FISCAL NOTE

Date Requested: January 15, 2016
Time Requested: 04:14 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
1419 Introduced SB293
CBD Subject: Taxation


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 reauthorize the Neighborhood Investment Program Act until July 1, 2021. The bill defines the terms “community based” and “emergency assistance.” The bill modifies the definition of “economically disadvantaged area.” The bill reduces the frequency of required project transferee reports. The bill reduces the number of required advisory board meetings. The bill reduces the required number of West Virginia Development Office reports to the board. The bill eliminates guidance on what a community based project is when the board is evaluating a project. The bill removes the requirement that the Tax Commissioner annually publish the addresses of taxpayers who claim the credit. The bill reduces the frequency of program assessments by the Director. According to our interpretation, this bill would extend the termination date of the Neighborhood Investment Program from July 1, 2016 to July 1, 2021. According to WV Code §11-13J-6, “the maximum tax credits certified in any state fiscal year may not exceed $3,000,000.” Passage of this bill would result in a loss of roughly $3.0 million to the General Revenue Fund in FY2018 through FY2021. A smaller loss of roughly $1.0 million would be expected in FY2022. Based on past tax credit allocation patterns, the incremental General Revenue Fund loss would be much smaller in FY2017. A significant portion of tax credit use in FY2017 would be attributable to tax credit allocation prior to the current statutory sunset date of July 1, 2016. The Governor’s official revenue estimates for FY2017 already include the $3.0 million cost for the Neighborhood Investment Tax Credit. There would be no additional administrative costs to the State Tax Department.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2016
Increase/Decrease
(use"-")
2017
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 -3,000,000


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


According to our interpretation, this bill would extend the termination date of the Neighborhood Investment Program from July 1, 2016 to July 1, 2021. According to WV Code §11-13J-6, “the maximum tax credits certified in any state fiscal year may not exceed $3,000,000.” Passage of this bill would result in a loss of roughly $3.0 million to the General Revenue Fund in FY2018 through FY2021. A smaller loss of roughly $1.0 million would be expected in FY2022. Based on past tax credit allocation patterns, the incremental General Revenue Fund loss would be much smaller in FY2017. A significant portion of tax credit use in FY2017 would be attributable to tax credit allocation prior to the current statutory sunset date of July 1, 2016. The Governor’s official revenue estimates for FY2017 already include the $3.0 million cost for the Neighborhood Investment Tax Credit. There would be no additional administrative costs to the State Tax Department.



Memorandum


The stated purpose of this bill is to reauthorize the Neighborhood Investment Program Act until July 1, 2021. The bill defines the terms “community based” and “emergency assistance.” The bill modifies the definition of “economically disadvantaged area.” The bill reduces the frequency of required project transferee reports. The bill reduces the number of required advisory board meetings. The bill reduces the required number of West Virginia Development Office reports to the board. The bill eliminates guidance on what a community based project is when the board is evaluating a project. The bill removes the requirement that the Tax Commissioner annually publish the addresses of taxpayers who claim the credit. The bill reduces the frequency of program assessments by the Director. The definition of “community-based” project is simply moved from W.Va. Code §11-13J-4a to W.Va. Code §11-13J-3, therefore it does not appear that the bill’s stated purpose of “eliminating guidance on what a community based project is when the board is evaluating a project” has been met.



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov