Date Requested: February 20, 2015
Time Requested: 02:50 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
3024 Introduced HB2852
CBD Subject: Public Safety


FUND(S):

General Revenue Fund, State Road Fund, Veterans Facilities Support Fund

Sources of Revenue:

General Fund,Special Fund,Other Fund State Road 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 the bill is to legalize and regulate the selling of fireworks; to allocate sales tax proceeds to special funds; and to modify criminal penalties.
    
    According to our interpretation, the bill will result in a net revenue gain of $800,000 a year. Two percent, or $16,000 each, will go to the State Road Fund and the Veterans Facilities Support Fund. It is assumed the remaining $768,000 will go to the General Revenue Fund. There is no internal effective date for the tax changes proposed by this bill. The provisions of West Virginia Code 11-10-5p would control the effective date. Under these provisions, the effective date would be January 1, 2016. Given the seasonal nature of these types of sales, we would expect about $60,000 in FY2016 and a full-year of receipts beginning in FY2017. Revenue to the funds would be split accordingly.
    
    Additionally, the one-time $15 registration fee for sparkler and novelty shops would be repealed. A new annual consumer fireworks certificate would be required with a fee not to exceed $50. In addition, there is a required permit for public fireworks display with a fee not to exceed $50. We are unable to determine the revenue increase from these fees because information is not available on the number of permits and certificates that would be applied for.
    
    Administrative costs to the Tax Department would be $85,000 in FY 2016 and $25,000 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 85,000 25,000
Personal Services 0 25,000 25,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 60,000 25,000
2. Estimated Total Revenues 0 0 0


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


    According to our interpretation, the bill will result in a net revenue gain of $800,000 a year. Two percent, or $16,000 each, will go to the State Road Fund and the Veterans Facilities Support Fund. It is assumed the remaining $768,000 will go to the General Revenue Fund. There is no internal effective date for the tax changes proposed by this bill. The provisions of West Virginia Code 11-10-5p would control the effective date. Under these provisions, the effective date would be January 1, 2016. Given the seasonal nature of these types of sales, we would expect about $60,000 in FY2016 and a full-year of receipts beginning in FY2017. Revenue to the funds would be split accordingly.
    
    Additionally, the one-time $15 registration fee for sparkler and novelty shops would be repealed. A new annual consumer fireworks certificate would be required with a fee not to exceed $50. In addition, there is a required permit for public fireworks display with a fee not to exceed $50. We are unable to determine the revenue increase from these fees because information is not available on the number of permits and certificates that would be applied for.
    
    Administrative costs to the Tax Department would be $85,000 in FY 2016 and $25,000 in each subsequent fiscal year.



Memorandum


    The stated purpose of the bill is to legalize and regulate the selling of fireworks; to allocate sales tax proceeds to special funds; and to modify criminal penalties.
    
    The bill does not direct the remaining tax after the allocation of the four percent to the State Road Fund and the Veterans Facilities Support Fund.
    
    The definition of “retailer” is a person who purchases consumer fireworks for resale to consumers. “Person” is further defined and an individual or the responsible person for an association, an organization, a partnership, a limited partnership, a limited liability company, a corporation, or any other group or combination as a unit. These definitions may allow all of the responsibility to fall on one particular person within an organization. If only one person is responsible, other employees may be able to deny responsibility for omissions of code and rules.
    
    The statute is unclear on the procedure to certify retailers of sparkling devices, novelties or toy caps.
    The bill does not include a fee for the Tax Department’s administration.
    
    The title of the bill fails to name the accounts into which revenues are to be deposited.
    
    The bill contains no internal effective date. The provisions of West Virginia Code 11-10-5p would control the effective date. Under these provisions, the effective date would be January 1, 2016.
    



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