Date Requested:March 23, 2005
Time Requested:03:17 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005R1816 Intro SB724
CBD Subject: Maintenance & Construction of Railroad T
FUND(S)
General Revenue Fund
Sources of Revenue
General Fund
Legislation creates:
Neither Program nor Fund

Fiscal Note Summary

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

    The stated purpose of this bill is to establish a railroad track maintenance tax credit for the expenditure by railroads of maintaining and repairing railroad track in West Virginia. The new credit would apply against the Business Franchise Tax.
    
    The bill enacts W. Va. Code §11-13V to provide to eligible taxpayers a tax credit versus the business franchise liability equal to twenty-five percent of the qualified railroad track maintenance expenditures paid or incurred by an eligible taxpayer during the taxable year. According to our interpretation, passage of this bill would result in a decline in the General Revenue Fund as shown in the table below.
    FY2007 ($1.4 million)
    
    FY2008 ($1.6 million)
    
    FY2009 ($1.9 million)
    
    FY2010 ($2.1 million)
    
    FY2011 ($2.4 million)
    
    FY2012+ ($2.5 million)
    
    There would be no additional administrative costs to the Tax Department 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 0 -2,500,000
3. Explanation of above estimates (including long-range effect):
    The bill enacts W. Va. Code §11-13V to provide to eligible taxpayers a tax credit versus the business franchise liability equal to twenty-five percent of the qualified railroad track maintenance expenditures paid or incurred by an eligible taxpayer during the taxable year. According to our interpretation, passage of this bill would result in a decline in the General Revenue Fund as shown in the table below.
    FY2007 ($1.4 million)
    
    FY2008 ($1.6 million)
    
    FY2009 ($1.9 million)
    
    FY2010 ($2.1 million)
    
    FY2011 ($2.4 million)
    
    FY2012+ ($2.5 million)
    
    There would be no additional administrative costs to the Tax Department associated with this bill.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us
    The bill enacts W. Va. Code §11-13V to provide to eligible taxpayers a tax credit versus the business franchise liability equal to twenty-five percent of the qualified railroad track maintenance expenditures paid or incurred by an eligible taxpayer during the taxable year.
    
    If this bill is passed it would replace W Va. Code § 11-13V, "Workers' Compensation Debt Reduction Act of 2005", which was created in the 1st Special Session 2005.
    
    According to W. Va. Code §11-13V-4(1), this credit is applied against Business Franchise Tax “after application of the credits against tax provided in” §11-23-17, which became inoperative in the 2003 tax year.
    
    The bill makes the credit applicable against Business Franchise Tax. However, §11-13V-4(b)(4) makes it also applicable for pass-through entities to the Corporation Net Income Tax for the amount of credit that exceeds the limit on Business Franchise Tax. It is unclear why the credit is applicable to both Business Franchise Tax and Corporation Net Income Tax only with respect to pass-through entities.