FISCAL NOTE
Date Requested: January 12, 2022
Time Requested: 04:50 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1310 |
Introduced |
SB143 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund, Economic Development Growth Fund
Sources of Revenue:
General Fund Economic Development Growth Fund
Legislation creates:
Increases Existing Expenses, Creates New Fund: Economic Development Growth Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to diversify certain severance tax funds, capping severance tax collections in general revenue at a specified percentage and dedicating any excess above the specified percentage to a special revenue account; creating an Economic Development Growth Fund; setting out the purpose of the account and use of funds therein; and providing for administration of the account.
According to our interpretation, passage of this bill would result in a transfer of General Revenue Fund severance tax collections to the Economic Development Growth Fund in any fiscal year when the total General Revenue Fund deposit of severance tax collections is otherwise more than an amount equal to 8.5 percent of total General Revenue Fund collections. This provision would first take effect beginning in Fiscal Year 2023. The amount of such transfer, if any, would be highly uncertain from year to year based on the overall volatility of the severance tax revenue source. Based on current projections, the Economic Development Fund would receive roughly $13 million in Fiscal Year 2023 and $7 million in Fiscal Year 2024. If such a provision had been in effect over the past five-year period, there would have been a transfer of roughly $64 million in Fiscal Year 2019 and no transfer in Fiscal Years 2018, 2020 or 2021. Through the first half of Fiscal Year 2022, severance tax collections equal 10.1 percent of total cumulative General Revenue Fund collections. At the current pace, the end of year revenue transfer would have been roughly $100 million or more if the provisions of this bill were in effect for the current fiscal year.
There would be no additional administrative costs incurred by the State Tax Department.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2022
Increase/Decrease
(use"-") |
2023
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, passage of this bill would result in a transfer of General Revenue Fund severance tax collections to the Economic Development Growth Fund in any fiscal year when the total General Revenue Fund deposit of severance tax collections is otherwise more than an amount equal to 8.5 percent of total General Revenue Fund collections. This provision would first take effect beginning in Fiscal Year 2023. The amount of such transfer, if any, would be highly uncertain from year to year based on the overall volatility of the severance tax revenue source. Based on current projections, the Economic Development Fund would receive roughly $13 million in Fiscal Year 2023 and $7 million in Fiscal Year 2024. If such a provision had been in effect over the past five-year period, there would have been a transfer of roughly $64 million in Fiscal Year 2019 and no transfer in Fiscal Years 2018, 2020 or 2021. Through the first half of Fiscal Year 2022, severance tax collections equal 10.1 percent of total cumulative General Revenue Fund collections. At the current pace, the end of year revenue transfer would have been roughly $100 million or more if the provisions of this bill were in effect for the current fiscal year.
There would be no additional administrative costs incurred by the State Tax Department.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov