FISCAL NOTE
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
A New Program
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to establish a West Virginia innovation and development program, to attract and support capital investment in innovation-driven enterprises in West Virginia through a combination of direct annual investment by the state in seed capital, venture capital and other equity and debt investments in West Virginia; technical support and assistance to entrepreneurs in the state; and recoverable revenue credits to private investors to encourage private investment in seed capital, venture capital and other private equity funds, such program to be run and such funding to be awarded through a competitive selection process to be managed by the West Virginia Economic Development Authority.
As written, this bill would permit the West Virginia Economic Development Authority to award up to $2 million per fiscal year of funds appropriated for the West Virginia Innovation and Development Program to provide or pay for technical and professional assistance to entrepreneurs in West Virginia funds or to make seed capital, venture capital and other investments in qualified investment companies operating in West Virginia. Additionally, the West Virginia Economic Development Authority would be authorized to award up to $5 million per fiscal year in recoverable revenue credits to private investors to encourage the private investors to invest in qualified investment companies approved by the West Virginia Economic Development Authority. The program provides for a return on the State’s investment by sharing the return of capital and profits with private limited partners. Additionally, the bill directs the State Tax Commissioner to publish in the State Register the name, address, and amount of credit, by amount categories, of taxpayers awarded the recoverable revenue credits.
According to our interpretation, the General Revenue Fund would be reduced by roughly $5 million per year from application of the recoverable revenue credits to offset tax liability. However, we are unable to estimate how much return on investment the State would receive due to the provisions in this bill.
Additional administrative costs to the State Tax Department associated with this bill would be minimal. The West Virginia Economic Development Authority may incur additional administrative costs due to passage of this bill.
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 |
-5,000,000 |
-5,000,000 |
Explanation of above estimates (including long-range effect):
Passage of this bill would establish a West Virginia innovation and development program. The program is intended to attract and support capital investment in innovation-driven enterprises in West Virginia through a combination of direct annual investment by the state in seed capital, venture capital and other equity and debt investments in West Virginia; technical support and assistance to entrepreneurs in the state; and recoverable revenue credits to private investors to encourage private investment in seed capital, venture capital and other private equity funds, such program to be run and such funding to be awarded through a competitive selection process to be managed by the West Virginia Economic Development Authority.
As written, this bill would permit the West Virginia Economic Development Authority to award up to $2 million per fiscal year of funds appropriated for the West Virginia Innovation and Development Program to provide or pay for technical and professional assistance to entrepreneurs in West Virginia funds or to make seed capital, venture capital and other investments in qualified investment companies operating in West Virginia. Additionally, the West Virginia Economic Development Authority would be authorized to award up to $5 million per fiscal year in recoverable revenue credits to private investors to encourage the private investors to invest in qualified investment companies approved by the West Virginia Economic Development Authority. The program provides for a return on the State’s investment by sharing the return of capital and profits with private limited partners. Additionally, the bill directs the State Tax Commissioner to publish in the State Register the name, address, and amount of credit, by amount categories, of taxpayers awarded the recoverable revenue credits.
According to our interpretation, the General Revenue Fund would be reduced by roughly $5 million per year from application of the recoverable revenue credits to offset tax liability. However, we are unable to estimate how much return on investment the State would receive due to the provisions in this bill.
Additional administrative costs to the State Tax Department associated with this bill would be minimal. The West Virginia Economic Development Authority may incur additional administrative costs due to passage of this bill.
Memorandum
The stated purpose of this bill is to establish a West Virginia innovation and development program, to attract and support capital investment in innovation-driven enterprises in West Virginia through a combination of direct annual investment by the state in seed capital, venture capital and other equity and debt investments in West Virginia; technical support and assistance to entrepreneurs in the state; and recoverable revenue credits to private investors to encourage private investment in seed capital, venture capital and other private equity funds, such program to be run and such funding to be awarded through a competitive selection process to be managed by the West Virginia Economic Development Authority.
As written, proposed W. Va. Code §5E-3-7 bill directs the State Tax Commissioner to publish in the State Register the name, address, and amount of credit, by amount categories, of taxpayers awarded the recoverable revenue credits. It is unclear whether the intent is to have the State Tax Commissioner report the credits as awarded by the West Virginia Development Authority or to report the amount of credit actually used on tax returns to offset tax liability.
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us