Date Requested:February 16, 2005
Time Requested:05:00 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2004R43 Intro HB2409
CBD Subject: Circuit Breaker Tax Relief
FUND(S)
General Revenue Fund
Sources of Revenue
General Fund
Legislation creates:
A New Program

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    The stated purpose of this bill is to provide the same tax relief for homeowners and renters who are under the age of sixty-five that is currently provided for those who are age sixty-five or over.
    
    This proposal would replace the current circuit breaker provided for elderly low-income taxpayers. No taxpayers qualify under the guideline for the current circuit breaker. This bill would provide completely different tax "credits" for elderly and non-elderly taxpayers with the same household gross income. Both homeowners and renters would benefit from this circuit breaker.
    
    The total annual loss in State revenue from this program would be approximately $14.9 million. Although the language of the proposed bill appears to provide no relief for taxpayers with an annual income under $10,000, our estimate assumes such relief is provided at the same level as for those taxpayers with an annual income from $10,000 to $14,999.
    
    Annual administrative costs to the Tax Department would be approximately $720,000. This amount does not include costs of program development for computer software for the circuit breaker program.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2005
Increase/Decrease
(use"-")
2006
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 770,000 720,000
Personal Services 0 110,000 120,000
Current Expenses 0 560,000 560,000
Repairs and Alterations 0 0 0
Assets 0 60,000 0
Other 0 40,000 40,000
2. Estimated Total Revenues 0 -14,900,000 -14,900,000
3. Explanation of above estimates (including long-range effect):
    Currently, no taxpayers claim the Circuit Breaker Tax Relief. As written, the bill may increase the number of eligible taxpayers to approximately 370,000.
    
    For Fiscal Year 2006, the increase in cost will be in excess of $770,000. The increased personnel costs include the salary and associated benefits for four full-time positions (including one Tax Unit Supervisor, two Tax Audit Clerk Senior positions and one Office Assistant II) and six temporary positions. Current expense increases include printing of revised forms and information packets and purchasing envelopes and postage for mailings. Additional equipment purchases include the purchase of personal computers (including software and related peripheral supplies) for the four full-time positions, calculators and workstations for all ten positions, a shared printer and filing space. Other costs include the annual rental of a Post Office box and file storage space. The costs do not include an unknown amount required for the revision and/or development of computer programs.
    
    Additional costs for Fiscal Year 2007 and thereafter will be approximately $720,000. With the exception of the equipment cost as detailed above, all costs will be recurring.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us
    The stated purpose of this bill is to provide the same tax relief for homeowners and renters who are under the age of sixty-five that is currently provided for those who are age sixty-five or over.
    
    The bill does provide tax relief for low-income homeowners and renters age sixty-five and under. However, the relief provided is not the same relief given to the elderly. The elderly are given a lower threshold to meet in order to receive the proposed relief. If the word “same” is replaced with the word “similar”, the bill will accomplish its purpose.
    
    Another concern with this bill is the definition provided at W. Va. Code §11-25-2(1) for “Claimant”. According to this definition, the only persons eligible for the tax relief would be those persons having a gross income of not more than five thousand dollars ($5,000) during the calendar year preceding the year in which he or she is eligible. This is in direct conflict with the computation of relief table set forth at W. Va. Code §11-25-3 which only provides tax credit guidelines to those persons with a gross household income of at least ten thousand and one dollars ($10,001). No guidelines are provided for those persons making less than ten thousand and one dollars.