FISCAL NOTE
Date Requested: January 18, 2024
Time Requested: 04:14 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2921 |
Introduced |
HB4888 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to distribute 10 percent of state revenues derived from sales tax, excise tax, severance tax, or generated by any other means be placed in General Revenue and returned to the County offices of the Division of Highways.
According to our interpretation, the proposed bill would reallocate 10% of all taxes and fees collected under Chapter 11 of the West Virginia Code. This broad reallocation would include various taxes deposited in the General Revenue Fund as well as various dedicated taxes, including but not limited to dedicated sales tax for the School Building Authority and the Public Service Commission, dedicated personal income tax for the post employment benefit trust, dedicated severance taxes, dedicated motor fuel excise taxes and sales taxes, dedicated motor vehicle sales tax, and dedicated health care provider taxes, acute care taxes and taxes on managed care organizations. The total amount reallocated would likely exceed $600 million, including more than $75 million already deposited in the State Road Fund. This proposed provision of the Code would conflict with various other provisions, dedicating existing taxes to other Special Revenue Fund needs, particularly the Medicaid Program. The direct loss to the State General Revenue Fund would be nearly $500 million. If it is determined that the State General Revenue Fund should also bear the fiscal impact of losses to the other special revenue accounts, the total loss could exceed $600 million per year.
The provisions of the bill suggest that the revenues generated by the 10 percent allocation formula should be dedicated to the various county offices of the Division of Highways. However, the bill fails to provide a formula for such dedication. Most tax revenue collections cannot be directly traced back to a county of origin.
There would be no additional administrative costs incurred by the Tax Division.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2024
Increase/Decrease
(use"-") |
2025
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):
According to our interpretation, the proposed bill would reallocate 10% of all taxes and fees collected under Chapter 11 of the West Virginia Code. This broad reallocation would include various taxes deposited in the General Revenue Fund as well as various dedicated taxes, including but not limited to dedicated sales tax for the School Building Authority and the Public Service Commission, dedicated personal income tax for the post employment benefit trust, dedicated severance taxes, dedicated motor fuel excise taxes and sales taxes, dedicated motor vehicle sales tax, and dedicated health care provider taxes, acute care taxes and taxes on managed care organizations. The total amount reallocated would likely exceed $600 million, including more than $75 million already deposited in the State Road Fund. This proposed provision of the Code would conflict with various other provisions, dedicating existing taxes to other Special Revenue Fund needs, particularly the Medicaid Program. The direct loss to the State General Revenue Fund would be nearly $500 million. If it is determined that the State General Revenue Fund should also bear the fiscal impact of losses to the other special revenue accounts, the total loss could exceed $600 million per year.
The provisions of the bill suggest that the revenues generated by the 10 percent allocation formula should be dedicated to the various county offices of the Division of Highways. However, the bill fails to provide a formula for such dedication. Most tax revenue collections cannot be directly traced back to a county of origin.
There would be no additional administrative costs incurred by the Tax Division.
Memorandum
The stated purpose of this bill is to distribute 10 percent of state revenues derived from sales tax, excise tax, severance tax, or generated by any other means be placed in General Revenue and returned to the County offices of the Division of Highways.
The fatal issue with this bill is that sales tax, severance tax or revenue generated by any other means of the code may have statutory dedications to other funds. For example, excise taxes collected from the sales of beer, wine and liquor are, in part, statutorily dedicated to the Drunk Driving Prevention Fund. Similar issues arise with pre-existing statutory dedications of severance taxes or revenues “generated by any other means imposed by this code.” Passage of this bill will lead to conflicting purposes in the dedication of these funds.
This bill’s use of “any other means” is ambiguous and vague. There are many other taxes and fees that generate collections in this state. By providing a specific list of examples and then using a catch all term, the vague and ambiguous term may be interpreted according to the prior examples provided. This may lead to litigation and administrative difficulties if the meaning of the phrase is open to interpretation.
Additionally, this bill lacks an apportionment formula for how to distribute the collected funds back to the counties. If an existing formula is to be followed, the bill should identify the formula to be followed.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov