FISCAL NOTE



FUND(S):

All State Budget Accounts, Tax Relief Account

Sources of Revenue:

General Fund,Other Fund see above

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 the Tea Party Act. The bill makes legislative findings. The bill requires $200 million of spending cuts per year for five years in state government. The bill requires the savings from the spending cuts and fifty percent of any budget surpluses be placed in a new account. The bill requires moneys in this new account to be used to reduce the taxes of all West Virginians. The bill also establishes July 1, 2011 the effective date. As written, this bill would require the budget of the State of West Virginia to be reduced by $200 million each year for five years, beginning with the effective date of July 1, 2011, and then following the last of the five annual reduction State spending would be frozen for five years. The bill also provides that for the five years beginning with the effective date of July 1, 2011, $200 million is to be deposited into the Tax Relief Account. In the fiscal year following the deposit of the $200 million, the Legislature would be required to reduce taxes for all West Virginians. Also, 50 percent of all surplus money is to be deposited into the Tax Relief Account by the Legislature. The budget of the State of West Virginia is comprised of a number of funds that include both tax and non-tax source revenue sources. Absent additional Legislative guidance as to which taxes would be reduced and the method of the reduction, we cannot estimate the revenue impact of this proposal. The State Department will likely incur some additional administrative costs attributable to the proposed, but unspecified, tax reductions indicated in the bill.



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):


As written, this bill would require the budget of the State of West Virginia to be reduced by $200 million each year for five years, beginning with the effective date of July 1, 2011, and then following the last of the five annual reduction State spending would be frozen for five years. The bill also provides that for the five years beginning with the effective date of July 1, 2011, $200 million is to be deposited into the Tax Relief Account. In the fiscal year following the deposit of the $200 million, the Legislature would be required to reduce taxes for all West Virginians. Also, 50 percent of all surplus money is to be deposited into the Tax Relief Account by the Legislature. The budget of the State of West Virginia is comprised of a number of funds that include both tax and non-tax source revenue sources. Absent additional Legislative guidance as to which taxes would be reduced and the method of the reduction, we cannot estimate the revenue impact of this proposal. The State Department will likely incur some additional administrative costs attributable to the proposed, but unspecified, tax reductions indicated in the bill.



Memorandum


The stated purpose of this bill is to create the Tea Party Act. The bill makes legislative findings. The bill requires $200 million of spending cuts per year for five years in state government. The bill requires the savings from the spending cuts and fifty percent of any budget surpluses be placed in a new account. The bill requires moneys in this new account to be used to reduce the taxes of all West Virginians. The bill also establishes July 1, 2011 the effective date. As written, this bill would require the budget of the State of West Virginia to be reduced by $200 million each year for five years, beginning with the effective date of July 1, 2011. If the required reduction is to be made from the current year’s budget, it may be in conflict with the Constitution’s requirement of a complete plan of expenditures and itemized estimate of appropriations. Additionally, the bill requires the $200 million by which the budget is to reduced to be deposited into a Tax Relief Account. If the Tax Relief Account is included in the budget, the overall budget would not be reduced.



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