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 provide a tax credit for persons who graduate with a bachelor’s or graduate degree in the area of science, technology, engineering, mathematics, nursing or teaching from any regionally accredited in-state or out-of-state higher education institution or any regionally accredited in-state community and technical college and who thereafter continue to reside in this state. As written, this bill creates the West Virginia Residential Incentive Tax Credit Act. The proposed West Virginia Residential Incentive Tax Credit would be available to persons who graduate with an associate’s degree, bachelor’s degree, or a graduate degree in the area of science, technology, engineering, mathematics, nursing or teaching from any regionally accredited in-state or out-of-state higher education institution or any regionally accredited in-state community and technical college on or after January 1, 2014 and before January 1, 2019 and who continuously resides in West Virginia from the date of graduation through the next subsequent year. The proposed credit is for tax years beginning after December 31, 2013 and is not to exceed $1,500 per year with the maximum a person can receive of $3,000. The bill also would require the State Tax Commissioner to prepare and submit a report evaluating the cost of the credit. According to our interpretation and based upon available information, passage of this bill would result in a reduction in the General Revenue Fund of roughly $7 million per year beginning in FY2016. Additional administrative costs to the State Tax Department associated with passage of this bill would be at least $50,000 per year beginning in FY2016. There may be significant taxpayer and tax administration compliance costs related to the collection of information necessary for both compliance purposes and evaluation purposes.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2013 Increase/Decrease (use"-")	2014 Increase/Decrease (use"-")	Fiscal Year (Upon Full Implementation)
1. Estmated Total Cost	0	0	50,000
Personal Services	0	0	50,000
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	-7,000,000

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

This bill proposes a West Virginia Residential Incentive Tax Credit that would be available to persons who graduate with an associate’s degree, bachelor’s degree, or a graduate degree in the area of science, technology, engineering, mathematics, nursing or teaching from any regionally accredited in-state or out-of-state higher education institution or any regionally accredited in-state community and technical college on or after January 1, 2014 and before January 1, 2019 and who continuously resides in West Virginia from the date of graduation through the next subsequent year. The proposed credit is for tax years beginning after December 31, 2013 and is not to exceed $1,500 per year with the maximum a person can receive of $3,000. The bill also would require the State Tax Commissioner to prepare and submit a report evaluating the cost of the credit. According to our interpretation and based upon available information, passage of this bill would result in a reduction in the General Revenue Fund of roughly $7 million per year beginning in FY2016. Additional administrative costs to the State Tax Department associated with passage of this bill would be at least $50,000 per year beginning in FY2016. There may be significant taxpayer and tax administration compliance costs related to the collection of information necessary for both compliance purposes and evaluation purposes.

Memorandum

The stated purpose of this bill is to provide a tax credit for persons who graduate with a bachelor’s or graduate degree in the area of science, technology, engineering, mathematics, nursing or teaching from any regionally accredited in-state or out-of-state higher education institution or any regionally accredited in-state community and technical college and who thereafter continue to reside in this state. The body of the bill indicates the proposed West Virginia Residential Incentive Tax Credit would be available to persons who graduate with an “associate’s degree, bachelor’s degree, or a graduate degree,” while the bill title only references “bachelor’s or graduate degree.” The bill proposes to amend the Code of West Virginia by adding a new article (i.e., §11-13CC-1 et seq.), however, that article already exists. As written, the bill indicates the State Tax Commissioner may obtain any information useful and necessary for effective oversight and administration from the governing board of any educational institution from which an eligible Taxpayer claims to have graduated. The State Tax Department is generally restricted from providing confidential Taxpayer information (including name, identification numbers, addresses) to external entities unless a Statutory exception exists and the educational institution may have its own restrictions on the release of information concerning a specific individual. This would lead to a large administrative burden in that both the State Tax Department and the educational institution would likely have to obtain an authorization to release information from the Taxpayer / graduate.

Person submitting Fiscal Note: Mark B. Muchow
Email Address: Roger.D.Cox@wv.gov