Date Requested: December 03, 2015
Time Requested: 11:59 AM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2478 Introduced SB310
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 nonprofit utility companies from the West Virginia Business and Occupation Tax.
    
    According to our interpretation, the bill will cost the General Revenue Fund roughly $250,000 a year beginning in FY2016.
    
    Additional administrative costs to the State Tax Department will be $11,600 for FY2016.
    



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 11,600 0
Personal Services 0 10,000 0
Current Expenses 0 1,600 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 -250,000 -250,000


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


    According to our interpretation, the bill will cost the General Revenue Fund roughly $250,000 a year beginning in FY2016.
    
    Additional administrative costs to the State Tax Department will be $11,600 for FY2016.
    



Memorandum


    The stated purpose of this bill is to exempt nonprofit utility companies from the West Virginia Business and Occupation Tax.
    
    “Nonprofit utility companies” is not defined in the West Virginia Code, and the bill does not define these companies. The Public Service Commission does not appear to distinguish between nonprofit public utilities and for profit public utilities in the way they are investigated or regulated.
    
    The proposed bill may raise constitutional concerns. Article X of the West Virginia Constitution requires that taxation “be equal and uniform throughout the state...” Also, the proposed bill may violate Section 10 of Article III of the West Virginia Constitution, which is the State’s equal protection clause. The state legislature “may make reasonable classifications in enacting statutes provided the classifications are based on some real and substantial relation to the objects sought to be accomplished by the legislation, and any person who assails any such classification has the burden of showing that it is essentially arbitrary and unreasonable.” Sylb. Pt. 5, United Fuel Gas Co. v. Battle, 152 W.Va. 222, 167 S.E.2d 890 (1969).
    
    



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