Date Requested: February 06, 2015
Time Requested: 03:09 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
1308 Introduced HB2633
CBD Subject: Tax


FUND(S):

General Revenue Fund, Prevention, Intervention, Treatment & Recovery Fund

Sources of Revenue:

General Fund,Special 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 provide funding for substance abuse services through increased taxes on beer, wine, and liquor. The bill increases the barrel tax on nonintoxicating beer, increases the tax on purchases of liquor and wine, and increases the liter tax. The bill creates a Prevention, Intervention, Treatment, and Recovery Fund to fund substance abuse programs.
    
    According to our interpretation, the provisions of this bill seek to double the $5.50 per barrel excise tax on beer, to double the 26.406 cents per liter wine excise tax and to raise the wholesale mark-up on liquor products to a level that would generate an additional $6.5 million per year. There is no internal effective date for these proposed changes. Therefore, the tax changes would likely occur sometime in the middle of June 2015. The proceeds of these additional revenues would be deposited in the Prevention, Intervention, Treatment and Recovery Fund. The net annual revenue gain from the proposed changes is estimated to be roughly $14.7 million per year under the assumption that the wholesale mark-up on liquor is adjusted to realize a gain of $6.5 million. The prevention, Intervention, Treatment and Recovery Fund would receive an additional $15 million per year and the State General Revenue Fund would lose roughly $300,000 per year due to decreases in product consumption associated with the proposed increases in excise tax rates.
    
    Administrative costs to the Tax Department will be $65,000 in the current 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 65,000 0 0
Personal Services 65,000 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 14,700,000 14,700,000


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


    According to our interpretation, the provisions of this bill seek to double the $5.50 per barrel excise tax on beer, to double the 26.406 cents per liter wine excise tax and to raise the wholesale mark-up on liquor products to a level that would generate an additional $6.5 million per year. There is no internal effective date for these proposed changes. Therefore, the tax changes would likely occur sometime in the middle of June 2015. The proceeds of these additional revenues would be deposited in the Prevention, Intervention, Treatment and Recovery Fund. The net annual revenue gain from the proposed changes is estimated to be roughly $14.7 million per year under the assumption that the wholesale mark-up on liquor is adjusted to realize a gain of $6.5 million. The prevention, Intervention, Treatment and Recovery Fund would receive an additional $15 million per year and the State General Revenue Fund would lose roughly $300,000 per year due to decreases in product consumption associated with the proposed increases in excise tax rates.
    
    Administrative costs to the Tax Department will be $65,000 in the current fiscal year.



Memorandum


    The stated purpose of this bill is to provide funding for substance abuse services through increased taxes on beer, wine, and liquor. The bill increases the barrel tax on nonintoxicating beer, increases the tax on purchases of liquor and wine, and increases the liter tax. The bill creates a Prevention, Intervention, Treatment, and Recovery Fund to fund substance abuse programs.
    
    The only directive of the bill is to expend the funds consistent with the Governor’s Comprehensive Strategic Plan to Address Substance Abuse in West Virginia.” This was created within DHHR by executive order. However, §11-16-27 directs the revenue raised under §11-16-13 to the General Fund and allows the cost of administration. The two sections conflict, making the bill impossible to administer as written.
    
    There are no provisions for oversight.
    



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