FISCAL NOTE
FUND(S):
21st Century Economic Development Fund
Sources of Revenue:
Special 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 establish the 21st Century Economic Development Fund in the West Virginia Economic Development Authority; specify how moneys in the fund may be used and to provide revenue sources for deposit in the fund.
As written, this bill proposes funding the 21st Century Economic Development Fund through the following: (1) increasing the electric generating capacity factor and tax rate and dedicating net tax collections for tax years beginning after December 31, 2009 that are in excess of the amount of taxes collected for the tax year ending December 31, 2009, (2) for fiscal years ending after June 30, 2009, dedicating coal Severance Taxes levied via W. Va. Code §11-13A in excess of the net amount of coal Severance Taxes collected in Fiscal Year 2006, (3) extending the Workers’ Compensation Debt Reduction Severance Taxes levied via W. Va. Code §11-13V such that after the unfunded liability of the old Workers’ Compensation Fund has been paid the revenue would be dedicated to the fund established by this bill, and (4) dedicating from the Personal Income Tax $12 per resident. Additionally, the bill specifies that the Economic Development is to use the 21st Century Economic Development Fund for purposes specified in the bill.
According to our interpretation, in addition to changes in the section on the taxation of electric power that are marked by strikethrough and underlining, other unmarked changes may significantly alter the desired intent. Assuming that the changes proposed for taxation of electric power merely increase the taxable capacity factor and the tax rate, passage of this bill would result in the deposit of roughly $188 million per year, when fully implemented, into the 21st Century Economic Development Fund (i.e., roughly $46 million from the increased tax on electric power generation, roughly $30 million of revenue dedicated from coal Severance Taxes, roughly $90 million of Severance Tax from W. Va. Code §11-13V {formerly dedicated to the old Workers’ Compensation Fund}, and roughly $22 million from the dedication of $12 per resident from the Personal Income Tax). However, passage of this bill will result in an annual reduction in the General Revenue Fund by roughly $52 million (i.e., $30 million of Severance Tax, and $22 million of Personal Income Tax).
Additional administrative costs to 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 |
136,000,000 |
Explanation of above estimates (including long-range effect):
As written, this bill proposes funding the 21st Century Economic Development Fund through the following: (1) increasing the electric generating capacity factor and tax rate and dedicating net tax collections for tax years beginning after December 31, 2009 that are in excess of the amount of taxes collected for the tax year ending December 31, 2009, (2) for fiscal years ending after June 30, 2009, dedicating coal Severance Taxes levied via W. Va. Code §11-13A in excess of the net amount of coal Severance Taxes collected in Fiscal Year 2006, (3) extending the Workers’ Compensation Debt Reduction Severance Taxes levied via W. Va. Code §11-13V such that after the unfunded liability of the old Workers’ Compensation Fund has been paid the revenue would be dedicated to the fund established by this bill, and (4) dedicating from the Personal Income Tax $12 per resident. Additionally, the bill specifies that the Economic Development is to use the 21st Century Economic Development Fund for purposes specified in the bill.
According to our interpretation, in addition to changes in the section on the taxation of electric power that are marked by strikethrough and underlining, other unmarked changes may significantly alter the desired intent. Assuming that the changes proposed for taxation of electric power merely increase the taxable capacity factor and the tax rate, passage of this bill would result in the deposit of roughly $188 million per year, when fully implemented, into the 21st Century Economic Development Fund (i.e., roughly $46 million from the increased tax on electric power generation, roughly $30 million of revenue dedicated from coal Severance Taxes, roughly $90 million of Severance Tax from W. Va. Code §11-13V {formerly dedicated to the old Workers’ Compensation Fund}, and roughly $22 million from the dedication of $12 per resident from the Personal Income Tax). However, passage of this bill will result in an annual reduction in the General Revenue Fund by roughly $52 million (i.e., $30 million of Severance Tax, and $22 million of Personal Income Tax).
Additional administrative costs to the State Tax Department associated with this bill would be minimal.
Memorandum
The stated purpose of this bill is to establish the 21st Century Economic Development Fund in the West Virginia Economic Development Authority; specify how moneys in the fund may be used and to provide revenue sources for deposit in the fund.
In addition to changes marked by strike-through and underlining, the bill apparently makes some unmarked changes that could significantly alter the intent of the bill.
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us