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 eliminate the availability of a tax credit for vehicles that are capable of running on ethanol and certain fuel mixtures containing ethanol, methanol or other alcohols. The bill removes the requirement that a converted vehicle must operate exclusively on an alternative fuel in order to take the credit. The bill eliminates a rule requirement. The bill allows pass-through entities to distribute credits to pass-through equity owners in any manner the equity owners see fit. The bill permits the transfer of tax credits for purchase of alternative-fuel vehicles, conversion to an alternative-fuel vehicle or construction of alternative-fuel vehicle infrastructure. The bill sets forth how those transfer of tax credits may be accomplished. The bill allows government entities and nonprofit entities to utilize certain tax credits.
This bill would amend the Alternative-Fuel Motor Vehicle Tax Credit program, a program currently generating roughly $50 million in potential annual tax credit. As written, the bill amends the definition of “Taxpayer,” for purposes of the Alternative-Fuel Motor Vehicles Tax Credit, to include State, county, and municipal governmental entities and nonprofit entities. Additionally, the bill provides that all Taxpayers, including State, county, and municipal governmental entities and nonprofit entities are entitled to take and transfer the Alternative-Fuel Motor Vehicles Tax Credit. The bill also provides that the total amount of tax credits authorized to be transferred by State, county, and municipal governmental entities and nonprofit entities in any one calendar year shall not exceed $2 million for qualified alternative-fuel motor vehicles tax credits and $2 million for qualified alternative-fuel vehicle refueling infrastructure tax credits. There is no limit on tax credit transfer amounts for other types of Taxpayers.
Passage of this bill would conflict with the Governor’s proposed bill regarding the Alternative-Fuel Motor Vehicles Tax Credit. The Governor’s official revenue estimates are based upon the assumption that tax credits for all vehicles with the exception of natural gas vehicles end as of December 31, 2012, all new residential infrastructure tax credits are terminated as of December 31, 2012, and the commercial infrastructure tax credit percentage is reduced from as high as 62.5 percent to 20 percent as of January 1, 2014.
The provisions of this proposed bill would terminate tax credits for flex fuel vehicles only after 90 days from passage. The credit for hybrid vehicles and electric vehicles remain in this bill along with the credit for home refueling infrastructure. In addition, the commercial infrastructure tax credit would continue to apply at a rate of as much as 62.5 percent. These tax credits are in addition to the 30 percent federal tax credit for alternative-fuel infrastructure.
Based upon available information, passage of this bill would reduce FY2014 tax revenues by between $10 million and $15 million from the Governor’s official revenue estimates. The revenue decrease in future years beyond FY2014 would be less due to delayed impact of the removal of flex fuel vehicles from the tax credit program. However, the proposed bill still provides for the continuation of the most lucrative alternative-fuel motor vehicle tax credits in the country with added transferability and added benefits for non-profit organization and governmental units.
Additional administrative cost to the State Tax Department associated with passage of this bill would be roughly $60,000 in FY2014 and roughly $50,000 per year thereafter.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2013
Increase/Decrease
(use"-") |
2014
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):
This bill would amend the Alternative-Fuel Motor Vehicle Tax Credit program, a program currently generating roughly $50 million in potential annual tax credit. As written, the bill amends the definition of “Taxpayer,” for purposes of the Alternative-Fuel Motor Vehicles Tax Credit, to include State, county, and municipal governmental entities and nonprofit entities. Additionally, the bill provides that all Taxpayers, including State, county, and municipal governmental entities and nonprofit entities are entitled to take and transfer the Alternative-Fuel Motor Vehicles Tax Credit. The bill also provides that the total amount of tax credits authorized to be transferred by State, county, and municipal governmental entities and nonprofit entities in any one calendar year shall not exceed $2 million for qualified alternative-fuel motor vehicles tax credits and $2 million for qualified alternative-fuel vehicle refueling infrastructure tax credits. There is no limit on tax credit transfer amounts for other types of Taxpayers.
Passage of this bill would conflict with the Governor’s proposed bill regarding the Alternative-Fuel Motor Vehicles Tax Credit. The Governor’s official revenue estimates are based upon the assumption that tax credits for all vehicles with the exception of natural gas vehicles end as of December 31, 2012, all new residential infrastructure tax credits are terminated as of December 31, 2012, and the commercial infrastructure tax credit percentage is reduced from as high as 62.5 percent to 20 percent as of January 1, 2014.
The provisions of this proposed bill would terminate tax credits for flex fuel vehicles only after 90 days from passage. The credit for hybrid vehicles and electric vehicles remain in this bill along with the credit for home refueling infrastructure. In addition, the commercial infrastructure tax credit would continue to apply at a rate of as much as 62.5 percent. These tax credits are in addition to the 30 percent federal tax credit for alternative-fuel infrastructure.
Based upon available information, passage of this bill would reduce FY2014 tax revenues by between $10 million and $15 million from the Governor’s official revenue estimates. The revenue decrease in future years beyond FY2014 would be less due to delayed impact of the removal of flex fuel vehicles from the tax credit program. However, the proposed bill still provides for the continuation of the most lucrative alternative-fuel motor vehicle tax credits in the country with added transferability and added benefits for non-profit organization and governmental units.
Additional administrative cost to the State Tax Department associated with passage of this bill would be roughly $60,000 in FY2014 and roughly $50,000 per year thereafter.
Memorandum
Person submitting Fiscal Note: Mark B. Muchow
Email Address: Roger.D.Cox@wv.gov