GOVERNOR'S VETO

Pursuant to Article V, Section 6, of the Constitution of Virginia, I veto House Bill 1290, which would have addressed machinery and tools taxation of manufacturers by local governments.

The issue of taxation of idle machinery and tools is a complex one and is the subject of more than a half century of decisions by the tax commissioner.  This legislation has positive features, which is why I submitted amendments to correct the part of the bill I find objectionable—a new definition of idle machinery and tools.

The previous standard required that machinery and tools must have been idle for 12 months in order to be exempt from taxation, but this bill establishes a much shorter standard of three months.  I am concerned that this significant change will have a revenue impact on localities.  For this reason, local governments oppose this bill.

The bill also calls for a working group on machinery and tools taxation.  While I am vetoing this legislation, I will convene a working group, to be co-chaired by the Secretary of Commerce and the Commissioner of the Department of Taxation, and to include members of the manufacturing community as well as local government, that can address this and other issues.

GOVERNOR'S RECOMMENDATION

1. Line 11, enrolled, after except

strike

idle machinery and tools as defined in this subsection and

2. Line 17, enrolled, after property.

strike

the remainder of line 17 and all of lines 18 through 20