FISCAL NOTE

Date Requested: February 10, 2016
Time Requested: 01:38 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
2425 Introduced HB4474
CBD Subject: Taxation


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 continue providing a personal income tax adjustment to the gross income of certain retirees receiving pensions from defined pension plans that terminated and are being paid a reduced maximum benefit guarantee. Retirees receiving pensions from defined pension plans that terminated and are being paid a reduced maximum benefit guarantee from the federal Pension Benefit Guaranty Corporation (PBGC) received a personal income tax adjustment equal to the amount of pension income not received through Tax Year 2014. This bill would reinstate the allowance of that decreasing modification beginning in TY2016 and terminating after the end of Tax Year 2018. Passage of the proposed legislation would result in a potential loss from Tax Year 2016 returns of approximately $400,000 occurring in FY2017. Approximately $400,000 in annual revenue losses are expected for the remaining years until termination. Additional administrative costs to the State Tax Department would be $8,000 in FY2017 and $5,000 in subsequent years. No additional administrative costs are expected for the remainder of FY2016.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2016
Increase/Decrease
(use"-")
2017
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 8,000 5,000
Personal Services 0 5,000 5,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 3,000 0
2. Estimated Total Revenues 0 -400,000 -400,000


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


Retirees receiving pensions from defined pension plans that terminated and are being paid a reduced maximum benefit guarantee from the federal Pension Benefit Guaranty Corporation (PBGC) received a personal income tax adjustment equal to the amount of pension income not received through Tax Year 2014. This bill would reinstate the allowance of that decreasing modification beginning in TY2016 and terminating after the end of Tax Year 2018. Passage of the proposed legislation would result in a potential loss from Tax Year 2016 returns of approximately $400,000 occurring in FY2017. Approximately $400,000 in annual revenue losses are expected for the remaining years until termination. Additional administrative costs to the State Tax Department would be $8,000 in FY2017 and $5,000 in subsequent years. No additional administrative costs are expected for the remainder of FY2016.



Memorandum


The stated purpose of this bill is to continue providing a personal income tax adjustment to the gross income of certain retirees receiving pensions from defined pension plans that terminated and are being paid a reduced maximum benefit guarantee. The use of the word “continue” in the bill’s stated purpose (i.e., “continue providing the personal income tax adjustment…”) is not entirely accurate due to the one-year termination or non-availability of the modification for Tax Year 2015. The term “reinstate” may be preferred; however this is not fatal to the bill. There are some minor stylistic amendments that do not change the substance of the bill.



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