Date Requested: January 26, 2015
Time Requested: 10:52 AM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2206 Introduced HB2410
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 improve state emergency preparedness. It requires the Office of Emergency Services to coordinate with local radio and television stations to broadcast public service announcements with information as to the location of emergency shelters. The bill provides tax credits for use of natural gas or propane fueled emergency generators. The bill also provides a protection from civil or criminal liability to persons who donate food during times of emergencies.
    
    As indicated in the stated purpose above, and in the bill itself, a number of changes in the West Virginia Code are proposed. This fiscal note only addresses the proposed tax credit. Other entities, including the Division of Homeland Security and Emergency Management, may be expected to submit a fiscal note for the portions of the bill under their purview.
    
    As written, this bill would provide a tax credit to any Taxpayer who installs or causes to be installed an emergency generator powered by natural gas or propane on property located in this State and owned by the Taxpayer and used as a place of business or residence. The credit would be effective for qualifying generators installed after July 1, 2015. The amount of the tax credit would be equal to 30 percent of the cost to purchase and install the system, up to a maximum of $3,000, and would be applied against the Personal Income Tax liability and Corporation Net Income Tax liability of the Taxpayer. The bill also provides for the carryover of tax credit in excess of the tax liability. The tax credit would expire on July 1, 2017.
    
    According to our interpretation and based on available information, passage of this bill would result in a potential reduction of the General Revenue Fund of between $11.2 million and $18.0 million spaced out over more than two fiscal years beginning in FY2016.
    
    Additional administrative costs to the State Tax Department from the passage of this bill would be approximately $77,000 in FY2016 and $50,000 in FY2017.
    
    



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 77,000 50,000
Personal Services 0 50,000 50,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 27,000 0
2. Estimated Total Revenues 0 0 0


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


    As indicated in the stated purpose above, and in the bill itself, a number of changes in the West Virginia Code are proposed. This fiscal note only addresses the proposed tax credit. Other entities, including the Division of Homeland Security and Emergency Management, may be expected to submit a fiscal note for the portions of the bill under their purview.
    
    As written, this bill would provide a tax credit to any Taxpayer who installs or causes to be installed an emergency generator powered by natural gas or propane on property located in this State and owned by the Taxpayer and used as a place of business or residence. The credit would be effective for qualifying generators installed after July 1, 2015. The amount of the tax credit would be equal to 30 percent of the cost to purchase and install the system, up to a maximum of $3,000, and would be applied against the Personal Income Tax liability and Corporation Net Income Tax liability of the Taxpayer. The bill also provides for the carryover of tax credit in excess of the tax liability. The tax credit would expire on July 1, 2017.
    
    According to our interpretation and based on available information, passage of this bill would result in a potential reduction of the General Revenue Fund of between $11.2 million and $18.0 million spaced out over more than two fiscal years beginning in FY2016.
    
    Additional administrative costs to the State Tax Department from the passage of this bill would be approximately $77,000 in FY2016 and $50,000 in FY2017.
    



Memorandum


    The stated purpose of this bill is to improve state emergency preparedness. It requires the Office of Emergency Services to coordinate with local radio and television stations to broadcast public service announcements with information as to the location of emergency shelters. The bill provides tax credits for use of natural gas or propane fueled emergency generators. The bill also provides a protection from civil or criminal liability to persons who donate food during times of emergencies.
    
    There are several concerns regarding the proposed tax credit under new Article §11-13DD. The credit is available to a taxpayer who “installs or causes to be installed” an emergency generator. However, while the credit is based upon the costs of the system, the proposed bill does not state that the taxpayer had to be the one who purchased the generator. Therefore, taxpayers may be taking a credit on a generator that was installed in their place of business or residence, but which they did not purchase. Further, the bill does not indicate whether or not the generator must be new or used when purchased.
    
    While the proposed bill states that the generator must be installed on property used as a place of business or residence by the taxpayer, it does not state that the taxpayer must own the property or the generator. Therefore, there may be some situations in which an owner and a tenant may both attempt to claim the credit.
    
    
    



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