FISCAL NOTE
FUND(S):
Medicaid State Share Fund
Sources of Revenue:
Other Fund Medicaid State Share 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 eliminate the severance tax and health care provider tax on behavior health providers.
As written, this bill would eliminate the Severance Tax rate on gross receipts attributable to the provision of behavioral health services and provide an exemption from the Health Care Provider Taxes for certain behavioral health services. The elimination of the Severance Tax on behavioral health services will result in a reduction in the Medicaid State Share Fund of roughly $9.7 million per year. Additionally, unless alternative matching funds are secured, the reduction in the Medicaid State Share Fund attributable to the elimination of the Severance Tax on behavioral health services will result in a reduction in Federal Funds of roughly four times the tax reduction ($38.8 million) during the first two years of effect and roughly three times the tax reduction (i.e., a reduction of roughly $29.1 million per year) in each year thereafter. The federal matching share temporarily rises by 6.2 percentage points over the next two years. Since the exemption from Health Care Provider Taxes could be broadly interpreted, the State Tax Department does not have sufficient information to accurately estimate the potential revenue reduction attributable to the estimate.
Additional administrative costs for the State Tax Department associated with this bill would be minimal.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2009
Increase/Decrease
(use"-") |
2010
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):
As written, this bill would eliminate the Severance Tax rate on gross receipts attributable to the provision of behavioral health services and provide an exemption from the Health Care Provider Taxes for certain behavioral health services. The elimination of the Severance Tax on behavioral health services will result in a reduction in the Medicaid State Share Fund of roughly $9.7 million per year. Additionally, unless alternative matching funds are secured, the reduction in the Medicaid State Share Fund attributable to the elimination of the Severance Tax on behavioral health services will result in a reduction in Federal Funds of roughly four times the tax reduction ($38.8 million) during the first two years of effect and roughly three times the tax reduction (i.e., a reduction of roughly $29.1 million per year) in each year thereafter. The federal matching share temporarily rises by 6.2 percentage points over the next two years. Since the exemption from Health Care Provider Taxes could be broadly interpreted, the State Tax Department does not have sufficient information to accurately estimate the potential revenue reduction attributable to the estimate.
Additional administrative costs for the State Tax Department associated with this bill would be minimal.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us