Sources of Revenue:

General Fund,Other Fund local government funds

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 create the “West Virginia Small Business Assistance Program Act” to promote improvement of competitiveness of the state’s small business community and to encourage entrepreneurial development. As written, the bill indicates that in order to accomplish the purpose and intention of the new Article it is necessary to: provide for an exemption from personal property tax assessment for the first three years on all “business related” equipment purchased by small businesses; recognize personal income deductions and exemptions for small businesses recognized by the federal government; provide a tax credit of $1,000 a year for each new employee, with training skills tax credit to be applied for employees who are entering the work force for the first time up to and including three years of continuous service; provide extra deductions for expenses of small businesses, including the deductibility on state taxes of the federal employment tax; consolidate forms needed and issued by all state departments and agencies for small business reporting and tax reporting requirements and allow twenty days to respond before the due date; use the same identification numbers for each business in all departments or agencies of the state when a business is chartered or registered; provide liaison sources of active and retired business mentors to assist in the start- up of small businesses in crisis; and establish a procedure to obtain funding from existing small business grants and West Virginia Economic Development programs in the state. The bill defines a small business as a business with no more than 50 employees and provides that the State Tax Commissioner, after conferring with the Secretary of Commerce and the Joint Commission on Economic Development, shall promulgate rules to carry out the policy and purposes of the proposal. The State Tax Department does not have sufficient data to accurately estimate the potential revenue impact of this bill. However, the potential reduction in revenue for the State and local governments could be substantial. Since the bill would require all State departments and agencies to use the same identification numbers for each business, passage of this bill may result in significant programming costs for all the affected agencies that would be required to revise data bases and computer programs to incorporate an identification number not currently used. Additionally, the affected State departments and agencies may incur significant administrative costs related to the requirement to consolidate forms for small business reporting.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	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	0	0

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

As written, the bill indicates that in order to accomplish the purpose and intention of the new Article it is necessary to: provide for an exemption from personal property tax assessment for the first three years on all “business related” equipment purchased by small businesses; recognize personal income deductions and exemptions for small businesses recognized by the federal government; provide a tax credit of $1,000 a year for each new employee, with training skills tax credit to be applied for employees who are entering the work force for the first time up to and including three years of continuous service; provide extra deductions for expenses of small businesses, including the deductibility on state taxes of the federal employment tax; consolidate forms needed and issued by all state departments and agencies for small business reporting and tax reporting requirements and allow twenty days to respond before the due date; use the same identification numbers for each business in all departments or agencies of the state when a business is chartered or registered; provide liaison sources of active and retired business mentors to assist in the start-up of small businesses in crisis; and establish a procedure to obtain funding from existing small business grants and West Virginia Economic Development programs in the state. The bill defines a small business as a business with no more than 50 employees and provides that the State Tax Commissioner, after conferring with the Secretary of Commerce and the Joint Commission on Economic Development, shall promulgate rules to carry out the policy and purposes of the proposal. The State Tax Department does not have sufficient data to accurately estimate the potential revenue impact of this bill. However, the potential reduction in revenue for the State and local governments could be substantial. Based upon Workforce West Virginia data, more than 37 percent of private sector employment is in businesses with less than 50 total employees. Some of these businesses may be Fortune 500 companies with less than 50 employees in this State. Since the bill would require all State departments and agencies to use the same identification numbers for each business, passage of this bill may result in significant programming costs for all the affected agencies that would be required to revise data bases and computer programs to incorporate an identification number not currently used. Additionally, the affected State departments and agencies may incur significant administrative costs related to the requirement to consolidate forms for small business reporting.

Memorandum

Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov