FISCAL NOTE
Date Requested: March 02, 2021
Time Requested: 04:49 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2908 |
Introduced |
SB489 |
|
|---|
| CBD Subject: |
Roads and Transportation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to return to the Division of Highways the sales tax collected from contractors for materials used in Highways construction and maintenance projects.
According to our interpretation, this bill would effectively create an annual General Revenue Fund appropriation to the State Road Fund. Rather than a direct appropriation, this bill establishes a formula to measure such transfer. The provisions of the bill would reinstate the refundable exemption from consumer sales tax for sales of construction and maintenance materials acquired by a second party for use in the construction of maintenance of a Division of Highways road, highway, or bridge project. In lieu of any refund or credit to the person that paid the tax, the Tax Commissioner shall deposit into the State Road Fund reimbursement for the tax. The amount of reimbursement will be based on an estimate that 40 percent of the total gross funds expended by the Division of Highways during the fiscal period were for the acquisition of materials used by contractors for construction and maintenance of highways’ projects. The amendments would be effective upon passage of the bill and the transfers would be required on and after January 1, 2021. Based on our interpretation, the proposed legislation would decrease General Revenue Fund collections by roughly $15.0 million in FY2022 and by roughly $20.0 million in subsequent fiscal years. Actual transfer amounts would vary each year based on an invoice provided by the Department of Transportation to the State Tax Commissioner.
There would be no additional administrative costs incurred by the Tax Department.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2021
Increase/Decrease
(use"-") |
2022
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 |
-15,000,000 |
-20,000,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, this bill would effectively create an annual General Revenue Fund appropriation to the State Road Fund. Rather than a direct appropriation, this bill establishes a formula to measure such transfer. The provisions of the bill would reinstate the refundable exemption from consumer sales tax for sales of construction and maintenance materials acquired by a second party for use in the construction of maintenance of a Division of Highways road, highway, or bridge project. In lieu of any refund or credit to the person that paid the tax, the Tax Commissioner shall deposit into the State Road Fund reimbursement for the tax. The amount of reimbursement will be based on an estimate that 40 percent of the total gross funds expended by the Division of Highways during the fiscal period were for the acquisition of materials used by contractors for construction and maintenance of highways’ projects. The amendments would be effective upon passage of the bill and the transfers would be required on and after January 1, 2021. Based on our interpretation, the proposed legislation would decrease General Revenue Fund collections by roughly $15.0 million in FY2022 and by roughly $20.0 million in subsequent fiscal years. Actual transfer amounts would vary each year based on an invoice provided by the Department of Transportation to the State Tax Commissioner.
There would be no additional administrative costs incurred by the Tax Department.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov