Date Requested:January 25, 2011
Time Requested:11:33 AM
Agency: Lottery Commission
CBD Number: Version: Bill Number: Resolution Number:
2011R1669 Introduced HB2087
CBD Subject: TRAUMATIC BRAIN INJURY COMMISSION
FUND(S)
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.

     The bill would create a Traumatic Brain Injury Services Commission. Funding for the Commission would come from two major sources: Federal Medicaid funds, and "a gross receipts tax of one percent on all Limited Video Lottery Terminals."
    
     The reason for the zero revenue estimate is explained in the Memorandum section of this fiscal note.
    
     Moneys for the new Commission are to be deposited into a "trust fund" mentioned in section 9A-5-5(b). THe Lottery is unclear whether this creates a "fund" as contemplated by the check box used in the fiscal note format.

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):
     The Lottery would incurr no increase or decrease in operating expenses.
    
     The reason for the zero revenue estimate is explained in the Memorandum section of this fiscal note.


Memorandum
Person submitting Fiscal Note:
Monica Robinson
Email Address:
jmelton@wvlottery.com
     Mention of a gross receipts tax in section 9A-5-5 is not sufficient to actually impose a tax. The bill has not given the Lottery or the tax payers a definition of gross receipts to which the one percent tax will apply. In the tax code [for example, W.Va. Code 11-13-1(b)(4)], there is a detailed definition of gross income or gross receipts to which the state business and occupation tax on public utilities applies. Municipalities also impose business and occupation taxes based on gross receipts, but not on legal gaming machines. See W.Va. Code 29-22B-1901. Here is a hypothetical gambling example of this kind of gross receipts tax: A person inserts a twenty dollar bill into a video lottery terminal, wagers one dollar on a single play, loses the bet and cashes out for nineteen dollars. If the gross receipt for the transaction is twenty dollars, but the merchant receives only one dollar, the tax of twenty cents will be a twenty percent tax on the one dollar the merchant actually received.
    
     W.Va. Code 29-22B-1408 goes into great detail about distributing the state's share of "gross terminal income," a term not defined by statute but later defined by legislative rule. Gross terminal income is defined as wagers-minus-prizes. It is a gross tax by name even though a substantial amount of money is deducted as prize payments. If this is the revenue stream to be used by HB 2354, the bill should modify section 1408 so that all the shares, including the share for the new Commission, will add to 100%.