FISCAL NOTE
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 enlarge the total amount of tourism development project tax credit authorized each year and to create a tourism development expansion project, which shall not exceed five million dollars each year. Additionally, the bill authorizes rules to implement the new credit and extends the expiration date of any applications from January 1, 2007 to January 1, 2013.
According to our interpretation, this bill provides for a new “tourism development expansion project” credit and provides that the total amount of “tourism development expansion project” credit that may be approved in any calendar year may not exceed $5 million. The bill also provides for the acceptance and approval of credit applications for the January 1, 2007 to January 1, 2013 period. Since eligible taxpayers must claim any approved credit over a ten-year period, the maximum annual amount of tax credits claimed against sales tax attributable to the new “tourism development expansion project” credit would range from $0.5 million in the initial year to a maximum of $3.5 million in the seventh year. Also, the bill eliminates the $1.5 million cap on the calendar year allocation of the existing “tourism project development” credit. If the majority of the tourism development projects would not occur without the available tax incentives provided in this proposed legislation, the net revenue loss to the General Revenue Fund would be minimal. The Development Office is in charge of approving these special tourism development projects.
Additional administrative costs to the State Tax Department associated with this bill would be minimal. However, the Development Office may incur additional administrative costs due to this bill.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2007
Increase/Decrease
(use"-") |
2008
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 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation, this bill provides for a new “tourism development expansion project” credit and provides that the total amount of “tourism development expansion project” credit that may be approved in any calendar year may not exceed $5 million. The bill also provides for the acceptance and approval of credit applications for the January 1, 2007 to January 1, 2013 period. Since eligible taxpayers must claim any approved credit over a ten-year period, the maximum annual amount of tax credits claimed against sales tax attributable to the new “tourism development expansion project” credit would range from $0.5 million in the initial year to a maximum of $3.5 million in the seventh year. Also, the bill eliminates the $1.5 million cap on the calendar year allocation of the existing “tourism project development” credit. If the majority of the tourism development projects would not occur without the available tax incentives provided in this proposed legislation, the net revenue loss to the General Revenue Fund would be minimal. The Development Office is in charge of approving these special tourism development projects.
Additional administrative costs to the State Tax Department associated with this bill would be minimal. However, the Development Office may incur additional administrative costs due to this bill.
Memorandum
The stated purpose of this bill is to enlarge the total amount of tourism development project tax credit authorized each year and to create a tourism development expansion project, which shall not exceed five million dollars each year. Additionally, the bill authorizes rules to implement the new credit and extends the expiration date of any applications from January 1, 2007 to January 1, 2013.
The bill, as written, uses terms such as “sales from the operation of the tourism development expansion project” and “resident” without providing a definition of the meaning of the terms. Additionally, the bill indicates the Development Office may not accept any new project applications after December 31, 2013, but requires that all applications received prior to January 1, 2013 that have not been previously approved shall be null and void as of January 1, 2013. It is unclear which date is the final termination date.
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us