Date Requested:March 18, 2005
Time Requested:03:07 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005R1713 Intro SB586
CBD Subject: One Time Bonus
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 give certain annuitants of the Public Employees Retirement System and the Teachers Retirement System a one-time supplement to be exempt from West Virginia taxes.
    
    As written, this bill proposes that a one-time supplement of $400 be paid to retirees who have been an annuitant of at least ten years of either the Public Employees Retirement System or the Teachers Retirement System. Retirees who have been an annuitant of either the Public Employees Retirement System or the Teachers Retirement System for at least five years, but less than ten years, would receive a one-time supplement of $200. The supplemental payments, to be made on December 1, 2005, would not be subject to the West Virginia Personal Income Tax.
    
    According to our interpretation and assuming the supplemental payments would be paid from the General Revenue Fund, there would be a one-time reduction in the General Revenue Fund of roughly $12.5 million in FY 2006. The West Virginia Personal Income Tax foregone as a result of the exempting the supplemental payments from the tax would be roughly $0.5 million. Additionally, the favored tax treatment of the potential beneficiaries in relation to other public employees may result in litigation where other retired public employees will seek to be treated in the same manner.
    
    There would be a minimal increase in administrative costs to the State Tax Department associated with the administration of the proposed income exclusion. However, the Consolidated Public Retirement Board may experience an increase in administrative costs associated with this bill.
    
    

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 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 -12,500,000 0
3. Explanation of above estimates (including long-range effect):
    As written, this bill proposes that a one-time supplement of $400 be paid to retirees who have been an annuitant of at least ten years of either the Public Employees Retirement System or the Teachers Retirement System. Retirees who have been an annuitant of either the Public Employees Retirement System or the Teachers Retirement System for at least five years, but less than ten years, would receive a one-time supplement of $200. The supplemental payments, to be made on December 1, 2005, would not be subject to the West Virginia Personal Income Tax.
    
    According to our interpretation and assuming the supplemental payments would be paid from the General Revenue Fund, there would be a one-time reduction in the General Revenue Fund of roughly $12.5 million in FY 2006. The West Virginia Personal Income Tax foregone as a result of the exempting the supplemental payments from the tax would be roughly $0.5 million. Additionally, the favored tax treatment of the potential beneficiaries in relation to other public employees may result in litigation where other retired public employees will seek to be treated in the same manner.
    
    There would be a minimal increase in administrative costs to the State Tax Department associated with the administration of the proposed income exclusion. However, the Consolidated Public Retirement Board may experience an increase in administrative costs associated with this bill.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us
    The stated purpose of this bill is to give certain annuitants of the Public Employees Retirement System and the Teachers Retirement System a one-time supplement to be exempt from West Virginia taxes.
    
    The bill, as written, provides for the favored treatment of the potential beneficiaries in relation to other public employees. This favored status may result in litigation where other retired public employees will seek to be treated in the same manner.