FISCAL NOTE
FUND(S):
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.
This memo addresses questions raised by the Fiscal note that was written in 2011 by the Tax Department in response to the inquiry regarding the increase of the Rehabilitation Tax Credit for Commercial, Income producing properties from 10% to 25%.
In the note, the Tax Department states that the increase to the tax credit would cause a loss of revenue of $2,200,000. The State Historic Preservation Office (SHPO) believes that these numbers are not an accurate representation of the cost of the program to the budget. Not taken into consideration is the income that would be generated from the additional state sales tax (for the purchase of supplies for the rehabilitation, as well as the sales tax increase for the new businesses created) as well as the income generated through the new jobs that are created. These jobs will add to the state payroll tax and help spur further growth in areas where rehabilitation programs take place.
The State Historic Preservation Office is aware that the increase in the rehabilitation tax credit will have an impact on the revenue stream. SHPO staff continues to believe that the increase would have positive impact on the State of West Virginia and that the constituents of the state would support an increase in the tax credit. However, it is understood that there are other factors that must be taken into consideration when deciding on a tax credit increase. With that in mind, the State Historic Preservation Office requests that you consider an increase to the tax credit that will facilitate the use of the tax credit program while in balance with other budgetary concerns.
Fiscal Note Detail
| 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 |
Explanation of above estimates (including long-range effect):
The State Historic Preservation Office asked the Tax Department to review their numbers, adding in the additional revenue that would be generated under the program. During a meeting with SHPO staff, Deputy Revenue Secretary Mark Muchow provided a more thorough explanation of the methodology used to obtain the numbers used in the Fiscal Note. The original fiscal note provided to the Senate and House Finance Committee which was completed in 2010, does not appear to consider the increase in state taxes due to increase in sales and jobs. Based on calculations completed by Mr. Muchow, it appears that the increase of the tax credit by 15% would equal approximately $1.75 million revenue loss. The State Historic Preservation Office asked Mr. Muchow to run the same numbers and decrease the tax credit to 20% (over the proposed 25%) and the loss in revenue equals approximately $1million.
Memorandum
Person submitting Fiscal Note: Jennifer L. Brennan
Email Address: Jennifer.L.Brennan@wv.gov