FISCAL NOTE
Date Requested: March 18, 2021
Time Requested: 12:19 PM |
| Agency: |
Economic Development Authority, WV |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2346 |
Introduced |
SB667 |
|
|---|
| CBD Subject: |
Corporations |
|---|
|
FUND(S):
9061
Sources of Revenue:
Other Fund Special Revenue
Legislation creates:
Creates New Revenue, Increases Existing Expenses
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.
The purpose of the proposed bill is to establish a new State tax credit for qualified community development entities that make qualified equity investments in low-income community businesses. The tax credit can be used to offset an investor’s state insurance premium tax liability imposed by the State Insurance Commissioner. Under the proposed bill, the West Virginia Economic Development Authority (WVEDA) will be the state entity charged with the responsibility for reviewing and approving applications seeking to have an investment designated as eligible for the tax credits, and for receiving and reviewing future reporting requirements.
The proposed bill limits the amount of a qualified investment in any low-income community business eligible to a maximum of $5 million, but does not provide for any minimum investment. The proposed bill also allows WVEDA to certify no more than an aggregate of $60 million in qualified equity investments. It is not possible for WVEDA to estimate the number of applications it may receive, although the minimum number would be 12 if each applicant seeks to have certified qualified equity investments of the maximum amount of $5 million. The bill, as proposed, requires any applicant to pay WVEDA a nonrefundable application fee equal to $10,000, which should cover all administrative costs of WVEDA for applications it must review and approve.
The projected amount of the tax credit and any affect upon the revenues of the State cannot be predicted by WVEDA. Both the Department of Tax and Revenue and the State Insurance Commissioner should be asked to submit a fiscal note for this proposed bill.
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 |
10,000 |
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.
As proposed, the bill contemplates that WVEDA will begin to accept applications on July 1, 2021. WVEDA will have to develop a new application and implement processes and procedures for this new tax credit program, and will incur additional administrative costs to implement the program before accepting its first application, estimated to be $10,000 as a one-time expense in this fiscal year. In addition, depending on the number of applications received, WVEDA may incur additional personnel costs in future fiscal years to add staff to manage the program. However, once the program begins operation, WVEDA will collect a $10,000 nonrefundable fee from each applicant, which should be sufficient to cover its administrative costs. WVEDA therefore estimates a net neutral fiscal impact upon full implementation of the program.
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.
The proposed bill requires WVEDA to grant or deny an application within 30 days of receipt of the application. However, the WVEDA Board meets only once per month, on the third Thursday of each month. WVEDA Staff contemplates that WVEDA Board action will be necessary to approve applications. Depending on when an application is received, WVEDA Staff may not be able to approve an application within 30 days depending on the timing of the Board meeting. We propose that § 31-15D-4(b) be modified to allow WVEDA 60 days to grant or deny an application. Additionally, the Department of Tax and Revenue and the State Insurance Commissioner should each be asked to the West Virginia Development Office, being a separate office from the West Virginia Economic Development Authority, should be asked to submit a fiscal note for this proposed bill.
Person submitting Fiscal Note: Caren Wilcher, Associate Director
Email Address: caren.d.wilcher@wv.gov