FISCAL NOTE
Date Requested: March 08, 2017
Time Requested: 01:24 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3048 |
Introduced |
SB561 |
|
|---|
| CBD Subject: |
Economic Development, Education (Higher), 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 allow a severely economically depressed county to retain fifty percent of coal severance tax collected in that county for economic development and education.
According to the provisions of this bill, the State Department of Revenue would return fifty percent of the money collected as coal severance tax in a county which has become severely economically depressed due to the loss of coal mining severance and property tax revenue and coal mining jobs. We cannot estimate the revenue loss to the General Revenue Fund and the corresponding increase in revenue for some counties. The provisions of the bill are unclear regarding the definition of a qualifying county. In addition, it is unclear whether the 50% factor would apply to total coal severance tax collections, coal severance tax collections less the current 0.35% local tax or coal severance tax less both the 0.35% local tax and the additional 5.0% locally shared collections. Total State coal severance tax collections for both the State General Revenue Fund and the Infrastructure Bond Fund are projected to be roughly $150 million in FY2018. Depending on interpretation, the provisions of this bill could result in a significant loss to the State General Revenue Fund to pay for gains in county funds.
Additional administrative costs incurred by the State Tax Department would be $72,000 in FY 2018 and $41,000 in fiscal years thereafter.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2017
Increase/Decrease
(use"-") |
2018
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
72,000 |
41,000 |
| Personal Services |
0 |
41,000 |
41,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
1,000 |
0 |
| Other |
0 |
30,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to the provisions of this bill, the State Department of Revenue would return fifty percent of the money collected as coal severance tax in a county which has become severely economically depressed due to the loss of coal mining severance and property tax revenue and coal mining jobs. We cannot estimate the revenue loss to the General Revenue Fund and the corresponding increase in revenue for some counties. The provisions of the bill are unclear regarding the definition of a qualifying county. In addition, it is unclear whether the 50% factor would apply to total coal severance tax collections, coal severance tax collections less the current 0.35% local tax or coal severance tax less both the 0.35% local tax and the additional 5.0% locally shared collections. Total State coal severance tax collections for both the State General Revenue Fund and the Infrastructure Bond Fund are projected to be roughly $150 million in FY2018. Depending on interpretation, the provisions of this bill could result in a significant loss to the State General Revenue Fund to pay for gains in county funds.
Additional administrative costs incurred by the State Tax Department would be $72,000 in FY 2018 and $41,000 in fiscal years thereafter.
Memorandum
The stated purpose of this bill is to allow a severely economically depressed county to retain fifty percent of coal severance tax collected in that county for economic development and education.
There are several concerns with this proposed bill. Under current W.Va. Code, coal severance tax revenues are deposited in the State’s General Revenue Fund, under the control of the State Treasurer. Therefore, the requirement that the State Department of Revenue return the revenues to the county is not feasible.
The bill does not specify how these economically depressed counties measure their forty percent loss in tax revenue. This is further complicated since the bill uses both property tax revenue and coal severance tax revenue as economic indicators for the poverty rate of a county. The proposed bill does not specify whether the coal severance losses are from coal producing counties. There are both coal producing and non-coal producing counties among those counties that lost forty percent of their tax revenue.
It is not clear whether lost jobs have to be directly related to the coal industry, or whether the payments under the bill are triggered by the loss of unrelated jobs. There is some difficulty in interpreting how the loss of jobs would be calculated over a five year period.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov