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 remove the cap on the amount of annual credit that may be awarded for destination tourism expansion projects approved after June 30, 2012. It provides a rule for determining amount of allowable credit when approved project is a multiyear, multiphase project; and provides a presumption that consumers sales and service tax is collected on calendar year basis. As written, this bill eliminates the cap of $1.5 million on the Tourism Development Expansion Project Tax Credit. When the project is to be completed in two or more phases over 48 months or less the phases are to have separate completion dates and open dates. The amount of the allowable credit is equal to 25% of the cost of the first phase applied in equal installments over a 10-year period. The allowable credit for each phase is 25% over a separate 10-year period. The baseline Consumer Sales and Service Tax collections is based on the 12-month period immediately preceding the month in which the first phase is open to the public. The same baseline is used for each phase of the project. The State Tax Department does not possess information on the number of tourism development projects that may qualify under the revised provisions. Thus, we are unable to accurately estimate the potential revenue impact of the proposal. The State Tax Department will incur additional administrative costs attributable to passage of this bill. The Development Office may also incur additional administrative costs. If there is little or no increase in the number of projects costs would be minimal. However, any significant increase in the number of projects would result in more significant costs.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2012 Increase/Decrease (use"-")	2013 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 eliminates the cap of $1.5 million on the Tourism Development Expansion Project Tax Credit. When the project is to be completed in two or more phases over 48 months or less the phases are to have separate completion dates and open dates. The amount of the allowable credit is equal to 25% of the cost of the first phase applied in equal installments over a 10-year period. The allowable credit for each phase is 25% over a separate 10-year period. The baseline Consumer Sales and Service Tax collections is based on the 12-month period immediately preceding the month in which the first phase is open to the public. The same baseline is used for each phase of the project. The State Tax Department does not possess information on the number of tourism development projects that may qualify under the revised provisions. Thus, we are unable to accurately estimate the potential revenue impact of the proposal. Since 2005, a total of $15.5 million in sales tax credits have been approved by the West Virginia Development Office. The State Tax Department will incur additional administrative costs attributable to passage of this bill. The Development Office may also incur additional administrative costs. If there is little or no increase in the number of projects costs would be minimal. However, any significant increase in the number of projects would result in more significant costs attributable to the complexity associated with multiple-year projects.

Memorandum

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