FISCAL NOTE



FUND(S):

State Road Fund

Sources of Revenue:

Other Fund State Road 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 exempt existing churches from paying a tax on propane and other heating oils used for the purpose of heating a church building. As written, we are unable to accurately estimate the loss to the State Road Fund from passage of this bill. This bill provides a refundable exemption from the variable rate component of the Motor Fuel Excise Tax on purchases of propane and other forms for heating oils by churches existing on July 1, 2009, to be used exclusively for heating church buildings. The bill is very broad in scope. It does not provide guidance as to what constitutes a “church building” (e.g., a gymnasium or business annex owned by the church), nor does it specifically define “other heating oils”. Additional administrative costs to the Tax Department would be about $41,000 during the current fiscal year and roughly $22,000 per year thereafter.



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 40,800 21,600 21,600
Personal Services 20,760 20,760 20,760
Current Expenses 4,040 840 840
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 16,000 0 0
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


As written, we are unable to accurately estimate the loss to the State Road Fund from passage of this bill. This bill provides a refundable exemption from the variable rate component of the Motor Fuel Excise Tax on purchases of propane and other forms for heating oils by churches existing on July 1, 2009, to be used exclusively for heating church buildings. The bill is very broad in scope. It does not provide guidance as to what constitutes a “church building” (e.g., a gymnasium or business annex owned by the church), nor does it specifically define “other heating oils”. Additional administrative costs to the Tax Department would be about $41,000 during the current fiscal year and roughly $22,000 per year thereafter.



Memorandum


The stated purpose of this bill is to exempt existing churches from paying a tax on propane and other heating oils used for the purpose of heating a church building. This bill provides a refundable exemption from the variable rate component of the Motor Fuel Excise Tax on purchases of propane and other forms for heating oils by churches existing on July 1, 2009, to be used exclusively for heating church buildings. The bill is very broad in scope. It does not provide guidance as to what constitutes a “church building” (e.g., a gymnasium or business annex owned by the church), nor does it specifically define “other heating oils”. In addition, there may be administrative difficulties because most of the substances considered as “heating oil” can serve a dual purpose. It maybe difficult to track whether the fuel is being used for an exempt purpose or non-exempt purpose. Also, this bill may have Constitutional problems. The proposed exemption would only apply to churches in existence on July 1, 2009, which would create a disparity in treatment of churches created after that date. This may violate Article X, Section 1 of the West Virginia Constitution, which provides that “taxation shall be equal and uniform throughout the State”.



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kpetry@tax.state.wv.us