Date Requested: January 21, 2015
Time Requested: 10:56 AM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2255 Introduced HB2113
CBD Subject: Tax


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 increase the amount of retirement income from $2,000 to $20,000 that may be excluded from the gross income for individuals receiving retirement benefits under the West Virginia Public Employees Retirement System and the West Virginia State Teachers Retirement System.
    
    The bill, as written, increases the decreasing modification from $2,000 to $20,000 for benefits received under PERS and the Teachers’ Retirement System beginning with Tax Year 2015. Passage of this bill would reduce General Revenue Fund collections by roughly $20.2 million in FY2016. The anticipated retirements of members of the baby-boom generation will result in additional escalation of costs over time.
    
    Additional litigation by less favored groups would result in a significant increase in administrative costs to the State Tax Department. In particular, additional preferential treatment for a large group of state and local government retirees relative to federal civil service retirees would conflict with the U.S. Supreme Court ruling in Davis v. Michigan.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2015
Increase/Decrease
(use"-")
2016
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 from $2,000 to $20,000 for benefits received under PERS and the Teachers’ Retirement System beginning with Tax Year 2015. Passage of this bill would reduce General Revenue Fund collections by roughly $20.2 million in FY2016. The anticipated retirements of members of the baby-boom generation will result in additional escalation of costs over time.
    
    Additional litigation by less favored groups would result in a significant increase in administrative costs to the State Tax Department. In particular, additional preferential treatment for a large group of state and local government retirees relative to federal civil service retirees would conflict with the U.S. Supreme Court ruling in Davis v. Michigan.



Memorandum


    The stated purpose of this bill is to increase the amount of retirement income from $2,000 to $20,000 that may be excluded from the gross income for individuals receiving retirement benefits under the West Virginia Public Employees Retirement System and the West Virginia State Teachers Retirement System.
    
    There is concern that additional preferential treatment for a large group of state and local government retirees relative to federal civil service retirees would conflict with the U.S. Supreme Court ruling in Davis v. Michigan.
    



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