FISCAL NOTE

Date Requested: February 03, 2016
Time Requested: 02:41 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
2321 Introduced SB489
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 establish a tax credit for physicians who are new graduates and locate in West Virginia to practice medicine for at least six years.
    
    Based on our interpretation, the proposed bill would create a maximum $10,000 per year Personal Income Tax credit for up to three consecutive years per eligible physician. If passed, this bill would result in revenue losses of roughly $1.0 million per year in the General Revenue Fund for the first full year of implementation. As the proposed legislation provides that the credit be available for tax years beginning after December 31, 2016, TY2017 will be the first year the credit is available, affecting revenues beginning FY2018. It should be noted that, given eligible physicians can claim the credit for up to three years, it is plausible that revenue losses could increase to as much as $3.0 million in subsequent years of credit availability based on current assumptions.
    
    There would be no additional administrative costs incurred by the State Tax Department for the remainder of FY2016 or in FY2017. There would be a one-time cost in FY2018 of $15,000.
    



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 0 0
Personal Services 0 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 0 -3,000,000


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


    Based on our interpretation, the proposed bill would create a maximum $10,000 per year Personal Income Tax credit for up to three consecutive years per eligible physician. If passed, this bill would result in revenue losses of roughly $1.0 million per year in the General Revenue Fund for the first full year of implementation. This estimate is based on roughly 100 eligible physicians locating to practice medicine in West Virginia after finishing an approved residency or fellowship program. As the proposed legislation provides that the credit be available for tax years beginning after December 31, 2016, TY2017 will be the first year the credit is available, affecting revenues beginning FY2018. It should be noted that, given eligible physicians can claim the credit for up to three years, it is plausible that revenue losses could increase to as much as $3.0 million in subsequent years of credit availability based on current assumptions.
    
    There would be no additional administrative costs incurred by the State Tax Department for the remainder of FY2016 or in FY2017. There would be a one-time cost in FY2018 of $15,000.
    
    



Memorandum


    The stated purpose of this bill is to establish a tax credit for physicians who are new graduates and locate in West Virginia to practice medicine for at least six years.
    
    There is no requirement that the physician be practicing in West Virginia, and the term “eligible physician” is not defined. Further, this credit is limited to those graduating from all allopathic or osteopathic medical schools. Allopathic medicine is homeopathic, and osteopathic is whole body medicine. Thus it is unclear whether this credit encompasses every type of medical school and specialist. A list of acceptable medical degrees would be helpful.
    
    The latter part of West Virginia Code §11-13DD-6(d) is confusing, as this is a credit and not a deduction.
    
    The term “reasonably construed” in West Virginia Code §11-13DD-8 is vague and undefined.
    
    
    



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