Date Requested:February 21, 2011
Time Requested:01:51 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R2789 Introduced SB566
CBD Subject: POST EMPLOYMENT BENEFITS
FUND(S)
General Revenue Fund & West Virginia Retiree Health Benefit Trust Fund
Sources of Revenue
General Fund,Special Fund
Legislation creates:
A New Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    The stated purpose of this bill is to deal with other post-employment benefits generally. It prohibits the Public Employees Insurance Agency finance board from including in the financial plans any subsidy for the cost of coverage for retired employees who were hired on or after July 1, 2010. It caps the amount the finance board may include in the financial plans as subsidy for the cost of coverage for retired employees who were hired before July 1, 2010 at $150 million. The bill defines “contractually required contribution” and authorizes the finance board to set minimum annual required contribution below the annual required contribution. The bill specifies that each participating government entity is required to remit annual contractual obligation. It authorizes the Tax Commissioner to disclose certain return information to the Public Employees Insurance Agency to determine total income for premium calculation. The bill increases the excise tax on cigarettes from 55 cents to $1.55 per pack and dedicates a portion of the increased tax to the West Virginia Retiree Health Benefit Trust Fund for ten years. The bill specifies that the trust fund is to keep all earnings during the ten-year period. It specifies that the foundation allowance for Public Employees Insurance Fund shall be paid directly to the West Virginia Retiree Health Benefit Trust Fund and each county board shall reflect its share of the payment as revenue on its financial statements to offset the applicable portion of its annual contractually required contribution expense. It provides that any amount of annual contractually required contribution allocated to and billed county boards of education for certain employees is a liability of the state until fully paid.
    
    This fiscal note only deals with matters related to the State Tax Department. As written, this bill proposes to raise the excise tax on cigarettes from the current rate of 55 cents per pack to $1.55 per pack, resulting in a gain of roughly $121.5 million per year. This estimate includes consumption declines in response to price increases associated with changes in tax rates. The bill provides that of the increase in revenues associated with the rate increase, an amount of $50 million annually for ten successive years be deposited into the West Virginia Retiree Health Benefit Trust Fund. Any additional amount would remain in the General Revenue Fund. As a result, General Revenue Fund collections would increase by a total of roughly $71.5 million per year for the next ten years and the new West Virginia Retiree Health Benefit Trust Fund would gain $50 million per year for the next ten years due to the increase in the tax rates.
    
    Also, this bill requires the Tax Commissioner to disclose tax return information (i.e., social security numbers, addresses, filing status, amounts and nature of income and number of dependents) for the purposes of establishing income for those individuals choosing family or spousal coverage through the Public Employees Insurance Agency.
    
    Additional administrative costs to the State Tax Department would be minimal during the current fiscal year due to programming changes and notifying taxpayers of the rate changes. Thereafter, there would be no additional costs.

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 3,540 0 0
Personal Services 0 0 0
Current Expenses 2,900 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 640 0 0
2. Estimated Total Revenues 0 111,400,000 121,500,000
3. Explanation of above estimates (including long-range effect):
    This fiscal note only deals with matters related to the State Tax Department. As written, this bill proposes to raise the excise tax on cigarettes from the current rate of 55 cents per pack to $1.55 per pack, resulting in a gain of roughly $121.5 million per year. This estimate includes consumption declines in response to price increases associated with changes in tax rates. The bill provides that of the increase in revenues associated with the rate increase, an amount of $50 million annually for ten successive years be deposited into the West Virginia Retiree Health Benefit Trust Fund. Any additional amount would remain in the General Revenue Fund. As a result, General Revenue Fund collections would increase by a total of roughly $71.5 million per year for the next ten years and the new West Virginia Retiree Health Benefit Trust Fund would gain $50 million per year for the next ten years due to the increase in the tax rates.
    
    Also, this bill requires the Tax Commissioner to disclose tax return information (i.e., social security numbers, addresses, filing status, amounts and nature of income and number of dependents) for the purposes of establishing income for those individuals choosing family or spousal coverage through the Public Employees Insurance Agency.
    
    Additional administrative costs to the State Tax Department would be minimal during the current fiscal year due to programming changes and notifying taxpayers of the rate changes. Thereafter, there would be no additional costs.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to deal with other post-employment benefits generally. It prohibits the Public Employees Insurance Agency finance board from including in the financial plans any subsidy for the cost of coverage for retired employees who were hired on or after July 1, 2010. It caps the amount the finance board may include in the financial plans as subsidy for the cost of coverage for retired employees who were hired before July 1, 2010 at $150 million. The bill defines “contractually required contribution” and authorizes the finance board to set minimum annual required contribution below the annual required contribution. The bill specifies that each participating government entity is required to remit annual contractual obligation. It authorizes the Tax Commissioner to disclose certain return information to the Public Employees Insurance Agency to determine total income for premium calculation. The bill increases the excise tax on cigarettes from 55 cents to $1.55 per pack and dedicates a portion of the increased tax to the West Virginia Retiree Health Benefit Trust Fund for ten years. The bill specifies that the trust fund is to keep all earnings during the ten-year period. It specifies that the foundation allowance for Public Employees Insurance Fund shall be paid directly to the West Virginia Retiree Health Benefit Trust Fund and each county board shall reflect its share of the payment as revenue on its financial statements to offset the applicable portion of its annual contractually required contribution expense. It provides that any amount of annual contractually required contribution allocated to and billed county boards of education for certain employees is a liability of the state until fully paid.
    
    The bill amends the confidentiality and disclosure of taxpayer return information in W. Va. Code §11-10-5d. The bill does not adequately restrict the use of confidential information provided to PEIA by PEIA.
    
    The bill also amends W. Va. Code §11-17-3 by increasing the tax on cigarettes. $50 million of the “increased revenues” per year are to be deposited in the W. Va. Retiree Health Benefit Trust Fund, and the remaining proceeds collected pursuant to this section are to be deposited in the General Revenue Fund. The difference in the amount collected after the amendment, and the “increased revenues” collected prior to the amendment is not apparent on the face of the statute, if adopted.
    
    In addition, the bill has no effective date.