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, increases the decreasing modification for pension income for PERS, the Teachers’ Retirement System and federal retirees from $2,000 to $20,000 and limits the amount a taxpayer claiming a modification for military retirement and for another government pension to $22,000. Passage of this bill would result in a reduction in General Revenue Fund collections of roughly $18.2 million per year beginning in Tax Year 2011. 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.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2011
Increase/Decrease
(use"-")
2012
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):


The bill, as written, increases the decreasing modification for pension income for PERS, the Teachers’ Retirement System and federal retirees from $2,000 to $20,000 and limits the amount a taxpayer claiming a modification for military retirement and for another government pension to $22,000. Passage of this bill would result in a reduction in General Revenue Fund collections of roughly $18.2 million per year beginning in Tax Year 2011. 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.



Memorandum


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. There is a problem with the dates in the bill. Subdivision (c)(5) makes the effective date beginning with Tax Year 2011 while subdivision (c)(3) makes the effective date beginning with Tax Year 2012.



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