Date Requested:February 17, 2011
Time Requested:05:40 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R2717 Introduced HB3169
CBD Subject: HIGH-GROWTH BUSINESS INVESTMENT TAX 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 reinstate the high-growth business investment tax credit. The bill broadens the definition of “eligible companies” to include start-up, early stage, growth-oriented businesses that may not otherwise qualify for the tax credit. The bill extends the expiration to five years with a provision for reauthorization. The bill also increases the annual allocation for credits from $1 million to $2 million.
    
    As written, this bill proposes to revive an expired tax credit. The bill changes a number of items from the original tax credit statute, including raising the total credit allowed in any fiscal year from $1 million to $2 million. The bill provides that the High Growth Business Investment Tax Credit Act is effective from passage and will terminate on July 1, 2016.
    
    According to our interpretation and based upon language in the bill, passage of this bill would reduce annual General Revenue Fund collections by up to $2 million per year beginning in FY2012. Since the bill contains a provision that it is effective from passage, some minor reduction in the General Revenue Fund may occur in the FY2011, the current fiscal year.
    
    Additional administrative costs to the State Tax Department associated with passage of this bill would be minimal. The Economic Development Authority may incur additional administrative costs due to passage of 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 -2,000,000 -2,000,000
3. Explanation of above estimates (including long-range effect):
    As written, this bill proposes to revive an expired tax credit. The bill changes a number of items from the original tax credit statute, including raising the total credit allowed in any fiscal year from $1 million to $2 million. The bill provides that the High Growth Business Investment Tax Credit Act is effective from passage and will terminate on July 1, 2016.
    
    According to our interpretation and based upon language in the bill, passage of this bill would reduce annual General Revenue Fund collections by up to $2 million per year beginning in FY2012. Since the bill contains a provision that it is effective from passage, some minor reduction in the General Revenue Fund may occur in the FY2011, the current fiscal year.
    
    Additional administrative costs to the State Tax Department associated with passage of this bill would be minimal. The Economic Development Authority may incur additional administrative costs due to passage of this bill.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to revise the high-growth business investment tax credit. The bill permits eligible start up, early stage or growth oriented taxpayers to take the credit. The bill lowers certain gross receipt and payroll requirements. The bill also increases the amount of credit available. Further, the bill requires the economic development authority to assist in preparing legislative reports. The bill requiring new rules to be promulgated. Additionally, the bill redefines terms and changes effective dates.
    
    As written, this bill proposes to revive an expired tax credit. The bill changes a number of items from the original tax credit statute, including the targeted businesses. However, the bill is inconsistent in the references. For example, some references of new and old language are to “start-up, early stage, growth oriented research and development” businesses while some others are for “start-up, early stage, growth oriented or research and development”businesses. Additionally, the bill revised one date to require a triennial report, but failed to change a date providing for the termination of the report requirement.