Sources of Revenue:

General Fund,Other Fund Clean Elections Fund

Legislation creates:

A New Fund

Fiscal Note Summary

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

The stated purpose of this bill is to provide a process for public funding of elections for members of the Legislature and the Governor. The bill establishes the “Clean Elections Act” which creates a voluntary system of public funding to qualified political candidates who agree to accept spending limits and do no other private fund raising. Participating candidates collect a set number of five-dollar qualifying contributions from voters in their districts in order to qualify. A qualified candidate receives a set amount of campaign funding on the date of certification as a qualified candidate. The state election commission is responsible for administering the program. A special clean elections fund is established to receive moneys from various sources including excess seed money funds, refunds of unspent allotments, tax check off funds and certain civil penalties. Both civil and criminal penalties are provided for violations of the act and the act is to become effective on January 1, 2006. Provisions of this bill include a new tax credit and a new check off program. A taxpayer directly making a donation to the Clean Election Fund is entitled to a “dollar for dollar” credit of up to 20% of the tax amount on the return or $500, whichever is higher. In addition to any donations made, a taxpayer may designate that up to $3 of “taxes” be deposited into the Clean Elections Fund pursuant to a check off program to be developed by the Tax Commissioner. This check off would not be a donation from a refund but a direction by the taxpayer that $3 in taxes be directed to the Clean Election Fund upon appropriation from the General Fund to the Clean Election Fund. Based upon similar programs in the United States, the Tax Department estimates that General Revenue Fund collections could decrease by $1.0 million or more due to transfer to the Clean Election Fund and tax credits for those who donate to the Clean Election Fund. If just eight percent of West Virginia individual income tax filers opt to designate $3 ($6 for married couples) of State General Revenue to the Clean Election Fund, total General Revenues would decrease by roughly $250,000 per year. If just one half of one percent (0.5%) of West Virginia’s individual income tax filers opt to claim a one hundred percent tax credit for donations averaging $200, an amount far less than the maximum cap of $500 per taxpayer, the State General Revenue Fund would lose an additional $750,000 per year. Additional administrative costs to the Tax Department associated with this bill would be minimal.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2005 Increase/Decrease (use"-")	2006 Increase/Decrease (use"-")	Fiscal Year (Upon Full Implementation)
1. Estmated Total Cost	0	0	0
Personal Services	0	0	0
Current Expenses	0	0	0
Repairs and Alterations	0	0	0
Assets	0	0	0
Other	0	0	0
2. Estimated Total Revenues	0	-1,000,000	-1,000,000

Explanation of above estimates (including long-range effect):

Based upon similar programs in the United States, the Tax Department estimates that General Revenue Fund collections could decrease by $1.0 million or more due to transfer to the Clean Election Fund and tax credits for those who donate to the Clean Election Fund. If just eight percent of West Virginia individual income tax filers opt to designate $3 ($6 for married couples) of State General Revenue to the Clean Election Fund, total General Revenues would decrease by roughly $250,000 per year. If just one half of one percent (0.5%) of West Virginia’s individual income tax filers opt to claim a one hundred percent tax credit for donations averaging $200, an amount far less than the maximum cap of $500 per taxpayer, the State General Revenue Fund would lose an additional $750,000 per year. Provisions of this bill include a new tax credit and a new check off program. A taxpayer directly making a donation to the Clean Election Fund is entitled to a “dollar for dollar” credit of up to 20% of the tax amount on the return or $500, whichever is higher. In addition to any donations made, a taxpayer may designate that up to $3 of “taxes” be deposited into the Clean Elections Fund pursuant to a check off program to be developed by the Tax Commissioner. This check off would not be a donation from a refund but a direction by the taxpayer that $3 in taxes be directed to the Clean Election Fund upon appropriation from the General Fund to the Clean Election Fund. Additional administrative costs to the Tax Department associated with this bill are minimal.

Memorandum

Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us