Date Requested:March 25, 2005
Time Requested:12:15 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005R1868 Intro HB3226
CBD Subject: Credit from B&O Tax to Power Plants
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 provide a credit from the B & O Tax for power plants located in West Virginia that burn coal produced in West Virginia for the generation of electricity.
    
    As written, this bill limits the credit to thirty percent of a taxpayers liability under West Virginia Code §11-13-2m. However, this section of the Code is no longer applicable to operators of electric power plants. Thus, as written, there would be no revenue impact attributable to passage of this bill.
    
    Assuming that the bill would be amended to limit the credit to thirty percent of the tax liability of electric power producers as levied under West Virginia Code §11-13-2o and based upon available data and our interpretation that the credit would only be available for tax liabilities for two years, passage of an amended bill would result in the reduction in the General Revenue Fund of approximately $75.2 million in Fiscal Year 2006. This revenue reduction assumes that refunds attributable to credits claimed for the applicable tax periods (i.e., July 2000 through June 2002) would be claimed in one year.
    
    Additional administrative costs to the State Tax Department associated with passage of this bill would be minimal.

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 -75,200,000 0
3. Explanation of above estimates (including long-range effect):
    Passage of this bill would provide a credit from the B & O Tax for power plants located in West Virginia that burn coal produced in West Virginia for the generation of electricity.
    
    As written, this bill limits the credit to thirty percent of a taxpayers liability under West Virginia Code §11-13-2m. However, this section of the Code is no longer applicable to operators of electric power plants. Thus, as written, there would be no revenue impact attributable to passage of this bill.
    
    Assuming that the bill would be amended to limit the credit to thirty percent of the tax liability of electric power producers as levied under West Virginia Code §11-13-2o and based upon available data and our interpretation that the credit would only be available for tax liabilities for two years, passage of an amended bill would result in the reduction in the General Revenue Fund of approximately $75.2 million in Fiscal Year 2006. This revenue reduction assumes that refunds attributable to credits claimed for the applicable tax periods (i.e., July 2000 through June 2002) would be claimed in one year.
    
    Additional administrative costs to the State Tax Department associated with passage of this bill would be minimal.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us
    The stated purpose of this bill is to provide a credit from the B & O Tax for power plants located in West Virginia that burn coal produced in West Virginia for the generation of electricity.
    
    Proposed West Virginia Code section §11-13V-5(a) states “The credit allowed in this article may not exceed thirty percent of the person’s tax liability under section two-m, article thirteen of this chapter per year”. West Virginia Code section §11-13-2m no longer applies to electric power producers. Thus, as the bill is currently written, no taxpayer would be eligible to claim the proposed credit. If enacted as Article 11-13V of the West Virginia Code, this bill would replace the Article 11-13V enacted during the 2005 Special Session.