Date Requested:February 14, 2013
Time Requested:01:45 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2013R1561 Introduced SB65
CBD Subject: NATURAL RESOURCE POLICE/OFFICERS
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 treat natural resources police like all other law enforcement and exempt them from state income tax.
    
     As written, this bill would exempt all retirement income received from the West Virginia Public Employees Retirement System (PERS) for police officers (formerly conservation officers) who retire from the Department of Natural Resources. However, if the exemption proposed by this bill is restructured to only apply to the retirement income received from PERS that is attributable to service as a Natural Resources Police Officer, the annual reduction in the General Revenue Fund would be roughly $160,000 per year. Since the bill indicates the proposed change would apply to taxable years beginning after December 31, 2013, the first annual revenue impact would occur in Fiscal Year 2015.
    
     The provisions of this bill would apply to an estimated 90 public sector retirees. However, other similarly situated retirees may seek the same special tax status.
    
     If all Personal Income Tax returns with the proposed modification were accepted as filed, additional administrative costs for the State Tax Department associated with passage of this bill would be minimal. However, if the State Tax Department is required to audit returns to ensure that income beyond that attributable to a Taxpayer’s service as a Natural Resource Police Officer is not included in the exemption, additional administrative costs could be substantial.
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2013
Increase/Decrease
(use"-")
2014
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 -160,000
3. Explanation of above estimates (including long-range effect):
     Passage of this bill would exempt all retirement income received from the West Virginia Public Employees Retirement System (PERS) for police officers (formerly conservation officers) who retire from the Department of Natural Resources. However, if the exemption proposed by this bill is restructured to only apply to the retirement income received from PERS that is attributable to service as a Natural Resources Police Officer, the annual reduction in the General Revenue Fund would be roughly $160,000 per year. Since the bill indicates the proposed change would apply to taxable years beginning after December 31, 2013, the first annual revenue impact would occur in Fiscal Year 2015.
    
     The provisions of this bill would apply to an estimated 90 public sector retirees. However, other similarly situated retirees may seek the same special tax status.
    
     If all Personal Income Tax returns with the proposed modification were accepted as filed, additional administrative costs for the State Tax Department associated with passage of this bill would be minimal. However, if the State Tax Department is required to audit returns to ensure that income beyond that attributable to a Taxpayer’s service as a Natural Resource Police Officer is not included in the exemption, additional administrative costs could be substantial.
    


Memorandum
Person submitting Fiscal Note:
Mark B. Muchow
Email Address:
Roger.D.Cox@wv.gov
     The stated purpose of this bill is treat natural resources police like all other law enforcement and exempt them from state income tax.
    
     As written, this bill would exempt all retirement income received from the West Virginia Public Employees Retirement System for police officers (formerly conservation officers) who retire from the Department of Natural Resources. According to our interpretation, the exemption would apply to retirement income derived from all of a person’s employment under the Public Employee Retirement System (PERS), not just the person’s employment as a Natural Resources Police Officer. That is, a person could work many years for another PERS agency and then work just a short time as a Natural Resources Police Officer then retire and thus receive the exemption for all their PERS retirement income. As such, the bill may have a broader application than intended.
    
     Pension provisions for Natural Resources Police Officers differ from pension provisions for State Police and most other police officers. Police officers generally do not participate in the federal social security system while employed as police officers. However, Natural Resources Police Officers participate in both the Public Employees Retirement System (PERS) and federal social security. The employee contribution rate to PERS is considerably less than police officer contributions to police retirement funds.