FISCAL NOTE
Date Requested: February 28, 2025
Time Requested: 11:06 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1192 |
Introduced |
HB2807 |
|
|---|
| CBD Subject: |
Natural Resources |
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|
FUND(S):
State Road Fund
Sources of Revenue:
Other Fund State Road Fund
Legislation creates:
Decreases Existing Revenue, Increases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
Summarize in a clear and concise manner what impact this measure will have on costs and revenues of state government.
The stated purpose of this bill is to clarify that the proceeds of fuel purchased at marinas and boat docks in this state shall be directed to the West Virginia Division of Natural Resources Law Enforcement Division.
According to our interpretation, the bill would divert fuel tax collections attributable to fuel purchased at marinas and boat docks in this state, which are intended for either commercial or personal use, to the West Virginia Division of Natural Resources Law Enforcement Division. No effective date is given in the bill; therefore, if passed, the legislation would become effective 90 days from passage.
Per our interpretation and based on available data, the legislation, if passed would reduce State Road Fund collections by up to $3.8 million per fiscal year beginning in FY2026.
Additional administrative costs incurred by the State Tax Department would be $23,650 in FY2025 and $47,500 in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2025
Increase/Decrease
(use"-") |
2026
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
23,650 |
47,500 |
47,500 |
| Personal Services |
5,500 |
47,500 |
47,500 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
1,650 |
0 |
0 |
| Other |
16,500 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-3,800,000 |
-3,800,000 |
Explanation of above estimates (including long-range effect):
Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years.
According to our interpretation, the bill would divert fuel tax collections attributable to fuel purchased at marinas and boat docks in this state, which are intended for either commercial or personal use, to the West Virginia Division of Natural Resources Law Enforcement Division. No effective date is given in the bill; therefore, if passed, the legislation would become effective 90 days from passage.
Under current code, the motor fuel excise tax is composed of a flat rate tax of 20.5 cents per invoiced gallon and a variable rate tax which is 5 percent of the average wholesale price of each motor fuel as determined annually by the State Tax Commissioner. Commercial watercraft in West Virginia is exempt from paying the flat rate tax on motor fuel under W.Va. Code §11-14C-9(c)(13). Purchases of motor fuel for commercial watercraft are still subject to the variable rate component of the tax, currently 15.2 cents per gallon. Motor fuel purchased for personal watercraft would be subject to both the flat and variable rates of tax, currently 35.7 cents per gallon for conventional motor fuels.
In West Virginia, the motor fuel excise tax is collected at the terminal rack or upon import of the fuel into the state. Therefore, marinas and boat docks would not remit motor fuel tax collection data to the State Tax Department. Commercial watercraft which cross state lines are required to file a Motor Carrier Return and remit the motor fuel excise tax according to the miles traveled in West Virginia.
There are more than 40,000 registered motorized personal watercraft in West Virginia. A large percentage of these watercraft are kept at residences and would potentially be fueled at local gas stations rather than at marinas or docks. Larger watercraft, such as cabin power boats, which would potentially remain in the water for the boating season, make up a small portion of personal watercraft in West Virginia.
Per our interpretation and based on available data, the legislation, if passed would reduce State Road Fund collections by up to $3.8 million per fiscal year beginning in FY2026.
Additional administrative costs incurred by the State Tax Department would be $23,650 in FY2025 and $47,500 in subsequent fiscal years.
Memorandum
Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form.
The stated purpose of this bill is to clarify that the proceeds of fuel purchased at marinas and boat docks in this state shall be directed to the West Virginia Division of Natural Resources Law Enforcement Division.
The bill would allocate “Motorboat fuel tax” proceeds collected from fuel purchased at marinas and boat docks in West Virginia to the West Virginia Division of Natural Resources Law Enforcement Division. However, the purpose of the bill was to allocate “the proceeds of fuel purchased at marinas and boat docks in this state” to the West Virginia Division of Natural Resources Law Enforcement Division, and the title of the bill states that the “proceeds from tax on marina and boat dock fuel” would be allocated to the West Virginia Division of Natural Resources Law Enforcement Division.
The language of the bill is concerning because there is no “Motorboat fuel tax” and it would be excessively burdensome to collect all proceeds from the legal sale of fuel purchased at marinas and boat docks. There is a Motor Fuel Excise Tax and the proposed language would be designated as a new section of Article 14C, Chapter 11 of the West Virginia Code, known as Motor Fuel Excise Tax. Therefore, the bill may be attempting to reallocate the portion of the Motor Fuel Excise Tax that is collected on fuel purchased at marinas and boat docks in this state, but this is not made clear from the language. It is recommended that clarifying and consistent language be used.
Assuming the bill is referring to portions of the current Motor Fuel Excise Tax, there are concerns with the administrability of the bill due to the current process in place for payment of the Motor Fuel Excise Tax. Motor Fuel Excise Tax is collected at the terminal rack or upon import of the fuel into the state. Therefore, there is presently no data available to reflect what portion thereof is purchased at marinas and boat docks and currently no way to assess what portions of the Motor Fuel Excise Tax should be allocated to the Natural Resources Law Enforcement Division.
It is notable that W.Va. Code §11-14C-9(c)(13) provides for a refundable exemption from the flat rate component of the motor fuel tax for “all gallons of motor fuel sold for use or used as a motor fuel for commercial watercraft.”
Person submitting Fiscal Note: Mark Muchow
Email Address: radfiscal@wv.gov