Date Requested:January 14, 2012
Time Requested:01:06 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R1103 Introduced HB2258
CBD Subject: BEHAVIORAL HEALTH PROVIDERS TAX
FUND(S)
Medicaid State Share Fund
Sources of Revenue
Other Fund Medicaid State Share 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 eliminate the severance tax and health care provider tax on behavioral health providers.
    
    As written, this bill would eliminate the Severance Tax rate on gross receipts attributable to the provision of behavioral health services and provide an exemption from the Health Care Provider Taxes for certain behavioral health services. The elimination of the Severance Tax on behavioral health services will result in a reduction in the Medicaid State Share Fund of roughly $13 million per year. Additionally, unless alternative matching funds are secured, the reduction in the Medicaid State Share Fund attributable to the elimination of the Severance Tax on behavioral health services will result in a reduction in Federal Funds of roughly three times the tax reduction. The reduction in matching funds attributable to the elimination of the Severance Tax on behavioral health services would be roughly $38 million per year.
    
    Since the proposed additional exemption from Health Care Provider Taxes could be broadly interpreted, the State Tax Department does not have sufficient information to accurately estimate the potential revenue reduction attributable to the proposed tax exemption.
    
    Additional administrative costs for the State Tax Department associated with this bill would be minimal.
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2012
Increase/Decrease
(use"-")
2013
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):
    As written, this bill would eliminate the Severance Tax rate on gross receipts attributable to the provision of behavioral health services and provide an exemption from the Health Care Provider Taxes for certain behavioral health services. The elimination of the Severance Tax on behavioral health services will result in a reduction in the Medicaid State Share Fund of roughly $13 million per year. Additionally, unless alternative matching funds are secured, the reduction in the Medicaid State Share Fund attributable to the elimination of the Severance Tax on behavioral health services will result in a reduction in Federal Funds of roughly three times the tax reduction. The reduction in matching funds attributable to the elimination of the Severance Tax on behavioral health services would be roughly $38 million per year.
    
    Since the proposed additional exemption from Health Care Provider Taxes could be broadly interpreted, the State Tax Department does not have sufficient information to accurately estimate the potential revenue reduction attributable to the proposed tax exemption.
    
    Additional administrative costs for the State Tax Department associated with this bill would be minimal.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to eliminate the severance tax and health care provider tax on behavioral health providers.
    
    As written, this bill eliminates the Severance Tax on behavioral health providers by proposing the repeal of the definition of behavioral health services and the tax imposition language from West Virginia Code Chapter 11, Article 13A. The bill proposes to eliminate the Health Care Provider Tax on behavioral health providers by adding a new section to the Health Care Provider Tax Statute at West Virginia Code Chapter 11, Article 27. The new section states that the provisions of the Health Care Provider Tax Statute do not apply to behavioral health services and defines the term as “services provided for the care and treatment of persons with mental illness, mental retardation, developmental disabilities or alcohol or drug abuse in an inpatient, residential or outpatient setting, . . .” Given the activities upon which the Health Care Provider Tax is applied (e.g., hospitals), the proposed change may be more broadly interpreted than intended.