FISCAL NOTE
FUND(S):
General Revenue Fund
Sources of Revenue:
General 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 give credit for energy savings when a solar energy system is installed on a residential, farm and small industry property. Farm and small industry property are given the same definition as “small business”.
As written, this bill provides a state personal income tax credit of 30 percent of the cost to purchase and install a solar energy system up to a maximum of $2,000. The bill includes residential and farm property owners and property owned by a “small business” as those who may qualify for the credit. As a result, the potential revenue loss to the General Revenue Fund would be less than $50,000 per year from the passage of this bill. According to the Energy Information Administration’s (EIA) Annual Energy Outlook 2008, the installed cost of a solar water heater was $3,500 and the installed cost of a photovoltaic system (to provide electricity for both residences and commercial businesses) was more than $6,300 in 2007. Due to the overall cost and installation factors involved (e.g., solar resources, climate, local building code requirements, etc.), there would only be a limited number of taxpayers who could potentially take advantage of such a personal income tax credit.
There would be no additional administrative costs to the State Tax Department from the passage of this bill.
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 |
-50,000 |
-50,000 |
Explanation of above estimates (including long-range effect):
The stated purpose of this bill is to give credit for energy savings when a solar energy system is installed on a residential, farm and small industry property. Farm and small industry property are given the same definition as “small business”.
As written, this bill provides a state personal income tax credit of 30 percent of the cost to purchase and install a solar energy system up to a maximum of $2,000. The bill includes residential and farm property owners and property owned by a “small business” as those who may qualify for the credit. As a result, the potential revenue loss to the General Revenue Fund would be less than $50,000 per year from the passage of this bill. According to the Energy Information Administration’s (EIA) Annual Energy Outlook 2008, the installed cost of a solar water heater was $3,500 and the installed cost of a photovoltaic system (to provide electricity for both residences and commercial businesses) was more than $6,300 in 2007. Due to the overall cost and installation factors involved (e.g., solar resources, climate, local building code requirements, etc.), there would only be a limited number of taxpayers who could potentially take advantage of such a personal income tax credit.
There would be no additional administrative costs to the State Tax Department from the passage of this bill.
Memorandum
The stated purpose of this bill is to give credit for energy savings when a solar energy system is installed on a residential, farm and small industry property. Farm and small industry property are given the same definition as “small business”.
The bill does not contain language limiting the application of the credit to property located in West Virginia. Thus, a West Virginia taxpayer could install a solar energy system on an out-of-state residence and/or “small business” and claim the credit against West Virginia’s state personal income tax liability.
Also, the bill requires the solar energy system to derive at least 50 percent of its energy from the sun. However, the bill does not provide a methodology or test to determine the amount of energy savings.
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us