Date Requested:February 16, 2012
Time Requested:03:27 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2012R2244 Introduced HB4562
CBD Subject: TEA PARTY ACT
FUND(S)
All State Budget Accounts, Tax Relief Account
Sources of Revenue
General Fund,Other Fund see above
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 create the Tea Party Act. The bill makes legislative findings. The bill requires $200 million of spending cuts per year for five years in state government. The bill requires the savings from the spending cuts and fifty percent of any budget surpluses be placed in a new account. The bill requires moneys in this new account to be used to reduce the taxes of all West Virginians. The bill also establishes July 1, 2012 the effective date.
    
    As written, this bill would require the budget of the State of West Virginia to be reduced by $200 million each year for five years, beginning with the effective date of July 1, 2012, and then following the last of the five annual reductions State spending would be frozen for five years. The bill also provides that for the five years beginning with the effective date of July 1, 2012, $200 million is to be deposited into the Tax Relief Account. In the fiscal year following the deposit of the $200 million, the Legislature would be required to reduce taxes for all West Virginians. Also, 50 percent of all surplus money is to be deposited into the Tax Relief Account by the Legislature.
    
    The budget of the State of West Virginia is comprised of a number of funds that include both tax and non-tax source revenue sources. Absent additional Legislative guidance as to which taxes would be reduced and the method of the reduction, we cannot estimate the revenue impact of this proposal.
    
    The State Department will likely incur some additional administrative costs attributable to the proposed, but unspecified, tax reductions indicated in the 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 0 0
3. Explanation of above estimates (including long-range effect):
    As written, this bill would require the budget of the State of West Virginia to be reduced by $200 million each year for five years, beginning with the effective date of July 1, 2012, and then following the last of the five annual reductions State spending would be frozen for five years. The bill also provides that for the five years beginning with the effective date of July 1, 2012, $200 million is to be deposited into the Tax Relief Account. In the fiscal year following the deposit of the $200 million, the Legislature would be required to reduce taxes for all West Virginians. Also, 50 percent of all surplus money is to be deposited into the Tax Relief Account by the Legislature.
    
    The budget of the State of West Virginia is comprised of a number of funds that include both tax and non-tax source revenue sources. Absent additional Legislative guidance as to which taxes would be reduced and the method of the reduction, we cannot estimate the revenue impact of this proposal.
    
    The State Department will likely incur some additional administrative costs attributable to the proposed, but unspecified, tax reductions indicated in the bill.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to create the Tea Party Act. The bill makes legislative findings. The bill requires $200 million of spending cuts per year for five years in state government. The bill requires the savings from the spending cuts and fifty percent of any budget surpluses be placed in a new account. The bill requires moneys in this new account to be used to reduce the taxes of all West Virginians. The bill also establishes July 1, 2012 the effective date.
    
    As written, this bill would require the budget of the State of West Virginia to be reduced by $200 million each year for five years, beginning with the effective date of July 1, 2012. If the required reduction is to be made from the current year’s budget, it may be in conflict with the Constitution’s requirement of a complete plan of expenditures and itemized estimate of appropriations. Additionally, the bill requires the $200 million by which the budget is to reduced to be deposited into a Tax Relief Account. If the Tax Relief Account is included in the budget, the overall budget would not be reduced.