FISCAL NOTE
FUND(S):
Sexual Assault Fund to End Rape, Special Fund Administered by WV State Tax Dept
Sources of Revenue:
Special Fund,Other Fund Sexual Assault Fund to En
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 implement a surcharge on licensed exotic entertainment facilities in this state to provide funding for rape crisis centers.
As written, this bill creates a surcharge that “is intended to ameliorate the negative secondary effects associated with the combination of sexually oriented businesses such as licensed exotic entertainment facilities and alcohol so as to promote the health, safety, and welfare of the citizens of West Virginia.” The proposed annual surcharge would be imposed upon any exotic entertainment facility operating in this state pursuant to W. Va. Code §60-4-23. The surcharge to be paid to the State Tax Department would be determined as follows:
On annual business gross receipts greater than $2,000,000, the surcharge would be $25,000;
On annual business gross receipts greater than $500,000 but less than $2,000,000, the surcharge would be $15,000; and,
On annual business gross receipts less than $500,000, the surcharge would be $5,000;
The bill provides that the State Tax Department may retain 2 percent of the total surcharge to cover costs of administering and enforcing the provisions in the bill.
According to the WV Alcohol Beverage Commission there are currently 42 exotic entertainment facilities with active liquor licenses in the State. The State Tax Department does not currently have readily available information on total annual sales of each exotic entertainment facility in West Virginia. Absent specific information on the sales of each business subject to the surcharge proposed by this bill, we are unable to accurately estimate the potential revenue that would accrue due to the surcharge. However, based upon the count of 42 existing facilities the revenue could range from $210,000 to $1,050,000, with the Sexual Assault Fund to End Rape receiving revenue ranging from $205,800 to $1,029,000 and the State Tax Department receiving $4,200 to $21,000.
Although the bill provides that the State Tax Department is to retain 2 percent of the proposed surcharge to cover costs of administering and enforcing the provisions in the bill, the Department’s projected costs to administer the surcharge will exceed the retention allowance. State Tax Department estimated costs to administer the surcharge would be roughly $45,000 in FY2015, and roughly $30,000 each year thereafter.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2014
Increase/Decrease
(use"-") |
2015
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
45,000 |
30,000 |
| Personal Services |
0 |
30,000 |
30,000 |
| Current Expenses |
0 |
11,000 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
2,500 |
0 |
| Other |
0 |
1,500 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
Passage of this bill would create a surcharge that “is intended to ameliorate the negative secondary effects associated with the combination of sexually oriented businesses such as licensed exotic entertainment facilities and alcohol so as to promote the health, safety, and welfare of the citizens of West Virginia.” The proposed annual surcharge would be imposed upon any exotic entertainment facility operating in this state pursuant to W. Va. Code §60-4-23. The surcharge to be paid to the State Tax Department would be determined as follows:
On annual business gross receipts greater than $2,000,000, the surcharge would be $25,000;
On annual business gross receipts greater than $500,000 but less than $2,000,000, the surcharge would be $15,000; and,
On annual business gross receipts less than $500,000, the surcharge would be $5,000;
The bill provides that the State Tax Department may retain 2 percent of the total surcharge to cover costs of administering and enforcing the provisions in the bill.
According to the WV Alcohol Beverage Commission there are currently 42 exotic entertainment facilities with active liquor licenses in the State. The State Tax Department does not currently have readily available information on total annual sales of each exotic entertainment facility in West Virginia. Absent specific information on the sales of each business subject to the surcharge proposed by this bill, we are unable to accurately estimate the potential revenue that would accrue due to the surcharge. However, based upon the count of 42 existing facilities the revenue could range from $210,000 to $1,050,000, with the Sexual Assault Fund to End Rape receiving revenue ranging from $205,800 to $1,029,000 and the State Tax Department receiving $4,200 to $21,000.
Although the bill provides that the State Tax Department is to retain 2 percent of the proposed surcharge to cover costs of administering and enforcing the provisions in the bill, the Department’s projected costs to administer the surcharge will exceed the retention allowance. State Tax Department estimated costs to administer the surcharge would be roughly $45,000 in FY2015, and roughly $30,000 each year thereafter.
Memorandum
The stated purpose of this bill is to implement a surcharge on licensed exotic entertainment facilities in this state to provide funding for rape crisis centers.
The proposed bill levies an annual surcharge on exotic entertainment facilities based upon annual sales. The definition of “sales” is defined by referring to W. Va. Code §11-24-3a(33). The correct citation is W. Va. Code §11-24-3a(a)(33). W. Va. Code §11-24-1 et seq is the Corporation Net Income Tax statute. Since some of the exotic entertainment facilities may have a business organization (e.g., partnership, limited liability company, sole proprietor) that would not be subject to the Corporation Net Income Tax, the reference to that Statute for the definition of sales may lead to some confusion.
Person submitting Fiscal Note: Mark B. Muchow
Email Address: Roger.D.Cox@wv.gov