Date Requested:February 11, 2008
Time Requested:03:55 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2008R2022 Introduced HB4476
CBD Subject: Public-Private Transportation Facilities Act
FUND(S)
General Revenue Fund, State Road Fund
Sources of Revenue
General Fund,Other Fund State Road 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 establish the Public-Private Transportation Facilities Act of 2008 within the Division of Highways.
    
    As written, this bill would allow private entities to enter into agreements with the Division of Highways to develop and operate “transportation facilities” and assess user fees. The bill defines “transportation facilities” as “any public inland waterway port facility, road, bridge, tunnel, overpass or existing airport used for the transportation of persons or goods.” The bill sets forth requirements for potential developers and the Division of Highways. Additionally, the bill provides that a developer is not required to pay any taxes or assessments, other than the Consumers Sales and Service Tax, upon any qualifying transportation facility or any property acquired or used by the developer or upon the income therefrom.
    
    The State Tax Department does not have information on the number of potential qualifying transportation facilities or the taxes that may be exempted by this proposal. The value of the proposed tax exemption may be substantial, but the projects would be public sector oriented. Tax benefits would be one trade-off for increased private sector expenditures on public goods.
    
    Passage of this bill would increase the State Tax Department’s administrative costs by roughly $60,000 in Fiscal Year 2009 and by roughly $40,000 in each succeeding year. The Division of Highways may incur additional administrative costs due to passage of this bill.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2008
Increase/Decrease
(use"-")
2009
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 60,000 40,000
Personal Services 0 40,000 40,000
Current Expenses 0 4,000 0
Repairs and Alterations 0 0 0
Assets 0 16,000 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
    Passage of this bill would establish the Public-Private Transportation Facilities Act of 2008 within the Division of Highways. As written, this bill would allow private entities to enter into agreements with the Division of Highways to develop and operate “transportation facilities” and assess user fees. The bill defines “transportation facilities” as “any public inland waterway port facility, road, bridge, tunnel, overpass or existing airport used for the transportation of persons or goods.” The bill sets forth requirements for potential developers and the Division of Highways. Additionally, the bill provides that a developer is not required to pay any taxes or assessments, other than the Consumers Sales and Service Tax, upon any qualifying transportation facility or any property acquired or used by the developer or upon the income therefrom.
    
    The State Tax Department does not have information on the number of potential qualifying transportation facilities or the taxes that may be exempted by this proposal. The value of the proposed tax exemption may be substantial, but the projects would be public sector oriented. Tax benefits would be one trade-off for increased private sector expenditures on public goods.
    
    Passage of this bill would increase the State Tax Department’s administrative costs by roughly $60,000 in Fiscal Year 2009 and by roughly $40,000 in each succeeding year. Continuing costs attributable to this bill would be for the hiring of an additional employee to process the additional tax refunds that this bill would be expected to generate. Also, costs would be incurred in the first year to obtain office equipment and space for the additional employee and to provide some notification to the taxpayers of the exemption. The Division of Highways may incur additional administrative costs due to passage of this bill.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us
    The stated purpose of this bill is to establish the Public-Private Transportation Facilities Act of 2008 within the Division of Highways.
    
    As written, this bill provides that a qualifying transportation facility developer is not required to pay any taxes or assessments, other than the Consumers Sales and Service Tax, upon any qualifying transportation facility or any property acquired or used by the developer or upon the income therefrom. Businesses generally collect, and remit to the State, two taxes (i.e., the Consumers Sales and Service Tax and the Withholding Tax) for which the business is not the direct taxpayer. While the bill requires the developer to remit the Consumers Sales and Service Tax collected from consumers, it is not clear whether or not the developer would be required to remit to the State the Withholding Tax collected from its employees. Also, some real estate transactions are subject to a Withholding Tax that could possibly be retained by the transportation facility developer based upon the current wording of the proposal.