FISCAL NOTE

Date Requested: March 24, 2021
Time Requested: 09:46 AM
Agency: Lottery Commission, WV
CBD Number: Version: Bill Number: Resolution Number:
3480 Originating HB3300
CBD Subject: Taxation


FUND(S):

State Lottery Fund; State Excess Lottery Fund

Sources of Revenue:

Special Fund Special Fund

Legislation creates:

Creates New Fund: Income Tax Reduction Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


Summarize in a clear and concise manner what impact this measure will have on costs and revenues of state government. Pursuant to Section 11B-2-33(b)(3) of HB 3300, the State’s share of all operator owned retailer limited video lottery locations, being $2,369,583, not the originally reported $164,451,840, would be directed into the new income tax reduction fund from the State Excess Lottery Fund. Currently, the State Excess Lottery Fund serves several State bonding requirements. Should the intention be, by the use of “additional” as set forth in 11B-2-33(b)(4) of HB 3300, to reference the State’s share of revenue generated by the increase in allowable number of limited video lottery machines at locations from 5 to 7, as passed into law by HB 3106 in the 2017 legislative session, such assumption would result in approximately $36,000,000 being directed into the new income tax reduction fund from the State Excess Lottery Fund. The transfer of $36,000,000 from the State Excess Lottery Fund will result in a reduction of debt coverage, which may affect the State’s bond ratings in the future. As drafted, HB 3300 generally references W. Va. Code 29-22B-1101. The current language of 1101 relates specifically to all locations and the number of machines allowable at each location and does not reference any increase in the number of machines permitted at each limited video lottery location. Additionally, should the intent of 11B-2-33(b)(4) of HB 3300 be to include revenue generated by an increase in the number of limited video lottery terminals per location from 7 to 10, as set forth in pending HB 3308, such would be additionally created revenue that cannot be projected at this time. Outside of the foregoing two Sections, HB 3300 projects to have little additional impact on State revenues and costs because the remaining provisions relate to the transfer of current revenues from Lottery accounts to the income tax reduction fund and do not include new mechanisms for generating revenue or further costs to State Government.



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 0 0


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


Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years. Please see Summary, above, and Memorandum, below.



Memorandum


Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form. HB 3300 will have the following impact on the Lottery: 1) Section 11B-2-33(b)(2) of HB 3300 would direct the State's share from the Lottery game "Keno Go" from the State Lottery Fund to the new income tax reduction fund. The projected impact is a reduction in the State Lottery Fund of $511,500, dollars which currently go towards education, tourism and senior citizens. There are additional planned lottery games that may fall under this section in the future. 2) Pursuant to Section 11B-2-33(b)(3) of HB 3300, the State’s share of all operator owned retailer limited video lottery locations, being $2,369,583, not the originally reported $164,451,840, would be directed into the new income tax reduction fund from the State Excess Lottery Fund. Currently, the State Excess Lottery Fund serves several State bonding requirements. 3) Should the intention be, by the use of “additional” as set forth in 11B-2-33(b)(4) of HB 3300, to reference the State’s share of revenue generated by the increase in allowable number of limited video lottery machines at locations from 5 to 7, as passed into law by HB 3106 in the 2017 legislative session, such assumption would result in approximately $36,000,000 being directed into the new income tax reduction fund from the State Excess Lottery Fund. The transfer of $36,000,000 from the State Excess Lottery Fund will result in a reduction of debt coverage, which may affect the State’s bond ratings in the future. As drafted, HB 3300 generally references W. Va. Code 29-22B-1101. The current language of 1101 relates specifically to all locations and the number of machines allowable at each location and does not reference any increase in the number of machines permitted at each limited video lottery location. Additionally, should the intent of 11B-2-33(b)(4) of HB 3300 be to include revenue generated by an increase in the number of limited video lottery terminals per location from 7 to 10, as set forth in pending HB 3308, such would be additionally created revenue that cannot be projected at this time. 4) Section 11B-2-33(b)(5) of would direct the State's share from Sports Wagering from the State Lottery Fund to the income tax reduction fund. The projected impact is a reduction of $2,100,000 from the State Lottery Fund, dollars that are currently spent towards education, tourism and senior citizens. 5) Section 11B-2-33(b)(6) would direct the State's share from Interactive Wagering, less one percent that is deposited into the racing association pension funds, from the State Lottery Fund to the income tax reduction fund. Although it is difficult to project the impact from Interactive Wagering because the program has yet to be in existence a full year, the Lottery projects the financial impact to approach a $1,500,000 reduction to the State Lottery Fund, dollars that are currently spent on education, tourism and senior citizens. Lottery is available to assist with the drafting of any specific language which may relate to any of the aforementioned provisions and may result in accomplishing the specific intent of the Legislature with respect to HB 3300.



    Person submitting Fiscal Note: W. Brian Nickerson, Managing General Counsel
    Email Address: bnickerson@wvlottery.com