Date Requested:February 11, 2014
Time Requested:11:37 AM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2014R2112 HB4449
CBD Subject:
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 to include proximity detection systems and cameras used on continuous mining machines and underground haulage equipment for tax credit purposes under the West Virginia Innovative Mine Safety Technology Credit Act.
    
     As written, this bill would expand the definition of eligible safety property in Article 13BB of Chapter 11 of the West Virginia Code by adding proximity detection systems and cameras used on continuous mining machines and underground haulage equipment to the existing machine mounted methane monitors as approved innovative mine safety technology.
    
     The State Tax Department does not have information on the number of proximity detection systems and/or cameras that would be purchased for if this bill is enacted. However according to the West Virginia Office of Miners’ Health Safety and Training as of August 2012, there were approximately 150 pieces of mining equipment that had been equipped with either proximity detectors and/or cameras. There were approximately 90 cameras and 60 proximity detectors. Each camera costs approximately $5,000 and each proximity detector can cost anywhere from $65,000 to $80,000.
     Under current Law, Innovative Mine Safety Tax Credits must be pre-approved by the Office of Miners Health Safety and Training (MHST). Total tax credit approvals are limited by Statute to no more than $2 million per year and approved tax credits must be pro-rated for use over a period of five years. According to information published in the annual tax credit accountability report, MHST approved a total of $470,981.79 of tax credits in FY2012 and $0 of tax credits in FY2013. In addition, the State Tax Department has no recorded claims for this tax credit on tax returns received to date. The provisions of this bill would expand the definition of eligible equipment subject to tax credit in a manner that could result in the approval of the full $2 million annual cap amount of tax credits beginning as early as FY2015. The Executive Budget’s tax expenditure estimate for Innovative Mine Safety Tax Credits in FY2015 is $1.0 million. Passage of this bill should not result in any necessary change to those FY2015 estimates. However, passage of the bill will more likely result in a gradual increase in the amount of tax credit cost to the full $2 million limit within the next four years.
    
     Additional administrative costs to the State Tax Department in FY2015 would be approximately $5,000 for implementation and testing.
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2014
Increase/Decrease
(use"-")
2015
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 5,000 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 5,000 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
     Passage of this bill would expand the definition of eligible safety property in Article 13BB of Chapter 11 of the West Virginia Code by adding proximity detection systems and cameras used on continuous mining machines and underground haulage equipment to the existing machine mounted methane monitors as approved innovative mine safety technology.
    
     The State Tax Department does not have information on the number of proximity detection systems and/or cameras that would be purchased for if this bill is enacted. However according to the West Virginia Office of Miners’ Health Safety and Training as of August 2012, there were approximately 150 pieces of mining equipment that had been equipped with either proximity detectors and/or cameras. There were approximately 90 cameras and 60 proximity detectors. Each camera costs approximately $5,000 and each proximity detector can cost anywhere from $65,000 to $80,000.
    
    Item Number Purchased Cost Per Unit Total Cost
    Cameras 90 $5,000 $450,000
    
    Proximity Detectors 60 $80,000 $4.8 million
    
     Under current Law, Innovative Mine Safety Tax Credits must be pre-approved by the Office of Miners Health Safety and Training (MHST). Total tax credit approvals are limited by Statute to no more than $2 million per year and approved tax credits must be pro-rated for use over a period of five years. According to information published in the annual tax credit accountability report, MHST approved a total of $470,981.79 of tax credits in FY2012 and $0 of tax credits in FY2013. In addition, the State Tax Department has no recorded claims for this tax credit on tax returns received to date. The provisions of this bill would expand the definition of eligible equipment subject to tax credit in a manner that could result in the approval of the full $2 million annual cap amount of tax credits beginning as early as FY2015. The Executive Budget’s tax expenditure estimate for Innovative Mine Safety Tax Credits in FY2015 is $1.0 million. Passage of this bill should not result in any necessary change to those FY2015 estimates. However, passage of the bill will more likely result in a gradual increase in the amount of tax credit cost to the full $2 million limit within the next four years.
    
     Additional administrative costs to the State Tax Department in FY2015 would be approximately $5,000 for implementation and testing.
    


Memorandum
Person submitting Fiscal Note:
Mark B. Muchow
Email Address:
Roger.D.Cox@wv.gov
     The stated purpose of this bill is to include proximity detection systems and cameras used on continuous mining machines and underground haulage equipment for tax credit purposes under the West Virginia Innovative Mine Safety Technology Credit Act.
    
     In general, the West Virginia Innovative Mine Safety Technology Tax Credit Act defines “eligible safety property” as “safety technology equipment that, at the time of acquisition, is on the list of approved innovative mine safety technology.” This bill expands the definition of “eligible safety property” to specifically include proximity detection systems and cameras used on continuous mining machines and underground haulage equipment. The specific inclusion of proximity detection systems and cameras in the definition precludes the items from being de-listed as “eligible safety property.” This may be contrary to the original intent of the act as specified in W. Va. Code §11-13BB-4(b).