Date Requested:February 22, 2013
Time Requested:01:22 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2013R1209 Introduced HB2016
CBD Subject: SUBSTANCE ABUSE SERVICES
FUND(S)
General Revenue Fund, Prevention, Intervention, Treatment and Recovery Fund
Sources of Revenue
General Fund,Other Fund Prevention, Intervention,
Legislation creates:
A New Program,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 provide funding for substance abuse services through increased taxes on beer, wine and liquor. The bill increases the barrel tax on nonintoxicating beer, increases the tax on purchases of liquor and wine, and increases the liter tax. The bill creates a Prevention, Intervention, Treatment and Recovery Fund to fund substance abuse programs. The bill creates the Alcohol and Drug Disbursement Board. The bill grants the board authority to decided how money from the fund may be spent to enhance services available to reduce drug and alcohol abuse. The bill sets forth the board’s membership and term lengths. The bill also requires annual reports be made to the Legislature.
    
     As written, this bill proposes to require the Alcohol Beverage Control Administration to set wholesale prices to yield at least $6.5 million per year for a new Prevention, Intervention, Treatment and Recovery Fund. However, language in W. Va. Code §60-3A-17 would essentially require the Alcohol Beverage Control Administration (ABCA) to double their required annual transfers. In W. Va. Code §60-3A-17, section (b) uses the same language as in section (a) and this language has the practical effect of requiring the ABCA to transfer the equivalent of what it transfers annually to the General Revenue Fund to the Prevention, Intervention, Treatment and Recovery Fund. Additionally, the bill proposes to raise the Beer Barrel Tax from the current rate of $5.50 per barrel to $11 per barrel, and to raise the Wine Liter Tax from 26.406 cents (i.e., $0.26406) per liter to 52.812 cents (i.e., $052812) per liter. The bill also provides that one-half of the Beer Barrel Tax and one-half of the Wine Liter Tax would be paid into the Prevention, Intervention, Treatment and Recovery Fund.
    
     According to our interpretation, passage of this bill would provide the Prevention, Intervention, Treatment and Recovery Fund with roughly $22.5 million per year ($13.2 million from an increase in the wholesale price on liquor, $7.4 million from the increase in the Beer Barrel Tax, and $1.9 million from the increase in the Wine Liter Tax). The increases proposed by this bill would be expected to be passed on to the consumer and some consumers would be expected to reduce consumption from current levels due to the higher prices under the new rates. Although the State General Revenue Fund would continue to receive revenue from the Beer Barrel Tax at $5.50 per barrel, revenue from the Wine Liter Tax at 26.406 cents per liter, and revenue from sales tax on retail sales, the reduced consumption would result in a reduction in the General Revenue Fund of roughly $0.6 million per year. Additionally, the required increase in the wholesale price of liquor could affect the Alcohol Beverage Control Administration’s ability to continue revenue transfers to the General Revenue Fund at current levels.
    
     Additional administrative costs to the State Tax Department associated with this bill would be minimal. The Alcohol Beverage Control Administration may incur additional administrative costs due to passage of this bill. The Alcohol and Drug Disbursement Board created by the bill would be expected to have significant administrative costs.
    

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 21,900,000 21,900,000
3. Explanation of above estimates (including long-range effect):
     As written, this bill proposes to require the Alcohol Beverage Control Administration to set wholesale prices to yield at least $6.5 million per year for a new Prevention, Intervention, Treatment and Recovery Fund. However, language in W. Va. Code §60-3A-17 would essentially require the Alcohol Beverage Control Administration (ABCA) to double their required annual transfers. In W. Va. Code §60-3A-17, section (b) uses the same language as in section (a) and this language has the practical effect of requiring the ABCA to transfer the equivalent of what it transfers annually to the General Revenue Fund to the Prevention, Intervention, Treatment and Recovery Fund. Additionally, the bill proposes to raise the Beer Barrel Tax from the current rate of $5.50 per barrel to $11 per barrel, and to raise the Wine Liter Tax from 26.406 cents (i.e., $0.26406) per liter to 52.812 cents (i.e., $052812) per liter. The bill also provides that one-half of the Beer Barrel Tax and one-half of the Wine Liter Tax would be paid into the Prevention, Intervention, Treatment and Recovery Fund.
    
     According to our interpretation, passage of this bill would provide the Prevention, Intervention, Treatment and Recovery Fund with roughly $22.5 million per year ($13.2 million from an increase in the wholesale price on liquor, $7.4 million from the increase in the Beer Barrel Tax, and $1.9 million from the increase in the Wine Liter Tax). The increases proposed by this bill would be expected to be passed on to the consumer and some consumers would be expected to reduce consumption from current levels due to the higher prices under the new rates. Although the State General Revenue Fund would continue to receive revenue from the Beer Barrel Tax at $5.50 per barrel, revenue from the Wine Liter Tax at 26.406 cents per liter, and revenue from sales tax on retail sales, the reduced consumption would result in a reduction in the General Revenue Fund of roughly $0.6 million per year. Additionally, the required increase in the wholesale price of liquor could affect the Alcohol Beverage Control Administration’s ability to continue revenue transfers to the General Revenue Fund at current levels.
    
     Additional administrative costs to the State Tax Department associated with this bill would be minimal. The Alcohol Beverage Control Administration may incur additional administrative costs due to passage of this bill. The Alcohol and Drug Disbursement Board created by the bill would be expected to have significant administrative costs.
    


Memorandum
Person submitting Fiscal Note:
Mark B. Muchow
Email Address:
Roger.D.Cox@wv.gov
     The stated purpose of this bill is to provide funding for substance abuse services through increased taxes on beer, wine and liquor. The bill increases the barrel tax on nonintoxicating beer, increases the tax on purchases of liquor and wine, and increases the liter tax. The bill creates a Prevention, Intervention, Treatment and Recovery Fund to fund substance abuse programs. The bill creates the Alcohol and Drug Disbursement Board. The bill grants the board authority to decided how money from the fund may be spent to enhance services available to reduce drug and alcohol abuse. The bill sets forth the board’s membership and term lengths. The bill also requires annual reports be made to the Legislature.
    
     The bill has a title defect. The title indicates the bill would amend the West Virginia Code”by adding a new article, designated §16-43-1, §16-43-2 and §16-43-1...” However, this article already exists in the Code.
    
     Some of the names of entities from which members are to be selected for the Alcohol and Drug Disbursement Board are inconsistent with the actual entity name or the named entity no longer exists. The bill does not contain language regarding compensation of expenses for the Board members.