FISCAL NOTE

Date Requested: February 11, 2016
Time Requested: 03:16 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
2583 Introduced HB4504
CBD Subject:


FUND(S):

Special West Virginia Medical School Fund

Sources of Revenue:

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 increase the excise tax on bottled soft drinks, syrups and dry mixtures and dedicate the proceeds to the benefit of the state university system.
    According to our interpretation, passage of this bill would result in the doubling of the West Virginia Soft Drink Excise beginning on July 1, 2016. The net revenue gain to the State from the additional tax would range between $14.0 million and $14.5 million per year. The provisions of the bill would require deposit of half of total revenues generated from the tax (i.e., $14.0 million to $14.5 million per year) to a special revenue account in the State Treasury known as the “Higher Education Facility Construction Maintenance and Operation Fund.” This fund deposit provision may conflict with separate language in the bill designating 75% of tax collections from the additional tax for deposit in a special revenue account in the State Treasury known as the “Give a Pop to Higher Education Fund” and designating the remaining 25% to funding county health departments. Given the conflicts in revenue dedication, we are unable to confidently determine the ultimate intended use of the additional funds.
    The remaining half of all soft drink tax revenues would continue to be dedicated to the West Virginia University School of Medicine. Revenues dedicated to the West Virginia University School of Medicine would be expected to decrease slightly as a result of an anticipated small decline in soft drink consumption related to the imposition of additional tax.
    The tax rates in the proposed bill would double as follows:
    
    • Tax on liquids doubles from 1 cent per half liter (16.9 fluid ounces) container or fraction thereof to 2 cents
    • Tax on syrup would double from 80 cents per gallon to $1.60 per gallon
    • Tax on dry mixture would double from 1 cent per 28.35 grams to 2 cents per 28.35 grams
    
    The 1% Tax Department Administrative Fee on special revenue fund collections would generate up to $140,000 in additional funds to offset the additional administrative costs estimated at $79,000. 
    



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 79,000 0 0
Personal Services 0 0 0
Current Expenses 450 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 78,550 0 0
2. Estimated Total Revenues 0 0 0


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


    According to our interpretation, passage of this bill would result in the doubling of the West Virginia Soft Drink Excise beginning on July 1, 2016. The net revenue gain to the State from the additional tax would range between $14.0 million and $14.5 million per year. The provisions of the bill would require deposit of half of total revenues generated from the tax (i.e., $14.0 million to $14.5 million per year) to a special revenue account in the State Treasury known as the “Higher Education Facility Construction Maintenance and Operation Fund.” This fund deposit provision may conflict with separate language in the bill designating 75% of tax collections from the additional tax for deposit in a special revenue account in the State Treasury known as the “Give a Pop to Higher Education Fund” and designating the remaining 25% to funding county health departments. Given the conflicts in revenue dedication, we are unable to confidently determine the ultimate intended use of the additional funds.
    The remaining half of all soft drink tax revenues would continue to be dedicated to the West Virginia University School of Medicine. Revenues dedicated to the West Virginia University School of Medicine would be expected to decrease slightly as a result of an anticipated small decline in soft drink consumption related to the imposition of additional tax.
    The tax rates in the proposed bill would double as follows:
    
    • Tax on liquids doubles from 1 cent per half liter (16.9 fluid ounces) container or fraction thereof to 2 cents
    • Tax on syrup would double from 80 cents per gallon to $1.60 per gallon
    
    • Tax on dry mixture would double from 1 cent per 28.35 grams to 2 cents per 28.35 grams
    
    The 1% Tax Department Administrative Fee on special revenue fund collections would generate up to $140,000 in additional funds to offset the additional administrative costs estimated at $79,000. 
    



Memorandum


    The stated purpose of this bill is to increase the excise tax on bottled soft drinks, syrups and dry mixtures and dedicate the proceeds to the benefit of the state university system.
    
    The title of the bill only states the beneficiary of the additional tax is the state university system. The bill also includes county boards of health. The West Virginia Constitution requires all parts of the amendment to be expressed in the title under Section 30, Article VI. The bill does not create the account, “Give a Pop to Higher Education Fund.”
    
    It is unclear into which fund the one quarter of the new tax will be deposited. The intended recipient is clear.
    



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