurers.

2. Product Liability Protections

Issue

Whether product-liability protections are in order for producers and distributors of necessary Personal Protective Equipment. Due to the speed with which the COVID-19 pandemic affected the world, severe supply shortages of many essential products needed to help limit the spread of the virus quickly occurred. Many individuals and businesses stepped up to help manufacture these needed items, but now may face product liability lawsuits related to their public service during a national emergency.

Background

As a result of the COVID-19 pandemic, many consumers, health care providers, first responders and others are looking for a way to protect themselves by using a variety of products. These products include, but are not limited to, personal protective equipment, ranging from homemade masks to equipment designed to protect healthcare providers, hand sanitizers, and various anti-bacterial cleaning products. Congress recognized the possibility of lawsuits against certain manufacturers of personal protective equipment by including protections from liability for manufacturers of respirators in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Unfortunately, the Act did not include protections from product liability claims as to the many other devices and products being manufactured to protect us all from the hazards of COVID-19, despite the fact that manufacturers and others face the threat of possible lawsuits due to their efforts. As a result, the West Virginia Chamber recommends enacting a statute providing limited immunity to entities that manufacture, use or distribute this personal protective equipment absent a showing of malicious intent to harm users of the product or willful misconduct.

The Chamber's Position

Any statute limiting liability for the manufacture, use or distribution of personal protective equipment should apply to the following: any device, equipment, substance, or material recommended by the Centers for Disease Control and Prevention, Food and Drug Administration, Environmental Protection Agency, Department of Homeland Security, another federal authority, or West Virginia authority to limit the spread of coronavirus, including but not limited to respirators, masks, surgical apparel, gowns, gloves, other apparel intended for a medical purpose, sanitizers, disinfectants, cleaning products.

Persons who manufacture, label, donate or distribute personal protective equipment should not be liable for damages, injury or death caused by personal protective equipment donated or sold at a price not to exceed the cost of production to a charitable organization, governmental unit or licensed health care provider or facility absent a showing of willful misconduct.

Any other person or entity who manufactures, labels, or distributes personal protective equipment should not be liable for damages, injury or death caused by such personal protective equipment absent a showing of gross negligence, willful misconduct, or intentional infliction of harm.

Any person or entity who used, employed, dispensed, or administered personal protective equipment in reliance on and by generally following applicable government standards and guidance related to such personal protective equipment should not be liable for damages, injury or death caused by or related to use of the personal protective equipment absent a showing of gross negligence, willful misconduct, or intentional infliction of harm.

The statute should contain a statute of limitations of one year from accrual of the cause of action and contain a sunset provision of the later of October 1, 2024 or the date on which there is no declaration by the Secretary of Health and Human Services under section 319F–3(b) of the Public Health Service Act (42 U.S.C. 247d–6d(b)) that is in effect with respect to coronavirus. A claim should be deemed to have “accrued” when the injury or claim is manifest to the would-be-claimant or should have been manifest to a reasonable person in the same or similar situation as the would-be claimant.

3. Liability Protection from Employees Diagnosed with COVID-19 Asserting Workers Compensation Claims

Issue

Whether employers should be protected from additional Worker Compensation claims. Employers whose businesses were deemed essential during the state’s “Stay at Home” order and those employers who are now re-opening as permitted by the Governor are concerned that employees who have been previously diagnosed with COVID-19 or may acquire it in the future may claim they were exposed to COVID-19 in the workplace and that they therefore should be eligible to receive Worker Compensation benefits.

Background

Worker Compensation benefits are designed to offer medical and financial benefits to workers “injured” in the scope of their employment. “Injury” includes occupational diseases due to causes and conditions characteristic of or peculiar to a particular occupation. In past situations involving contagious diseases such as H1N1, hepatitis or AIDS, only certain employees such as healthcare providers and first responders could make an occupational disease claim. They also had to prove when and where the transmission occurred or prove there was a substantial connection between their occupation and the transmission of the disease. Many states are changing these rules by enacting presumptions that any “essential employee” who becomes infected must have been exposed to COVID-19 in the workplace. Not only will such presumptions result in thousands of dollars in added costs, it ignores the reality that many essential workers have no additional exposure because of the nature of their work and they could have just as easily been exposed by their own activities unrelated to their job.

The Chamber's Position

The Chamber appreciates and recognizes the potential impact of a COVID-19 infection on individuals who remained at work in industries deemed essential. Before any legislation is crafted to create a presumption that a worker has contracted the disease on the job, the Chamber respectfully offers the following suggestions:

a) To the extent the legislature considers applying workers’ compensation coverage to coronavirus-related claims, whatever coverage may apply should be offset by the paid leave provided under the Families First Coronavirus Response Act (FFCRA) that provides federal funding for emergency paid sick leave at businesses with less than 500 employees and 80 hours of paid leave up to $511 per day.

In addition, any presumptions under workers’ compensation should be limited in application and not cover all industries deemed “essential.” For example, any such presumption should only apply to front line health care workers and first responders who actually worked with or provided a service to infected persons. In short, there must be a causal connection between the conditions under which the work was performed and COVID-19, and which can be seen to have followed as a natural incident to the work as a result of the exposure occasioned by the nature of the employment.

b) Additionally, since West Virginia lifted its “stay at home” order, individuals have been free to socialize in larger numbers and operate more or less as usual, although the risk of exposure is still present. As a result, it will be essentially impossible to determine whether a future exposure is truly occupational. Presumptions should apply only from the start of the “stay at home order” until lifted.

c) Any presumption should only apply to temporary total disability provisions to the extent that the exposure is truly occupational. Such a policy will ensure that workers’ compensation plans can maintain coverage without placing enormous stress on the entire system, while providing coverage for those most likely to have become infected as a result of their work.

4. Immunity from Lawsuits Against Employers Related to WV's Workers Compensation Deliberate Intent Statute

Issue

Whether employers, both those deemed essential and otherwise, are concerned that employees infected with COVID-19 will claim they were exposed while at work and that their employer is liable under West Virginia’s deliberate intent statute because of some unintended situation despite an employer’s efforts to follow CDC or other governmental guidelines.

Background

The legislature recently revised the 5 factor test for deliberate intent under the Worker Compensation statute. It now says that an employee proves deliberate intent if they can show: (1) the existence of a specific unsafe working condition that presented a high degree of risk and a strong probability of serious injury or death; (2) that the employer, pre-injury, had actual knowledge of the existence of the specific unsafe working condition and of the high degree of risk and the strong probability of serious injury or death presented by the specific unsafe working condition; (3) that the specific unsafe working condition was a violation of a state or federal safety statute, rule, or regulation, whether cited or not, or of a commonly accepted and well-known safety standard within the industry or business of the employer; (4) that notwithstanding the existence of each of the above-referenced facts, the person or persons alleged to have actual knowledge intentionally thereafter exposed the employee to the specific unsafe working condition; and (5) that the employee suffered serious compensable injury or compensable death as a direct and proximate result of the specific unsafe working condition. It is quite likely that employers will be unable to ensure that CDC guidelines are followed every minute of every day, whether because of mistakes made by supervisors or co-workers or an inability to fully comply because of misplaced, stolen or unavailable PPE due to nationwide shortages.

The Chamber's Position

COVID-19 is an unseen and highly contagious disease, yet some persons who are infected may show no symptoms. The CDC has changed its guidance for employers multiple times because COVID-19 is novel and we are still learning about it. Meanwhile employers large and small are experiencing a nationwide shortage of PPE and cleaning supplies. Under these circumstances, the Legislature is encouraged to put in place protections that prevent employers from being held liable from claims of worker compensation deliberate intent liability.

5. Temporary Protections for Hospitals and Healthcare Providers

Issue

Whether health care facilities should be afforded temporary and limited liability protections for their good faith actions taken in the course of efforts to assist in the state’s response to the COVID-19 health pandemic.

Background

As the novel coronavirus SARS-Cov2 and the resulting disease state COVID-19 began to sweep across large cities on the east and west coasts, it posed a direct threat to the U.S. medical system and its supporting supply chains. West Virginians watched the news as Italy, Seattle and New York City were inundated with COVID-19 patients under resource-constrained conditions and health care providers were faced with conserving, substituting, adapting, re-using and re-allocating critical supplies. As West Virginia was preparing for the COVID-19 pandemic to begin affecting its population, Governor Jim Justice signed a number of executive orders to limit the spread of the virus in the state. Among these actions were executive orders that pertained to healthcare providers, including a prohibition on elective medical care. Healthcare providers also struggled to obtain personal protective equipment (PPE) for their staff due to world-wide shortages of these critical materials. Meanwhile, science, healthcare organizations, the CDC and medical providers engaged in a high speed quest for knowledge in a global effort to diagnose a growing variety of COVID-19 symptoms impacting different age groups and a quest to find and use possible treatments. While elective medical care was put on hold, drastically reducing revenues of many healthcare facilities and providers, those preparing to treat COVID-19 patients and those making substantial changes to help reduce the spread of COVID-19 incurred substantial additional expenditures.

The Chamber's Position

Healthcare providers are a critical component of the state’s economy and the health and well-being of all West Virginians. Ensuring that these facilities are able to recover from difficulties arising from the COVID-19 pandemic is essential to the health and economic future of our state and its citizens.

These facilities, their employees and management, as well as all medical providers, should be given immunity from civil liability for any injury or death alleged to have been sustained because of a provider’s or facility’s good faith acts or omissions while providing health care services in support of West Virginia’s COVID-19 response as laid out in executive orders and directives by the West Virginia Department of Health and Human Resources (DHHR). This should include acts or omissions attributable to a lack of resources that rendered the health care provider or facility unable to provide the level or manner of care that otherwise would have been required in the absence of the COVID-19 pandemic, and to any acts or omissions resulting from efforts or medical decision-making to comply with executive orders of DHHR directives to slow the spread of the virus.

Of course, immunity should not extend to acts or omissions that rise to the level of a crime, fraud, actual malice, or a conscious, reckless, and outrageous indifference to the health, safety and welfare of others.

6. Liability Protections for General Businesses

Issue

Whether liability protections should be adopted for businesses in general. Businesses that are in the process of re-opening and resuming commerce following the COVID-19 pandemic and government-mandated closures are facing a new uncertainty – the risk of being sued if a patron, employee or other visitor catches the virus.

Background

As COVID-19 spread across the United States, many types of businesses were ordered to close by government directive in an attempt to slow the spread of the disease. Some businesses were deemed essential but were required to adapt policies to protect customers, clients, and employees from exposure to the virus. Most businesses have experienced major adverse financial impacts due to the spread of COVID-19, and many will be forced to close their doors. Those businesses that are reopening and ramping up operations are frequently doing so under much greater strain than normal.

As businesses are re-opening, many are now doing so with the fear of being sued for an individual allegedly catching COVID-19 at their establishment. Despite the impossibility of proving exactly where an individual would have contracted this virus, these types of suits are appearing across the country, further jeopardizing the ability of employers to recover from the COVID-19 pandemic.

The Chamber's Position

Safeguards should be put in place to protect employers from lawsuits related to COVID-19. Specifically, policymakers should consider adopting the following standards:

1. Compliance with federal, state or other governmental guidelines regarding safe business operations as a result of the COVID-19 pandemic shall be a complete defense to any claim of COVID-19 related injury or illness by employees or non-employees.

2. Actual knowledge of an unsafe condition relating to COVID-19 should be required to be proven in order to make a prima facie case of fault in a COVID-19 related claim by an employee or non-employee.

3. Constructive knowledge (i.e., should have known) of an unsafe condition relating to COVID-19 is insufficient to establish a prima facie case of fault in a COVID-19 related claim by an employee or non-employee.

4. In the absence of federal, state or other governmental guidelines regarding safe business operation as a result of the COVID-19 pandemic, compliance with business or industry standards for the specific business at issue shall be a complete defense to any claim of COVID-19 related injury or illness by employees or non-employees.

5. Identify the mechanism to operate, such as waiver, assumption of the risk.

Printable Version

Issue

The business case for employee diversity is real. Diversity in the workplace is beneficial. People with different backgrounds bring different perspectives and create a more robust, stimulating, and vibrant environment from which everyone can learn and grow. In turn, the expanded base of knowledge leads to more creativity and innovation in the workplace. A diversity of opinions naturally leads to higher quality decisions and improved performance.

Discussion

West Virginia Chamber of Commerce members employ more than one-half of the state’s workforce, giving the Chamber a large and influential voice to articulate workforce needs and preparedness. We are a solutions oriented, member supported organization that gives voice to the needs and concerns of our state’s employers. Our members understand the struggles of finding qualified applicants for well-paying jobs.

There are numerous types of diversity within our culture, including gender, race, age, religion, national origin, sexual orientation and gender identity. Numerous studies confirm the economic reality that diversity and non-discrimination policies are good for business. Companies embracing diversity know that inclusive working environments are good for business. Studies show that employers with non-discrimination policies enjoy greater productivity and lower turnover in their workforces.

Demographic research shows that West Virginia ranks exceptionally low in terms of the racial diversity of our population. According to the 2014 U.S. Census, West Virginia’s total population is 92.5% white, 3.6% black, 1.5% Latino / Hispanic, and 0.8% Asian. West Virginia’s population is, to a large extent, racially homogenous.

In addition to issues of racial diversity, employers also recognize the importance of other types of diversity among their employees, such as sexual orientation and gender identity. More than 90 percent of Fortune 500 companies now include sexual orientation in their workplace nondiscrimination policies, and 61 percent of such companies prohibit discrimination based on gender identity.

The Chamber's Position

We need full participation and inclusion of all groups in order to move West Virginia forward. Our ability to attract new jobs and the job creators, particularly Fortune 500 companies who require diversity within their workforce, is greatly impaired without a strong commitment to diversity.

West Virginia businesses should take full advantage of the opportunities that a diverse workforce represents, and our policy makers should embrace policies that support a diverse and robust workforce in West Virginia. As the U.S. population becomes increasingly more diverse, so too will our state’s workforce in West Virginia. West Virginia’s job creators should embrace diversity and capitalize on the resulting benefits.

West Virginia must be able to attract and retain investment and talent from all backgrounds. The Chamber has long supported diversity in our state and in our workplaces. Many of our Chamber members already have existing personnel policies in effect which promote diversity and inclusion in the workplace. The Chamber also respects the strongly-held faith based views of different religious groups in West Virginia. The Chamber will not support legislation which promotes or allows discrimination, nor which sends the wrong message regarding economic development and job growth in West Virginia. The Chamber will oppose legislation (including RFRA) that authorizes a form of discrimination or that creates new causes of action against employers. Such legal actions would place our state’s employers at a competitive disadvantage with other states.

Printable Version

Issue

West Virginia’s public education system must continuously strive to ensure students can achieve the results necessary to compete in the global marketplace.

Background

The West Virginia Chamber of Commerce believes that the children of West Virginia deserve a public school system that is the envy of the nation. Our schools must produce educated, versatile, creative problem solvers and responsible, well informed citizens. Our children must be equipped to succeed in the global marketplace regardless of their economic station or background.

West Virginia Chamber of Commerce members employ more than one-half of the state’s workforce, giving the Chamber a large and influential voice to articulate workforce needs and preparedness. Our members understand the struggles of finding qualified applicants for well-paying jobs. Chamber members know that educated and skilled citizens make good workers and help to build robust communities.

When we fail to educate all children, the outcome is predictable: elementary school students with poor skills become middle school students with poor skills, and eventually become high school students without the ability to succeed in post-secondary education or to compete in today's economy. Through the 3rd Grade, children learn to read. After the 3rd grade, children read to learn. If they do not meet this critical benchmark, children continue falling further and further behind and will not be prepared for life after school.

The National Assessment of Educational Progress (NAEP) is the largest continuing and nationally representative educational assessment of American students in all 50 states. This assessment is administered every two years and measures student achievement in the critical subjects of math and reading in both the 4th and 8th grades. In the 2019 NAEP assessment, the percentage of West Virginia students who are considered “at-or-above proficient” rank the state 44th in fourth-grade reading, 45th in eighth-grade reading, 48th in fourth-grade math, and 47th in eighth-grade math. In measuring the important metric of being able to read in order to learn when a child is in the 4th grade, only 30.3%, less than one-third, of 4th graders in West Virginia are considered proficient in reading.

The 2019 WV Balanced Scorecard that was released by the West Virginia Department of Education, which tracks all public schools’ English Language Arts and Mathematics performance, shows that much work remains. According to the state’s own assessments, out of 116 public high schools, 10 meet the standard for English Language Arts and none meet the standard for Math.

Yet from a spending perspective, public education accounts for nearly 45 percent of the state’s General Revenue Budget (FY 2021). According to the National Education Association (NEA), West Virginia has the 21st highest total spending per pupil in the nation (2020 Report). West Virginia spends $12,878 per pupil. The national average for per pupil spending is $12,978. Despite the state’s significant investment in education that keeps up with national norms, student achievement in West Virginia continues to lag behind the rest of the country.

The Chamber's Position

The Chamber supports efforts to improve the academic achievement of every student in West Virginia. These recommendations provide a framework for a system that allows for more authority and accountability at the local level. The West Virginia Legislature and the West Virginia Department of Education must work together to remove existing impediments that constitute the over-regulation of our education system while guaranteeing benchmarks that raise the bar for West Virginia students to compete successfully with their international peers.

• The Chamber supports an accountability system for schools that is easy to understand and allows for a measurement of year-to-year progress. Accountability systems that are based on academic growth will increase transparency, parental engagement and public pressure to improve. Accountability systems are contributing to improved school performance in other states.
• West Virginia must begin to implement a culture of constant improvement in our public school system. Such a move will help our state become and remain competitive in attracting investment and jobs to West Virginia. This mindset is also needed to combat what is frequently perceived by employers seeking to hire recent graduates as a culture of “mediocrity is OK” in our public school system. Nearby states such as Virginia have adopted rigorous performance standards for schools, principals and teachers. We should examine what practices work best in those states and implement them here.
• Transparency in our public education system is critical. A 2012 audit found that West Virginia is one of the most highly-centralized and the most insulated from voter control or input in the country. Requiring an easy-to-use, detailed online portal that allows the tracking of education funds down to the classroom level will enable parents, teachers and policy-makers the ability to explore how their tax dollars are being spent and offer creative solutions on maximizing the efficiency of the state’s investment in education. Additionally, the West Virginia Legislature and Governor should require a new independent audit of the state’s public education system to ascertain what improvements have been made since the 2012 audit.
• Highly qualified principals and teachers are of great importance to helping students improve academic achievement. Professional development and leadership training should be continuously modernized to ensure that those in the classroom have the necessary resources and support to help our children. Teachers must also be respected as professionals, and given the flexibility to customize teaching methods to better fit the needs of each student.
• The Chamber believes that innovation works in both business and in education. Public charter schools would allow for truly innovative schools where non-traditional operators, such as a group of educators, parents or directors could lead a school or a cluster of feeder schools to recreate itself from the ground up with new ways to best educate its kids. The freedom to operate a low-performing school differently and to move away from the “one size fits all” paradigm will create the best opportunity for students to reach their potential. West Virginia recently joined forty-four states and the District of Columbia in allowing public charter schools, even though no more than three can be created every three years. Every effort should be made to assist in the creation of public charter schools in our state to allow innovative teaching methods where best practices can be learned and applied to traditional schools. These efforts should include additional authorizing bodies to limit conflicts of interest in decisions affecting charter school applications.
• Additional control should be given to local boards of education to better meet the local realities they face. This control should extend to more flexibility in setting the school calendar, and locality pay to ensure that highly qualified teachers can be attracted and retained.
• Personnel policies within the public education system must be modernized, and principals should be given more responsibility and accountability to ensure they have an effective team in place to lead their schools.
• While public school teachers have received raises equating to 10% during 2018 and 2019, salaries for public educators in West Virginia continue to rank 50th in the country (NEA Report). Continuous attention must be given to improving this standing, though future raises should incorporate a system to ensure that highly qualified and excellent teachers are receiving additional compensation.
• Pre-K programs in West Virginia should be expanded. Many children in our state are living in difficult circumstances and do not receive the educational foundation that is necessary to their success in school. Pre-K programs play a vital role in preparing these students, helping them start K-12 school on a level playing field.
• Schools and local businesses should be encouraged to closely partner with each other. The employer community in West Virginia supports public education and can provide additional resources and support that are not traditionally available to schools. This is not limited to financial support and can extend to internship and mentorship programs to benefit students.
• A continued focus must remain on meeting students’ emotional needs, especially those dealing with family challenges such as drug abuse, homelessness or unemployment. West Virginia should also continue expansion of the U.S. Department of Agriculture’s Community Eligibility Provision to ensure every student receives breakfast and lunch – regardless of their family’s ability to pay.

These policy and legislative recommendations represent part of the Chamber’s long-term commitment to the multifaceted effort to transform our education system in West Virginia. We believe that all West Virginia students should be held to high expectations, with the belief that they can and will achieve success. The West Virginia school system should promote a culture of rigor that makes ‘getting an education’ a serious pursuit which leads to success in life.

The West Virginia Chamber of Commerce is comprised of our state’s leading businesses. We are a solutions-oriented, member supported organization that gives voice to the needs and concerns of our state’s employers. The Chamber is committed to working with state and local officials, teachers, principals and caring citizens to assure the best for our 21st Century students.

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Issue

West Virginia is an energy state. Our coal, oil and gas resources are some of the most valuable natural resource assets in the world, and these resources – and the industries they power – play a major role in economic development for our state and nation. The West Virginia Chamber also points out that market conditions and requirements from prospective businesses require fostering the growth of renewable energy sources such as wind and solar. To best utilize all of these energy sources, West Virginia needs to ensure that we are putting the correct policies in place to encourage “downstream investment” that utilizes as many of these resources in-state as possible.

Background

In 2019, the most recent year for which data is available, West Virginia was the second largest producer of coal in The United States. West Virginia was also the sixth largest producer of natural gas that year in terms of marketed production. Those two factors alone place West Virginia in a unique situation to attract significant economic development.

Over the past few years West Virginia has been examined by major investors seeking to build natural gas power plants and other downstream projects. These projects would provide decades of economic benefit to the state and nearby communities. Unfortunately, some competitive interests have sought to tie these projects up in the courts. While their legal challenges were found to be without merit, these competitors successfully delayed the projects long enough that they were pulled by investors. By comparison, over 30 gigawatts of natural gas-fired electricity is going online in neighboring Pennsylvania and Ohio.

West Virginia is also the site of investment and development of renewable energy sources such as wind and solar. Those who work in economic development will quickly point out that many major employers and investors have a requirement that some of the energy they use comes from renewable sources. This drove the successful passage of SB 583 during the 2020 Legislative Session, which allows commercial production of solar energy in the state.

The Chamber's Position

West Virginia economic development groups and officials – from the local level to the federal level – must send clear and unambiguous signals to potential investors that West Virginia is welcoming of all types of energy investment. The state must also help these investors efficiently work through the regulatory process so that they can quickly break ground and begin construction. Competition should not be between technologies or fuel types, but rather between West Virginia and other states. If West Virginia does not capitalize on these opportunities, we will continue to watch these projects be built across the state line.

West Virginia should avoid severance tax increases advocated by some groups to fund certain projects. While severance taxes are an important part of West Virginia’s collected revenues, increasing them in a careless fashion can make production less economically viable in our state. The West Virginia Chamber also opposes any efforts to increase taxation on wind energy by taxing wind turbines at real property values rather than salvage value. Changing the rules in the middle of the game would make operating wind energy facilities uneconomical, sending a troubling signal about the lack of a stable business environment in the state.

Ad Valorem taxes on producing natural gas wells are out of sync with surrounding states. They have not been updated to consider shale gas development and all the costs associated with such. The Chamber supports a fair property tax framework in which producers pay taxes on the true and accurate value of the wells.

As technology and innovation foster advances in natural gas development, state laws must be modernized to allow for large tracts of minerals to be produced in a planned and efficient manner. This means that mineral owners must be treated fairly, but not enabled to hold up development for the rest of the owners in the unit. Unitization laws would make West Virginia competitive with surrounding states, foster greater energy extraction with smaller surface impact, enable more West Virginians to receive royalty payments, and encourage investment and job growth in the natural gas sector.

Affordable, abundant, and reliable energy resources are critical to the state’s future economy. These resources can be the catalyst that unlocks the full potential of that economy.

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Issue

West Virginia is ground zero for the opioid addiction crisis. Among the many health challenges facing America, none has hit our state harder than opioid addiction. The impact of the opioid crisis on West Virginians is staggering, with an estimated 952 overdose deaths reported in 2018. According to the U.S. Centers for Disease Control and Prevention, West Virginia has the highest overdose rate in the nation, and the overdose rate in 2018 was approximately 52.7 per 100,000 people. In addition to the human cost, of significance is the toll it has taken on the state’s economic growth and development.

Background

In West Virginia, the opioid crisis has contributed to a workforce participation challenge that undermines the competitiveness of existing businesses while creating barriers for new investments. For existing businesses, unfilled vacancies represent lost productivity that makes competing in the regional, national and global economies more difficult. Meanwhile, companies are hesitant to invest in areas where they may not be able to attract and retain the skilled and drug-free workforce they need to operate efficiently.

West Virginia has welcomed many new business investments this year, creating over 17,000 new jobs for the state. But many employers are growing concerned about the lack of qualified workers to fill new jobs. Many Chamber members say drug abuse is a key contributor to that problem. Many people actively looking for work cannot pass the drug tests required for employment, and those who do have jobs are exiting the workforce due to untreated, or undertreated, addictions.

When work is not an option, individuals turn to government programs, such as Medicaid, for support. This transition from gainful work to reliance on public assistance creates a cyclical problem with disastrous, long-term consequences for taxpayers and the economy. According to the White House Council of Economic Advisers, the total economic cost to the nation of the opioid epidemic is over $500 billion per year. Giving patient’s access to effective addiction treatments with a goal of truly ending their addiction is our best chance at getting people back to work and improving our economy.

Addiction continues to threaten opportunities for economic growth – a cyclical problem that will only become more difficult to break in the years to come.

The Chamber's Position

At a time when job openings and investments in West Virginia are growing, we must provide the healthy, productive workforce needed to grow the economy. To do that, treatment, with the goal of full recovery, must be a top priority for our state.

Because every person is different, health care providers and the public must be aware of all evidence-based, FDA approved treatment options. This includes counseling and medication assisted treatments proven to be effective at managing and, hopefully, ending addiction.

Providers must be prepared to develop treatment plans that consider each patient’s individual needs, which may require new education and training. At the same time, patients must have barrier-free access to the treatment they need to recover and return to healthy, productive lives.

Business leaders, health care providers and public officials must work together to address the opioid crisis by ensuring unfettered access to and education around all FDA approved opioid addiction treatments. Only by getting more individuals on the path to recovery will West Virginia truly thrive and reach its full potential.

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Issue

What steps can be taken to help strengthen and improve our economic recovery for small businesses in West Virginia?

Discussion

Small businesses make up the backbone of West Virginia’s economy. According to the latest information available (March 2020) through Workforce West Virginia, all but 119 employers in West Virginia meet the federal definition of a small business. 73% of West Virginia employees work for a business that employs less than 500 people, and nearly half of employees work for a company of less than 100 people.

The West Virginia Chamber of Commerce has members located in all fifty-five counties who employ over half of our state’s workforce. The vast majority of these members are our small business neighbors. The economic effects of the COVID-19 pandemic have been felt by individuals and employers of all size, but the impact has been especially pronounced for small businesses. Helping these businesses to recover from this global health crisis will be crucial to the economic recovery of West Virginia as a whole.

The Chamber's Position

Policymakers at the state and local level should be mindful of policies they implement and how they affect small businesses. Additionally, steps can be taken to help assist these important members of our community. These include:

• Providing meaningful COVID-19 liability protections for those businesses operating responsibly and within health and safety guidelines.
• Seeking to lower costs associated with unemployment insurance.
• Finding ways for small businesses to obtain and offer affordable health insurance.
• Streamlining regulatory processes to more easily permit small businesses to participate in state contracts and purchasing.
• Ensuring tax rates are competitive and allow small businesses to grow and thrive.
• Simplifying tax and regulatory filings.

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Issue

What can be done to enhance the role of West Virginia’s institutions of post-secondary education in improving the economy of West Virginia?

Discussion

West Virginia’s institutions of post-secondary education play an important role in preparing our students for the workforce of the 21st Century. They also are economic cornerstones for many communities throughout the state. Four-year institutions with undergraduate and graduate programs have the ability to attract some of the best and brightest minds from around the country and the world. When these schools thrive the local economy in the area sees a major boost, helping to create good-paying jobs for our citizens.

West Virginia’s system of community & technical colleges and junior colleges also plays a critical role in workforce development. Many individuals pursue careers that require post-secondary education, but not a four-year degree. Individuals attending these institutions are prepared for good-paying jobs without being saddled with large student loans that may take years to repay.

The Chamber's Position

The economic constriction resulting from the COVID-19 pandemic has caused nearly every sector of the economy to tighten budgets. Governments and education institutions have not been immune to these challenges. Public funding is an important component of the success for many of West Virginia’s post-secondary institutions, and great care should be taken to avoid making harmful cuts in the state budget that could negatively affect the great service provided.

West Virginia should also look at ways to make post-secondary education more affordable for our citizens. Allowing for a student loan tax credit would enable more students to consider the loans necessary for attending these institutions, providing a boost to both public and private institutions, and helping to keep their graduates within our state. 2019’s Senate Bill 1 has opened the door for many of our citizens to attend community and technical college, and that program should be preserved and expanded.

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Taxation of Tangible Personal Property

The Chamber has recommended in the past and continues to recommend that the West Virginia Constitution be amended to allow the Legislature to, by general law, exempt some or all tangible personal property from ad valorem property taxation and, should such legislation be enacted, for the Legislature to provide one or more means by which additional revenues or revenue sources are made available to the local levying bodies to cover the cost of the personal property tax exemption.

An obstacle to capital investment and reinvestment is the property tax on machinery and equipment and other tangible personal property. Business decision makers will ask why should the capital investment be made in West Virginia when the investment can be made across the border in Ohio or Pennsylvania, or in one of a host of other states, that do not tax tangible personal property for property tax purposes or only nominally tax such property. A recent study by KPMG concludes that our state’s manufacturers and labor-intensive industries are among the eighth and fourth highest inventory and tangible personal property taxpayers in the United States.

There is common agreement among stakeholders that the West Virginia Constitution must be amended before some or all tangible personal property can be exempt from ad valorem property taxation. However, the practical reality is that amending the Constitution is easier said than done. The ensuing pages of this paper discuss some of the reasons why it will be difficult to amend the Constitution. Understanding these challenges also provides opportunities to find solutions to this problem.

Local Concerns

Representatives of local levying bodies have insisted that before they will support a constitutional amendment, they want to know exactly how the lost revenue will be replaced. While most, if not all, of the local levying bodies have this concern, it is of greater concern to levying bodies in those counties that rely more heavily on taxes levied on tangible personal property to balance their budgets. While application of the state aid formula can, in part, insulate county boards of education from this concern, the state aid formula considers only regular property tax levy collections and does not consider voter-approved excess levies and general obligation bond levies. Consequently, all local levying bodies have this concern to one degree or another.

Scope of Fiscal Problem

The scope of the fiscal problem for local levying bodies is demonstrated by data in the State Tax Department’s recently released Classified Assessed Valuations Taxes Levied for the 2020 Tax Year. This report shows that the statewide aggregate of state and local property taxes levied on real property was $1,009,375,023, while the aggregate tax on personal property was $631,207,475. This represented a 6% increase in real property taxes levied and an increase of 20% in personal property taxes collected since 2018. However, just as real property taxes are not evenly distributed among the 55 counties, neither are taxes on tangible personal property equally distributed among the 55 counties.

In 8 of the 55 counties, the amount of taxes levied on tangible personal property exceeded the amount of taxes levied on real property in the particular county. The following chart prepared from the State Tax Department’s study supports these statements.

***Click Printable Version Below to View Table***

Additionally, in Cabell, Doddridge, Harrison, Marion, Marshall, Monongalia, Ohio, Tyler, Wetzel and Wood Counties, the taxes levied on personal property exceeded $20 million, in each county; and taxes levied on personal property exceeded $64 million in Kanawha County.

Solving the Fiscal Problem Requires Two Solutions

The primary issue for local governments has two parts. First, what will be the source(s) of the additional revenue and, second, how will the additional revenue be distributed in order to hold the local levying bodies harmless? While the first part of the primary issue is challenging, the second part of the issue is even more daunting because some counties have more tangible personal property than other counties. Simply put, distribution of the make-up revenue on a per capita basis cannot achieve the desired result. Even if the cap on real property tax levies were increased, which we are not suggesting be done, that would not achieve the desired result either, because there is no correlation between the value of real property in a county and the value of tangible personal property in the same county. Moreover, in tax year 2020, property taxes levied on real property aggregated $1,009,375,023, which suggests that the levy rates on real property would need to increase by more than 60% to generate the amount of replacement revenue needed -- $631,207,475.

Secondary issues of the local levying bodies include, but are not limited to, generating replacement dollars to pay annual debt service on general obligation bonds and replacing excess levy dollars which are used by county boards of education to fund items outside the state aid formula, including, but not limited to, providing additional compensation for teachers and school service personnel and capital improvements. County commissions and municipalities frequently use voter-approved excess levies to fund fire service, emergency ambulance service, additional police personnel and other community improvements. They too have voter-approved general obligation bonds outstanding.

Summary of Issue

In summary, there are no easy answers to this $631 million problem. What we do know is that the states with robust economies do not impose property taxes on business tangible personal property. We also know that personal property taxes affect where and when capital investment is made. This is a consideration in the location of new businesses in West Virginia. It is also a consideration when an existing business decides to modernize or expand in West Virginia. Finally, we also know that to fundamentally change West Virginia’s economy from one dependent on fossil fuels to a new, diverse economy something needs to be done about the taxation of business tangible personal property.

The Chamber believes that the evidence is clear and overwhelming that Tangible Personal Property taxes are a drag on the State’s economy and the competitiveness of its businesses. The Chamber urges that the Tangible Personal Property tax issue be kept alive and that further proposals to potentially eliminate the tax or lessen its impact be identified. The Chamber maintains that any solution must be statewide in scope – not piecemeal among levying bodies and/or types of taxpayers.

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Issue

The West Virginia Legislature should enact state tax policies which are perceived as fair, which are easy and cost effective to administer, generate sufficient revenue for the efficient and effective administration of required services, and which promote job creation and economic growth.

Discussion

We applaud the West Virginia Legislature’s ongoing efforts to review the State’s existing tax system. The Chamber desires a tax system meeting the following objectives:

• Perceived as fair.
• Easy and cost effective to administer.
• Supplies sufficient revenues for the efficient and effective administration of required services.
• Lower and flatter.
• Eliminates the tax on tangible personal property.
• Promotes job creation and economic growth.

Tax reform should be done carefully and responsibly and not in an effort to create winners and losers, but in an overall fiscally responsible manner, comprehensively reviewing each aspect of West Virginia’s tax structure, creating a flatter and broader system overall with lower marginal rates, encouraging economic growth and investment, and fully recognizing the myriad of intended and unintended consequences and implications of any changes to West Virginia’s tax system. To assist in that effort, the Chamber provides some areas where we believe change may be warranted and additional scrutiny is necessary where West Virginia is out of line with a majority of states in its approach to a particular tax or tax policy.

State Tax Climate Overall

In the Tax Foundation’s recently released 2021 State Business Tax Climate Index, West Virginia ranked as having the 22nd most competitive tax code overall in the nation. (This compares favorably with the states which are contiguous to West Virginia: Pennsylvania 27th, Ohio 39th, Virginia 26th, Kentucky 19th, and Maryland 44th.) Significantly, West Virginia ranked 17th in Corporate Tax Rank, 19th in Sales Tax Rank, and 10th in Property Tax Rank.

While the State’s overall tax system generally appears competitive, it does place a higher reliance on businesses for tax revenue than our neighboring states and the nation in general. According to a 2018 report by Ernst & Young LLP in Conjunction with the Council on State Taxation and the State Tax Research Institute, in West Virginia, business tax revenues account for 49.3% of state and local tax revenues. While West Virginia ranks in the bottom half of states with regard to this over-contribution of businesses toward total state tax revenue, the contrast is even starker with regard to businesses’ contribution to local tax revenue. With $4 of every $5 collected in local taxes being paid by businesses instead of individuals, West Virginia is the highest state in the country in terms of the amount of local taxes being paid by the business community.

Insurance Premium Tax Rate

West Virginia has some of the highest insurance premium tax rates in the nation. Taxes levied on insurance premiums in West Virginia generate nearly $178,000,000 per year in revenue, which is distributed to the General Revenue Fund, Municipal Pensions, Volunteer Fire Departments, the State Fire Marshal, and the WV Teachers Retirement System.

The tax rate on Property & Casualty insurance premiums in West Virginia is the highest in the nation at 4.55% (4% tax + 0.55% surcharge = 4.55%). The national average for state premium taxes on property & casualty policies is 2.15%. The most common tax rate nationally is 2.0%. The premium tax rates for property & casualty policies in our surrounding states are Kentucky at 2.0%, Maryland at 2.0%, Ohio at 1.4%, Pennsylvania at 2.0%, and Virginia at 2.25%.

For fire insurance policies in West Virginia, our premium tax rate of 5.05% is among the highest in the nation (4 % tax + 0.55% surcharge + 0.5% fire marshal = 5.05%). The national average for state premium taxes on fire insurance policies is 2.7%. The most common tax rate nationally is 2.0%. The tax rates for fire policies in our surrounding states are Kentucky at 2.75%, Maryland at 2.0%, Ohio at 2.15%, Pennsylvania at 2.0%, and Virginia at 3.25%.

Retaliatory taxes are additional taxes levied on insurance companies that are domiciled outside of the taxing state in order to burden those “out-of-state” insurers in exactly the same way that the out-of-state insurer’s state of domicile would burden an insurer from the taxing state. It is intended to “level the playing field” by deterring a state from imposing excessive taxes on non-domiciled insurance companies. Since WV’s premium taxes are higher than most states, WV’s domestic (“in-state”) insurers are taxed at the higher WV premium tax rate for premium written “out of state” or in states other than WV. This is a significant financial drag on any WV domestic insurance company that wishes to grow and write business outside of the state. In the current climate, to be rate competitive with premiums written outside WV, the WV domestic must overcome the premium tax differential (often 2% or more) either by charging a higher rate, accepting reduced profits, reducing expenses or reducing losses compared to the competition in those states. The financial incentive for an insurance carrier is to be domesticated in a low premium tax state due to ‘Retaliatory taxes’.

Tobacco Taxes

Effective July 1, 2016, the tax rates for tobacco products in West Virginia are as follows:

• Cigarettes -- $1.20 per pack
• Cigars and smokeless products -- 12% of wholesale price
• E-tobacco liquids -- 7.5 cents per milliliter

While West Virginia has the second highest rate of smoking deaths in the nation and some of the highest death rates due to cancer, heart disease and other smoking related illnesses, our tobacco tax still remains lower than the national average, and is lower than several of our surrounding states. The average national cigarette tax rate in 2019 was $1.73 per pack. West Virginia’s cigarette tax rate at $1.20 per pack ranks as the 33rd lowest in the nation. Cigarette tax rates in surrounding states are Pennsylvania at $2.60 per pack, Maryland at $2.00, Ohio at $1.60, Kentucky at $1.10, and Virginia at $0.30.

Tangible Personal Property Taxes on Business Inventories, Manufacturing Machinery & Equipment

The West Virginia Chamber supports the elimination of the ad valorem property taxes on tangible personal property and, in particular, the tax on inventory and manufacturing machinery and equipment. This isn’t just a manufacturing industry issue. All West Virginia businesses pay personal property taxes on the value of furnishings, fixtures, equipment and supplies each year. Retailers and most wholesalers additionally pay property taxes on the value of their inventories as of the July 1 assessment date. This particular tax, probably more than others, hurts our West Virginia businesses, fails to promote growth, stifles expansion, discourages job creation, and creates a competitive disadvantage for West Virginia. Its continued existence is a tremendous impediment to economic development. Businesses wishing to locate a new operation obviously consider a state’s tax structure during their due diligence process and our unfavorable comparison to other states on this particular tax is a factor keeping additional businesses from locating here.

Consideration should be given to elimination of this tax because it causes West Virginia businesses to pay taxes on the same machinery and equipment year after year, while discouraging them from upgrading or modernizing their facilities. It discourages West Virginia businesses from expanding or purchasing additional inventory while incentivizing them to move it across the border into another state. The personal property tax is a disincentive to new businesses locating in this state when they compare our tax with other states and can just as easily locate in a state that doesn’t impose this costly and burdensome tax (for example, our neighboring states of Ohio and Pennsylvania). It causes businesses to continue using outdated machinery and equipment (which could be less safe and efficient) rather than upgrading to the newest available technology. It discourages businesses from keeping on hand the inventory they need or that their customers want. It imposes a huge administrative burden, not only on business owners who must report each item of tangible personal property that the business owns as of the July 1 assessment date, but also on state and county assessing officers who must then determine the value of each item of tangible personal property reported each year.

Our local counties and municipalities rely heavily on property tax revenues. Before this tax could be eliminated, the State and local governments would need to identify additional sources of tax revenues to offset revenues lost by its repeal. Further, there are significant State constitutional issues that would have to be addressed as part of this repeal.

Tax Credits to Incentivize Infrastructure Investment and Energy Production

The legislature should consider incentivizing infrastructure investment in broadband and energy production in West Virginia through the use of carefully constructed tax credits, as has been successfully done in other states such as Virginia.

Clarification of Regulations Regarding Municipal B&O Taxes

West Virginia’s regulations relative to the imposition of Business & Occupation Taxes at the municipal level have not been revised in several years. The West Virginia State Tax Department should closely examine and update these regulations to ensure they reflect the realities of the modern economy and do not dissuade businesses from engaging in commerce in the state.

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Issue

The United States Congress is considering H.R. 1423, the “Forced Arbitration Injustice Repeal (FAIR) Act,” which would effectively ban the use and availability of pre-dispute arbitration agreements.

Background

Arbitration is a common dispute resolution method between businesses, employees and consumers that has been in use for nearly a century. Arbitration is a less-costly method of dispute resolution for all parties involved and is fair and effective. Arbitration is also a much speedier process than litigation where the parties must often wait months or years before a judge can schedule a trial. Finally, both parties get to choose a neutral arbitrator from a panel of available arbitrators and they can often select an arbitrator with expertise in the area of law at issue; unlike courts where judges are assigned with little input from the parties and sometimes with no expertise on the law at issue.

The United States Supreme Court has made it clear that where parties have agreed to arbitration to settle disputes, those agreements are binding and will be enforced. In addition, the courts have set forth various protections and obligations that must be followed to protect employees when it involves the arbitration of employment law disputes. Arbitration agreements tend to keep the courts from being flooded with disputes that can otherwise be settled in a fair and less-expensive manner, leaving the courts available to address more serious cases and criminal cases where the US Constitution guarantees the right to a speedy trial.

The FAIR Act that is under consideration by the U.S. Congress would effectively eliminate this form of dispute resolution.

The Chamber's Position

The West Virginia Chamber of Commerce opposes the FAIR Act and believes that arbitration should remain as an option for dispute resolution. Arbitration only occurs when all parties previously agree to use that as a method of dispute resolution – if a dispute were to arise in the future. Eliminating this as an option will simply mean that any disputes must be handled in the court system, which will typically take longer and be much more expensive for all parties involved.

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