Date Requested:February 02, 2011
Time Requested:04:19 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R2369 Introduced HB2994
CBD Subject: MUNICIPAL SELF-FUNDED PENSION FUNDS
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 make municipal self-funded pensions tax exempt.
    
    This bill would allow retirement pensions of retired municipal employees to share the same tax exempt status provided for police and firemen’s retirement pensions in Class I, II and III cities. The passage of this bill would reduce General Revenue Fund collections by at least $70,000 per year beginning in Fiscal Year 2013. The Tax Department currently follows policy set forth in Dodson v. Palmer, Civil Action No. 00-C-AP-10, Circuit Court of Monongalia County (2000) (holding that a retired federal corrections officer and firefighter was entitled to the same benefits as retired West Virginia police officers and firefighters). Expansion of the current exemption to encompass other retirees could result in a higher total cost related to the proposed changes. Due to the lack of an internal effective date, this proposed modification would first become effective for tax years beginning on or after January 1, 2012.
    
    There would be no additional administrative costs to the State Tax Department.

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 -70,000
3. Explanation of above estimates (including long-range effect):
    This bill would allow retirement pensions of retired municipal employees to share the same tax exempt status provided for police and firemen’s retirement pensions in Class I, II and III cities. The passage of this bill would reduce General Revenue Fund collections by at least $70,000 per year beginning in Fiscal Year 2013. The Tax Department currently follows policy set forth in Dodson v. Palmer, Civil Action No. 00-C-AP-10, Circuit Court of Monongalia County (2000) (holding that a retired federal corrections officer and firefighter was entitled to the same benefits as retired West Virginia police officers and firefighters). Expansion of the current exemption to encompass other retirees could result in a higher total cost related to the proposed changes. Due to the lack of an internal effective date, this proposed modification would first become effective for tax years beginning on or after January 1, 2012.
    
    There would be no additional administrative costs to the State Tax Department.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to make municipal self-funded pensions tax exempt.
    
    This bill should include language amending and reenacting W. Va. Code § 11- 21-12(c) which deals with modifications reducing federal adjusted gross income. Subdivision 6 contains language that allows pension and annuities received under Police and Firemen Retirement Funds to be exempt from state income tax. Language needs to be added to Subdivision 6 to provide same state tax exemption status to pensions and annuities received under Municipal Employee Retirement Funds.
    
    Use of the word “heretofore” may be interpreted to limit the application of the bill to those municipalities which have established and maintained “Employee Retirement and Benefit Fund” before the bill is enacted or becomes effective. This may exclude application of the bill to include those municipalities which establishes such retirement funds in the future.