Date Requested: February 06, 2015
Time Requested: 02:46 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
2517 Introduced HB2647
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 allow an employer to extend workers’ compensation insurance coverage to an employee engaged in volunteer fire fighting and allowing employers a tax credit for the cost of providing workers’ compensation insurance to employees engaged in volunteer fire fighting.
    
    According to our interpretation, this bill could result in a General Revenue Fund decrease of up to $5 million if all employers choose to provide volunteer fire workers’ compensation coverage to their employees. Not all employers currently provide or will elect to provide workers’ compensation insurance for their employees who are volunteer firefighters. In 2011, the Legislature set up a workers compensation subsidy to aid volunteer fire departments at a cost of $5 million spread out over multiple years. Volunteer fire departments are already required to provide Workers’ Compensation or be decertified unless the volunteer firefighter is covered by an employer. Volunteer fire departments would not be totally relieved of their workers’ compensation obligations as a result of this bill because only a fraction of the affected volunteers would likely receive coverage from an employer.
    
    Additional administrative costs to the Tax Department will be $60,000 in FY 2016 and $35,000 in 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 60,000 35,000
Personal Services 0 35,000 35,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 10,000 0
Other 0 15,000 0
2. Estimated Total Revenues 0 -5,000,000 -5,000,000


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


    According to our interpretation, this bill could result in a General Revenue Fund decrease of up to $5 million if all employers choose to provide volunteer fire workers’ compensation coverage to their employees. Not all employers currently provide or will elect to provide workers’ compensation insurance for their employees who are volunteer firefighters. In 2011, the Legislature set up a workers compensation subsidy to aid volunteer fire departments at a cost of $5 million spread out over multiple years. Volunteer fire departments are already required to provide Workers’ Compensation or be decertified unless the volunteer firefighter is covered by an employer. Volunteer fire departments would not be totally relieved of their workers’ compensation obligations as a result of this bill because only a fraction of the affected volunteers would likely receive coverage from an employer.
    
    Additional administrative costs to the Tax Department will be $60,000 in FY 2016 and $35,000 in each subsequent fiscal year.



Memorandum


    The stated purpose of this bill is to allow an employer to extend workers’ compensation insurance coverage to an employee engaged in volunteer fire fighting and allowing employers a tax credit for the cost of providing workers’ compensation insurance to employees engaged in volunteer fire fighting.
    
    The bill places a burden on the employer to provide an affidavit to the fire department every six months verifying that the employee is covered by workers’ compensation insurance for the next six months. No penalty for non-compliance is given.
    
    The legislation shifts at least part of the cost of coverage to the state budget. Employers pay for the extended coverage, but by doing so may receive a tax credit that effectively offsets the payments, reducing the General Revenue Fund.
    
    A constitutional issue could be raised regarding the provision of this tax credit to employers and workers’ compensation coverage for volunteer fire fighting activities while coverage or credits for other volunteer activities of a similar or disparate nature is not available.
    
    The legislation does not provide for rule making authority and rules may be necessary in order to effectively administer this tax credit.
    



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