FISCAL NOTE

Date Requested: March 07, 2017
Time Requested: 11:40 AM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2880 Introduced SB486
CBD Subject: Health, Taxation


FUND(S):

Medicaid State Share Fund

Sources of Revenue:

Other Fund Medicaid State Share 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 change the rate of tax on eligible acute care hospitals for fiscal year 2018; specify purposes for which funds may be collected, provide for distribution of remaining funds at the end of fiscal year and extend the expiration date for the tax.
    
    According to our interpretation, the proposed bill would raise the Acute Care Tax rate from 0.74 percent to 0.75 percent effective July 1, 2017, would extend the tax through June 30, 2018, and would include government-owned facilities, excluding state-owned facilities, as eligible acute care hospitals subject to the tax. Absent this bill, the Acute Care Tax as codified in West Virginia Code §11-27-38 would expire June 30, 2017, with the final quarterly payment accruing in July 2017. Passage of this bill would continue the Acute Care Tax through FY2018, and is expected to yield roughly $33.5 million in collections in FY2018. This amount includes three quarters at the new rate of 0.75 percent and one quarter at the former rate of 0.74 percent due to the lag in payments. Per the language of the proposed bill, the Acute Care Tax at the new rate of 0.75 percent of gross receipts would expire June 30, 2018, with the final quarterly payment of approximately $8.5 million accruing in July 2018. Comparing four-quarter estimated receipts, the new tax rate would increase annual collections by approximately $6.3 million.
    
    Additional costs incurred by the State Tax Department would be $8,000 in FY2017 and $2,500 in FY2018. No additional costs are expected 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 8,000 2,500 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 8,000 2,500 0
2. Estimated Total Revenues 0 0 0


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


    According to our interpretation, the proposed bill would raise the Acute Care Tax rate from 0.74 percent to 0.75 percent effective July 1, 2017, would extend the tax through June 30, 2018, and would include government-owned facilities, excluding state-owned facilities, as eligible acute care hospitals subject to the tax. Absent this bill, the Acute Care Tax as codified in West Virginia Code §11-27-38 would expire June 30, 2017, with the final quarterly payment accruing in July 2017. Passage of this bill would continue the Acute Care Tax through FY2018, and is expected to yield roughly $33.5 million in collections in FY2018. This amount includes three quarters at the new rate of 0.75 percent and one quarter at the former rate of 0.74 percent due to the lag in payments. Per the language of the proposed bill, the Acute Care Tax at the new rate of 0.75 percent of gross receipts would expire June 30, 2018, with the final quarterly payment of approximately $8.5 million accruing in July 2018. Comparing four-quarter estimated receipts, the new tax rate would increase annual collections by approximately $6.3 million.
    
    Additional costs incurred by the State Tax Department would be $8,000 in FY2017 and $2,500 in FY2018. No additional costs are expected thereafter.
    



Memorandum


    



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