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 create a tax credit for residential renewable energy systems. This bill also changes the duration of the residential solar energy tax credit, as the credit created by this bill applies to several types of residential renewable energy systems, including solar systems.
As written, this bill provides a state personal income tax credit of 25 percent of the cost to purchase and install a renewal energy system up to a maximum of $3,000. There would be minimal revenue consequences associated with the passage of this bill. According to the Energy Information Administration’s (EIA) Annual Energy Outlook 2009, the installed cost of a solar photovoltaic system (to provide electricity for a residence) is nearly $6,000, a small wind system is roughly $3,700, and the installed cost of a geothermal heat pump system is about $7,500. Due to the overall cost and installation factors involved (e.g., solar resources, climate, local building code requirements, etc.), there would only be a limited number of taxpayers who could potentially take advantage of such a personal income tax credit.
Taxpayers are already able to claim a federal energy efficiency tax credit under The American Recovery and Reinvestment Act of 2009. Under this Act, renewable energy systems (e.g., residential geothermal heat pumps and residential solar electric and water heating systems) placed in service before December 31, 2016 qualify for a 30 percent credit of the total cost (no caps). Home energy efficiency products (e.g., roofing, windows and doors) placed in service before December 31, 2016 may qualify for a 30 percent credit up to $1,500 through 2010 in existing homes only.
There would be no additional administrative costs to the State Tax Department from the passage of this bill.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2010
Increase/Decrease
(use"-") |
2011
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 |
0 |
Explanation of above estimates (including long-range effect):
As written, this bill provides a state personal income tax credit of 25 percent of the cost to purchase and install a renewal energy system up to a maximum of $3,000. There would be minimal revenue consequences associated with the passage of this bill. According to the Energy Information Administration’s (EIA) Annual Energy Outlook 2009, the installed cost of a solar photovoltaic system (to provide electricity for a residence) is nearly $6,000, a small wind system is roughly $3,700, and the installed cost of a geothermal heat pump system is about $7,500. Due to the overall cost and installation factors involved (e.g., solar resources, climate, local building code requirements, etc.), there would only be a limited number of taxpayers who could potentially take advantage of such a personal income tax credit.
Taxpayers are already able to claim a federal energy efficiency tax credit under The American Recovery and Reinvestment Act of 2009. Under this Act, renewable energy systems (e.g., residential geothermal heat pumps and residential solar electric and water heating systems) placed in service before December 31, 2016 qualify for a 30 percent credit of the total cost (no caps). Home energy efficiency products (e.g., roofing, windows and doors) placed in service before December 31, 2016 may qualify for a 30 percent credit up to $1,500 through 2010 in existing homes only.
According to the February 12, 2009 estimates published by the Federal Joint Committee on Taxation, the cost of the federal credit for renewable energy systems was $186 million in 2009. Although this bill proposes limitations on the State credit, the prorated cost attributable to West Virginia could be as high as $1 million. However, due to geographic and other differences from the assumptions made in the federal estimate, the revenue loss from the passage of this bill would be far less than $1 million.
There would be no additional administrative costs to the State Tax Department from the passage of this bill.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov