Date Requested:February 19, 2008
Time Requested:12:42 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2008R2391 Introduced SB735
CBD Subject: Dedicating parts of certain severance taxes to counties and municipalities
FUND(S)
General Revenue Fund, Division of Forestry Severance Tax Operations Fund, Waste Coal-Producing Counties Fund, County Severance Revenue Fund
Sources of Revenue
General Fund,Special Fund
Legislation creates:
A New Fund

Fiscal Note Summary

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

    The stated purpose of this bill is to dedicate 5% of every million dollars of certain severance taxes for the use and benefit of the counties and municipalities from which those taxes were generated.
    
    As written, this bill would require that 5 percent of the Severance Tax on natural gas and oil (W. Va. Code §11-13A-3a), timber (W. Va. Code §11-13A-3b), other natural resources, except coal (W. Va. Code §11-13A-3c), and waste coal (W. Va. Code §11-13A-3e) to be dedicated to the counties and municipalities from which the taxes were generated. The bill also provides that the money resulting from the 5 percent calculation be deposited into the “County Severance Revenue Fund,” as established, and that the money in the fund is to be distributed to the respective counties and municipalities entitled to the money at the direction of the Legislature.
    
    According to our interpretation, passage of this bill will not result in any change in total revenue, but a reallocation of revenue. While the County Severance Revenue Fund will receive roughly $4.6 million per year, the General Revenue Fund would be reduced by roughly $4.38 million per year, the Division of Forestry Severance Tax Operations Fund would be reduced by roughly $0.2 million per year, and the Waste Coal-Producing Counties Fund would be reduced by roughly $20,000 per year.
    
    As written, the bill requires that the money dedicated by the proposal is to be distributed to the respective counties and municipalities entitled to the money. If the State Tax Department is required to determine the source of the money back to the exact location from which the revenue was generated, additional administrative costs to the State Tax Department would be substantial.
    

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 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
3. Explanation of above estimates (including long-range effect):
    Passage of this bill would require that 5 percent of the Severance Tax on natural gas and oil (W. Va. Code §11-13A-3a), timber (W. Va. Code §11-13A-3b), other natural resources, except coal (W. Va. Code §11-13A-3c), and waste coal (W. Va. Code §11-13A-3e) to be dedicated to the counties and municipalities from which the taxes were generated. The bill also provides that the money resulting from the 5 percent calculation be deposited into the “County Severance Revenue Fund,” as established, and that the money in the fund is to be distributed to the respective counties and municipalities entitled to the money at the direction of the Legislature.
    
    According to our interpretation, passage of this bill will not result in any change in total revenue, but a reallocation of revenue. While the County Severance Revenue Fund will receive roughly $4.6 million per year, the General Revenue Fund would be reduced by roughly $4.38 million per year, the Division of Forestry Severance Tax Operations Fund would be reduced by roughly $0.2 million per year, and the Waste Coal-Producing Counties Fund would be reduced by roughly $20,000 per year.
    
    As written, the bill requires that the money dedicated by the proposal is to be distributed to the respective counties and municipalities entitled to the money. If the State Tax Department is required to determine the source of the money back to the exact location from which the revenue was generated, additional administrative costs to the State Tax Department would be substantial.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us
    The stated purpose of this bill is to dedicate 5% of every million dollars of certain severance taxes for the use and benefit of the counties and municipalities from which those taxes were generated.
    
    As written, the bill requires that the money dedicated by the proposal is to be distributed to the respective counties and municipalities entitled to the money. However, no information is provided on what factors (e.g., revenue, production, or population) are to be used in determining the distribution. Also, the dedication of revenue attributable to timber and waste coal as stated in this proposal would take precedence over existing statutory tax dedications