FISCAL NOTE

Date Requested: February 24, 2021
Time Requested: 01:57 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2689 Introduced SB437
CBD Subject: Taxation


FUND(S):

Medicaid State Share Fund

Sources of Revenue:

Special Fund

Legislation creates:

Increases Revenue From Existing Sources, Increases Existing Expenses



Fiscal Note Summary


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


The stated purpose of this bill is to clarify that a critical access hospital located in an urban area cannot be considered an “eligible acute care hospital” for purposes of the health care provider tax. The bill also modifies the effective date and removes the expiration date of the tax. According to our interpretation, the proposed bill clarifies the definition of a “critical access hospital” which is exempt from the 0.75 percent tax on acute care hospitals and changes the effective date of the tax to July 1, 2021. Hospitals designated as critical access hospitals, after meeting federal eligibility criteria, are already exempt from this tax under current law. The expiration date currently in place is removed and no new expiration date is given. Absent this bill, the Acute Care Tax as codified in W.Va. Code §11-27-38 would expire on June 30, 2021. Passage of this bill would increase tax collections by $25.5 million in FY2022 and $34.0 million in subsequent fiscal years. Additional administrative costs incurred by the State Tax Department would be $5,000 in FY2022.



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 5,000 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 5,000 0
2. Estimated Total Revenues 0 25,500,000 34,000,000


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


According to our interpretation, the proposed bill clarifies the definition of a “critical access hospital” which is exempt from the 0.75 percent tax on acute care hospitals and changes the effective date of the tax to July 1, 2021. Hospitals designated as critical access hospitals, after meeting federal eligibility criteria, are already exempt from this tax under current law. The expiration date currently in place is removed and no new expiration date is given. Absent this bill, the Acute Care Tax as codified in W.Va. Code §11-27-38 would expire on June 30, 2021. Passage of this bill would increase tax collections by $25.5 million in FY2022 and $34.0 million in subsequent fiscal years. Additional administrative costs incurred by the State Tax Department would be $5,000 in FY2022.



Memorandum


The stated purpose of this bill is to clarify that a critical access hospital located in an urban area cannot be considered an “eligible acute care hospital” for purposes of the health care provider tax, modifying the effective date of the tax, and removing the expiration date of the tax. This bill amends and reenacts W.Va. Code §11-27-38. That code section currently imposes an additional tax of 0.75 percent on the gross receipts received or receivable by eligible acute care hospitals that provide inpatient or outpatient hospital services in this state. The bill removes “a facility designated pursuant to §16-5B-14 of this code” from the definition of an eligible acute care hospital that is subject to the tax. The bill also removes the expiration date and the expiration date language from the code. The tax was set to expire on or after June 30, 2021. However, amendments to this section do not become effective until July 1, 2021, which is after the expiration date.



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