Date Requested:January 13, 2011
Time Requested:12:42 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R1146 Introduced HB2352
CBD Subject: EXTEND ALTERNATIVE FUEL VEHICLE CREDIT
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 extend the alternative-fuel motor vehicles tax credit for ten years and to make the credit retroactive from the expiration of the initial credit.
    
    As written, this bill would change the expiration date of the Alternative-Fuel Motor Vehicles Tax Credit from ten years after the initial effective date to twenty years after the initial effective date. According to our interpretation that the initial effective date of the Alternative-Fuel Motor Vehicles Tax Credit, as enacted in West Virginia Code §11-6D et al., was June 5, 1996, passage of this bill would reestablish the alternative-fuel motor vehicles tax credit and would include eligible vehicles purchased from June 6, 2006 through June 5, 2016. While the initial credit program began slowly, the rapid growth in qualifying vehicles, particularly hybrid vehicles, resulted in a rapid escalation of the amount of credit claimed. As the number of qualifying vehicles continues to increase, the potential annual revenue reduction attributable to the reestablished tax credit may approach several million dollars annually.
    
    Additional administrative costs to the State Tax Department associated with passage of this bill would be minimal in most years. However, the reactivation of the credit also reactivates a reporting requirement contained in West Virginia Code §11-6D-8(c). Additional costs associated with compiling information for the report would be approximately $30,000 in Fiscal Year 2017.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2011
Increase/Decrease
(use"-")
2012
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
3. Explanation of above estimates (including long-range effect):
    Passage of this bill would reestablish the alternative-fuel motor vehicles tax credit and would include eligible vehicles purchased from June 6, 2006 through June 5, 2016. While the initial credit program began slowly, the rapid growth in qualifying vehicles, particularly hybrid vehicles, resulted in a rapid escalation of the amount of credit claimed. As the number of qualifying vehicles continues to increase, the potential annual revenue reduction attributable to the reestablished tax credit may approach several million dollars annually.
    
    U.S. sales of hybrid cars grew rapidly from just 9,500 in 2000 to more than 350,000 in 2007. The availability of more alternative-fuel vehicle models and federal tax credits is expected to further accelerate the growth of qualifying alternative-fuel vehicles.
    
    Since this bill provides tax credits for vehicles purchased after the prior expiration date of the credit program, Taxpayers may need to file amended returns to claim the credit for qualifying vehicles purchased in the latter half of 2006 and in 2007 and 2008. Passage of this bill would result in only minimal additional administrative costs to the State Tax Department in most years. However, the reactivation of the credit also reactivates a reporting requirement contained in West Virginia Code §11-6D-8(c). Additional costs associated with compiling information for the report would be approximately $30,000 in Fiscal Year 2017 for hiring temporary help to assist in the data gathering and compilation.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to extend the alternative-fuel motor vehicles tax credit for ten years and to make the credit retroactive from the expiration of the initial credit.
    
    As written, the bill states “Provided, however, that the amendments to this section enacted in the year 2011 are retroactive to the expiration date of the tax credit in the year 2009.” However, the credit, as originally enacted, expired June 5, 2006.