Date Requested:January 14, 2012
Time Requested:01:19 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R2363 Carry Over HB3024
CBD Subject: RETIREMENT TAX EXEMPT
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 exempt income received by retired public employees and retired teachers through their state retirement systems from personal income taxes.
    
    The bill, as written, creates a decreasing modification for all retirement income received in pensions and annuities from the Public Employees Retirement System or the West Virginia Teachers Retirement System. In addition, the bill places this new decreasing modification outside the calculations for the $8,000 senior citizens’ modification. Absent an internal effective date, the provisions of this bill would become effective for the 2013 tax year. Passage of this bill would result in a decrease in General Revenue Fund collections of $26.1 million beginning in FY2014. The anticipated retirements of members of the baby-boom generation will result in additional escalation of costs over time.
    
    Additional litigation by less favored groups may result in some increase in costs to the State Tax Department.

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):
    The bill, as written, creates a decreasing modification for all retirement income received in pensions and annuities from the Public Employees Retirement System or the West Virginia Teachers Retirement System. In addition, the bill places this new decreasing modification outside the calculations for the $8,000 senior citizens’ modification. Absent an internal effective date, the provisions of this bill would become effective for the 2013 tax year. Passage of this bill would result in a decrease in General Revenue Fund collections of $26.1 million beginning in FY2014. The anticipated retirements of members of the baby-boom generation will result in additional escalation of costs over time.
    
    Additional litigation by less favored groups may result in some increase in 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 exempt income received by retired public employees and retired teachers through their state retirement systems from personal income taxes.
    
    The bill is silent as to the present limitation of $2,000 in W. Va. Code §11-21-12(c)(5) of the same monies. The bill does not specify that a surviving spouse has the same modification but implies that result because the bill includes annuities.
    
    There is also concern that additional preferential treatment for a large group of state and local government retirees relative to federal civil service retirees would conflict with the U.S. Supreme Court ruling in Davis v. Michigan.