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 state and federal retirees by increasing the exemption on retirement income in calculating the federal gross income for state personal income tax purposes. The bill, as written, moves the decreasing modification for pension benefits from PERS, the Teachers’ Retirement System and federal retirement plans outside the calculations for the $8,000 senior citizens’ modification and increases the exempt amount for federal retirees to $20,000 beginning with Tax Year 2009. The provisions of this bill would reduce General Revenue Fund collections by roughly $22.2 million in FY2011 and $11.1 million in FY2012. The change in the modifications for Tax Year 2009 would result in amended returns. The revenue loss for FY2011 includes the loss for those amended 2009 returns as well as the loss for Tax Year 2010 returns. Costs will rise significantly after 2012 as more baby-boomers begin to qualify for this modification. Additional administrative costs to the Tax Department in FY 2011 could be significant due to changes needed in the computer system and processing of amended returns for Tax Year 2009.



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 -22,200,000 0


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


The bill, as written, moves the decreasing modification for pension benefits from PERS, the Teachers’ Retirement System and federal retirement plans outside the calculations for the $8,000 senior citizens’ modification and increases the exempt amount for federal retirees to $20,000 beginning with Tax Year 2009. The provisions of this bill would reduce General Revenue Fund collections by roughly $22.2 million in FY2011 and $11.1 million in FY2012. The change in the modifications for Tax Year 2009 would result in amended returns. The revenue loss for FY2011 includes the loss for those amended 2009 returns as well as the loss for Tax Year 2010 returns. Costs will rise significantly after 2012 as more baby-boomers begin to qualify for this modification. Additional administrative costs to the Tax Department in FY 2011 could be significant due to changes needed in the computer system and processing of amended returns for Tax Year 2009.



Memorandum






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