Date Requested: February 03, 2015
Time Requested: 02:28 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2099 Introduced HB2580
CBD Subject: Tax


FUND(S):

General Revenue Fund, county governments

Sources of Revenue:

General Fund,Other Fund county governments

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 create the economic fairness act and encourage economic development in counties with high unemployment.
    
    Based upon our interpretation of this bill, passage of this bill would result in a reduction in the General Revenue Fund of up to $2.5 million per year beginning in FY2016. The bill provides for a partial refund of the Personal Income Tax collections from the five counties with the highest average unemployment during the previous three years. Each of the five designated counties would receive additional revenues equal to 20 percent of Personal Income Tax collections attributable to the county or $500,000, whichever is less. Currently, 20 percent of Personal Income Tax collections in all counties is greater than $500,000 so the top five counties in unemployment will receive $500,000 each. As written, the bill requires the designated counties to submit an economic development plan to the West Virginia Economic Development Authority. Upon approval of the economic development plan by the West Virginia Economic Development Authority, the funds would be released to the county for economic development purposes.
    
    A new revenue model will need to be created by the State Tax Department to achieve the purpose of this bill. The costs to the Tax Department will be $90,500 in FY2016 and $30,000 for each subsequent fiscal year.
    



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 90,500 30,000
Personal Services 0 30,000 30,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 10,500 0
Other 0 50,000 0
2. Estimated Total Revenues 0 -2,500,000 -2,500,000


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


    Based upon our interpretation of this bill, passage of this bill would result in a reduction in the General Revenue Fund of up to $2.5 million per year beginning in FY2016. The bill provides for a partial refund of the Personal Income Tax collections from the five counties with the highest average unemployment during the previous three years. Each of the five designated counties would receive additional revenues equal to 20 percent of Personal Income Tax collections attributable to the county or $500,000, whichever is less. Currently, 20 percent of Personal Income Tax collections in all counties is greater than $500,000 so the top five counties in unemployment will receive $500,000 each. As written, the bill requires the designated counties to submit an economic development plan to the West Virginia Economic Development Authority. Upon approval of the economic development plan by the West Virginia Economic Development Authority, the funds would be released to the county for economic development purposes.
    
    A new revenue model will need to be created by the State Tax Department to achieve the purpose of this bill. The costs to the Tax Department will be $90,500 in FY2016 and $30,000 for each subsequent fiscal year.
    



Memorandum


    The stated purpose of this bill is to create the economic fairness act and encourage economic development in counties with high unemployment.
    
    The referred to W. Va. Code § 31-15-4 defines project by referring to "industrial projects" and "commercial projects" as broadly defined under W. Va. Code §13-2C-3. No additional definitions or accountability provisions are provided.
    
    When certain taxes are dedicated to something other than the General Revenue Fund, the dedication is set out in the article of the particular tax. Since the proposed bill involves personal income tax it may be better placed in article 21 of the tax code. Article 1 of the Tax Code sets forth the general powers of the Tax Commissioner.
    



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