Sources of Revenue:

General Fund

Legislation creates:

A New Program

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

The stated purpose of this bill is to provide more flexibility to county school boards in managing schools, and to provide an income tax credit for tuition and transportation expenses incurred by students who transfer from a failing school to a nonfailing school. This bill, as written, establishes a Personal Income Tax credit for the parent of a child assigned to attend a failing school to help offset the cost of transferring the student to a nonfailing public school or a nonpublic school chosen by the parent. The credit is equal to 80 percent of the average annual State cost of attendance for a public K-12 student or the actual cost of attending a nonfailing public school or nonpublic school, whichever is less. We are unable to accurately estimate the amount of credit that would be taken under this proposal since it is unknown how many parents would use this tax credit and what the amount of the credit for each taxpayer would be. During the first year, the State Tax Department would incur approximately $45,000 in costs for creating and testing a new form to be used by taxpayers to take this credit. The State Tax Department would also have other additional costs annually for the processing of these forms or schedules, but the amount of the costs cannot be determined since we do not know how many taxpayers would take this credit.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	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	0

Explanation of above estimates (including long-range effect):

This bill, as written, establishes a Personal Income Tax credit for the parent of a child assigned to attend a failing school to help offset the cost of transferring the student to a nonfailing public school or a nonpublic school chosen by the parent. The credit is equal to 80 percent of the average annual State cost of attendance for a public K-12 student or the actual cost of attending a nonfailing public school or nonpublic school, whichever is less. We are unable to accurately estimate the amount of credit that would be taken under this proposal since it is unknown how many parents would use this tax credit and what the amount of the credit for each taxpayer would be. The bill indicates that the tax credits will be paid out of the Failing School Income Tax Credit Account, and that Commissioner of Revenue will annually certify to the Comptroller the amount of income tax credits due to parents. The Comptroller will transfer into the Failing Schools Income Tax Credit Account the amount from sales tax revenues within the Education Trust Fund that is sufficient for the Department of Revenue to use to cover the income tax credits for the applicable tax year. The Commissioner of Revenue will annually distribute the funds in the Failing Schools Income Tax Credit Account to parents. The bill has no references to sales tax revenues within the Education Trust Fund other than that funds should be transferred from that account to the Failing School Income Tax Credit Account. During the first year, the State Tax Department would incur approximately $45,000 in costs for creating and testing a new form to be used by taxpayers to take this credit. The State Tax Department would also have other additional costs annually for the processing of these forms or schedules, but the amount of the costs cannot be determined since we do not know how many taxpayers would take this credit.

Memorandum

The stated purpose of this bill is to provide more flexibility to county school boards in managing schools, and to provide an income tax credit for tuition and transportation expenses incurred by students who transfer from a failing school to a nonfailing school. The bill does not include a formula for determining the “average annual state cost of attendance for a public K-12 student” or a formula for determining the “actual cost of attending a nonfailing public school or nonpublic school”. This is similar to a publicly funded voucher program in that it would allow public funds to be spent on attendance at religious schools. This might violate the constitutional separation of church and state. The bill also does not have any references to funding for the Education Trust Fund or the creation of such a fund. It also requires the Comptroller to make the transfer from the Education Trust Fund to the Failing Schools Income Tax Credit Fund.

Person submitting Fiscal Note: Roger D. Cox
Email Address: Roger.D.Cox@wv.gov