Date Requested:January 25, 2012
Time Requested:03:45 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2012R1728 Introduced SB419
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 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 would reactivate and revise the High-Growth Business Investment Tax Credit. Revisions to the original High-Growth Business Investment Tax Credit include the following: changing the target businesses in which investment is to be encouraged; lowering the maximum annual gross receipts and annual payroll that identify the targeted businesses; changing responsibility for certifying businesses that would qualify for the investment, and, increasing from $1 million to $3 million the amount of tax credit that could be allocated during any fiscal year
    
     According to our interpretation, passage of this bill would reduce the General Revenue Fund by up to $3 million per year (i.e., the amount of tax credit that can be allocated per year) beginning in Fiscal Year 2013.
    
     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
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 -3,000,000 -3,000,000
3. Explanation of above estimates (including long-range effect):
     Passage of this bill would reactivate and revise the High-Growth Business Investment Tax Credit. Revisions to the original High-Growth Business Investment Tax Credit include the following: changing the target businesses in which investment is to be encouraged; lowering the maximum annual gross receipts and annual payroll that identify the targeted businesses; changing responsibility for certifying businesses that would qualify for the investment, and, increasing from $1 million to $3 million the amount of tax credit that could be allocated during any fiscal year
    
     According to our interpretation, passage of this bill would reduce the General Revenue Fund by up to $3 million per year (i.e., the amount of tax credit that can be allocated per year) beginning in Fiscal Year 2013.
    
     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 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, the bill uses both the phrase “start-up, early stage, growth oriented or research and development” and the phrase “start-up, early stage, growth oriented and research and development” (emphasis added). The inconsistent use of one of the above phrases may result in some confusion as to the applicable businesses.
    
     Although the bill, as written, proposes revisions to W. Va. code §11-13U-8 to change the start date of the required tax credit review and accountability report to February 1, 2013, no changes were made to the termination date for the report (i.e., June 30, 2011).