FISCAL NOTE
Date Requested: February 02, 2026
Time Requested: 01:43 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2884 |
Introduced |
HB5030 |
|
|---|
| CBD Subject: |
Counties; Natural Resources; Public Safety; Roads and Transportation; Taxation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue, Increases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill relates to pension benefits which are exempt from income taxation. The bill adds Division of Natural Resources police, deputy sheriffs, full-time firefighters, and municipal police officers into the class of law-enforcement officers exempted.
As written, this bill allows a full Personal Income Tax exemption for retirement benefits from the Public Employees Retirement System received by officers retired from the Division of Natural Resources, including those formerly classified as conservation officers, deputy sheriffs, full-time firefighters and municipal police officers.
Based on our interpretation, the bill would extend the full Personal Income Tax Exemption to the following groups receiving benefits from the Public Employees Retirement System-Division of Natural Resource officers, deputy sheriffs, full-time firefighters, and municipal police officers. Providing a full Personal Income Tax modification to these taxpayers would result in a loss to the General Revenue Fund of $290,000 per year. In addition, the wording of the bill language effectively makes the changes retroactive to the 1980 tax year, which will probably result in many amended returns from taxpayers who will benefit from the change.
However, extension of the proposed tax exclusions to certain retirees of the Public Employees Retirement System will result in additional litigation on the part of federal civil service retirees and possibly any disfavored public employee retirees. Past history with similar litigation would suggest that at a minimum passage of this legislation would ultimately result in the full exclusion of federal civil service retirees at an additional cost of $23.1 million per year.
Additional administrative costs would be $109,800 in FY2027 and $90,000 in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2026
Increase/Decrease
(use"-") |
2027
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
109,800 |
90,000 |
| Personal Services |
0 |
90,000 |
90,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
3,300 |
0 |
| Other |
0 |
16,500 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
As written, this bill allows a full Personal Income Tax exemption for retirement benefits from the Public Employees Retirement System received by officers retired from the Division of Natural Resources, including those formerly classified as conservation officers, deputy sheriffs, full-time firefighters and municipal police officers.
Based on our interpretation, the bill would extend the full Personal Income Tax Exemption to the following groups receiving benefits from the Public Employees Retirement System-Division of Natural Resource officers, deputy sheriffs, full-time firefighters, and municipal police officers. Providing a full Personal Income Tax modification to these taxpayers would result in a loss to the General Revenue Fund of $290,000 per year. In addition, the wording of the bill language effectively makes the changes retroactive to the 1980 tax year, which will probably result in many amended returns from taxpayers who will benefit from the change.
However, extension of the proposed tax exclusions to certain retirees of the Public Employees Retirement System will result in additional litigation on the part of federal civil service retirees and possibly any disfavored public employee retirees. Past history with similar litigation would suggest that at a minimum passage of this legislation would ultimately result in the full exclusion of federal civil service retirees at an additional cost of $23.1 million per year.
Additional administrative costs would be $109,800 in FY2027 and $90,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill relates to pension benefits which are exempt from income taxation. The bill adds Division of Natural Resources police, deputy sheriffs, full-time firefighters, and municipal police officers into the class of law-enforcement officers exempted.
The substituted language retains the subdivision’s opening applicability language – “Retirement income received in the form of pensions and annuities after December 31, 1979 . . .” – effectively making the changes retroactive to the 1980 tax year, which will probably result in many amended returns from taxpayers who will benefit from the change
There is concern that preferential treatment for a group of state and local government retirees relative to federal civil service retirees would conflict with the U.S. Supreme Court ruling in Davis v. Michigan.
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov