FUND(S):

7162

Sources of Revenue:

Special Fund

Legislation creates:

A New Fund



Fiscal Note Summary


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


    SB 337 proposes annually redirecting $3 million of the $11 million in lottery terminal proceeds currently dedicated to the Old Fund and depositing those funds into the WV Racing Commissions Special Account –Unredeemed Pari-Mutual Tickets account.
    
    The cost to the Old Fund is $3 million per year and the associated compounded interest income lost. The $11 million lottery transfer occurs in July – September. The first reduction in transfer revenue would occur in fiscal year 2011. The 2011 impact to the Old Fund is a reduction in revenue $3,150,000. Year 2012, the reduction in revenue would be 3,307,500, and continues to grow each year based on the assumed 5% discount factor used to value the long term obligations of the Old Fund.
    
    An accurate projection of the impact the $3 million annual reduction in revenue would have on the retirement date of the Old Fund liability is not possible, given the multiple variables involved and the current size of the liability.
    
    The latest audited amounts for the Old Fund are as of June 30, 2009.
    Old Fund liabilities equal $2,163,744,000 with the unfunded portion being $1,299,583,000.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2010
Increase/Decrease
(use"-")
2011
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 -3,150,000 -3,307,500


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


    ($3,000,000) annual reduction in revenue
    Old Fund liabilities discounted at 5% (long term)
    
    FY 2011 = 3,000,000 X 0.05 = 150,000 (investment/interest income)
    Total 2011 reduction = 3,000,000 + 150,000 = (3,150,000)
    
    FY 2012 = (3,150,000 + 3,000,000) X 0.05 = 307,500 investment/interest income)
    Total 2012 reduction = 3,000,000 + 307,500 = (3,307,500)



Memorandum


    



    Person submitting Fiscal Note: Michael D Riley
    Email Address: Michael.Riley@wvinsurance.gov