Date Requested:January 22, 2011
Time Requested:10:58 AM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R1690 Introduced HB2731
CBD Subject: CREDIT FOR "CRITICAL NEEDS" TEACHER
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 authorize a tax credit for new teachers in critical needs areas. It requires the State Board of Education to determine standards defining “critical needs areas” in both subject areas and geographic areas. The tax credit for the first three years of employment in such an area shall equal the teachers’ liability for personal income taxes. If the teacher continues to teach in a critical needs area for another five years, the tax credit is equal to fifty percent of the tax liability.
    
    As written, this bill would provide a tax credit against personal income taxes for new “critical needs” teachers of 100 percent of personal income tax liability per year for the first three years of employment and a credit of 50 percent of personal income tax liability per year for continued employment during the next five years. The loss to the General Revenue Fund during the first year would be about $550,000. The annual cost would rise each year, as a new group of “critical needs” teachers are added, until a maximum annual cost of more than $3.2 million is reached by the eighth year of the tax credit program. The tax credit would first become available for the 2011 tax year.
    
    Additional administrative costs for the State Tax Department would be minimal. The State Board of Education may also incur additional administrative costs associated with this bill.

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 -550,000 -3,200,000
3. Explanation of above estimates (including long-range effect):
    As written, this bill would provide a tax credit against personal income taxes for new “critical needs” teachers of 100 percent of personal income tax liability per year for the first three years of employment and a credit of 50 percent of personal income tax liability per year for continued employment during the next five years. The loss to the General Revenue Fund during the first year would be about $550,000. The annual cost would rise each year, as a new group of “critical needs” teachers are added, until a maximum annual cost of more than $3.2 million is reached by the eighth year of the tax credit program. The tax credit would first become available for the 2011 tax year.
    
    Additional administrative costs for the State Tax Department would be minimal. The State Board of Education may also incur additional administrative costs associated with this bill.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to authorize a tax credit for new teachers in critical needs areas. It requires the State Board of Education to determine standards defining “critical needs areas” in both subject areas and geographic areas. The tax credit for the first three years of employment in such an area shall equal the teachers’ liability for personal income taxes. If the teacher continues to teach in a critical needs area for another five years, the tax credit is equal to fifty percent of the tax liability.
    
    The proposed bill has several concerns. First, the bill uses the term “new teacher” without a clear definition. Second, the proposed bill does not restrict the amount of the credit to income from teaching. Lastly, the proposed bill requires the State Board of Education to “develop standards applicable to defining critical needs areas” but does not provide any guidelines and/or restrictions on the Board in providing such a definition. Also, the deadline given the State Board to develop these standards should be changed from July 1, 2011 to the effective date of the bill, which is January 1, 2011.