Date Requested: February 02, 2015
Time Requested: 02:05 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
1801 Introduced HB2522
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 exempt State Teachers Retirement System pension benefits from West Virginia personal income tax.
    
    The bill, as written, exempts all retirement income from the Teachers’ Retirement System from Personal Income Tax beginning with Tax Year 2015. Passage of this bill would reduce General Revenue Fund collections by roughly $20.8 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 -20,800,000 0


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


    The bill, as written, exempts all retirement income from the Teachers’ Retirement System from Personal Income Tax beginning with Tax Year 2015. Passage of this bill would reduce General Revenue Fund collections by roughly $20.8 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 exempt State Teachers Retirement System pension benefits from West Virginia personal income tax.
    
    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