FISCAL NOTE
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 reduce state income taxes for certain county, state and federal retirees by increasing the amount excluded from their retirement income in calculating the federal gross income for state personal income tax purposes.
The bill, as written, exempts the first $20,000 of pension income for PERS, the Teachers’ Retirement System and federal retirees. The increase in this modification from $2,000 to $20,000 would reduce General Revenue Fund collections by approximately $17.7 million in FY2009. The anticipated retirements of members of the baby-boom generation will result in additional escalation of costs over time.
There would be no additional administrative costs associated with the change in the modification for current tax years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2008
Increase/Decrease
(use"-") |
2009
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 |
-17,700,000 |
0 |
Explanation of above estimates (including long-range effect):
The bill, as written, exempts the first $20,000 of pension income for PERS, the Teachers’ Retirement System and federal retirees. The increase in this modification from $2,000 to $20,000 would reduce General Revenue Fund collections by approximately $17.7 million per year beginning in FY2009. The anticipated retirements of members of the baby-boom generation will result in additional escalation of costs over time.
There would be no additional administrative costs associated with the change in the modification for current tax years.
Memorandum
The stated purpose of this bill is to reduce state income taxes for certain county, state and federal retirees by increasing the amount excluded from their retirement income in calculating the federal gross income for state personal income tax purposes.
The proposed changes to subsection (c) subdivision (5) rename the existing Code language as (5)(A) and add new language as (5)(B). A new modification limit of $20,000 is placed at the end of (5)(B) with language stating “The total modification under this paragraph shall not exceed twenty thousand per person receiving retirement benefits.” If the term “paragraph” is interpreted to mean everything under subdivision (5), then military retirees would now receive a $20,000 modification under subdivision (5) along with a $20,000 modification under subdivision (7). If the term paragraph simply refers to (5)(B), then the total modification for a military retiree would remain at $22,000 or $2,000 under subdivision (5) and $20,000 under subdivision (7).
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us