FISCAL NOTE
Date Requested: January 21, 2022
Time Requested: 04:11 PM |
| Agency: |
Lottery Commission, WV |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1478 |
Introduced |
HB4338 |
|
|---|
| CBD Subject: |
Legal Gaming |
|---|
|
FUND(S):
Excess Lottery Revenue Fund
Sources of Revenue:
Special Fund
Legislation creates:
Decreases Existing 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.
HB 4338 will decrease the revenues of State Government by taking $4.5 million dollars per year, and $41.5m over each 10-year permit period, from the State Excess Lottery Fund. In addition to reducing revenue into the fund, HB 4338 would also have a negative impact on the debt service coverage ratio. Although the coverage ratio would not be reduced by much, reducing or taking away revenue that was previously pledged to bond holders has a potential negative impact.
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 |
-4,500,000 |
-4,500,000 |
| 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.
HB 4338 will decrease the revenues of State Government by taking $4.5 million dollars per year, and $41.5m over each 10-year permit period, from the State Excess Lottery Fund. In addition to reducing revenue into the fund, HB 4338 would also have a negative impact on the debt service coverage ratio. Although the coverage ratio would not be reduced by much, reducing or taking away revenue that was previously pledged to bond holders has a potential negative impact.
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.
As indicated above, HB 4338 will decrease the revenues of State Government by taking $4.5 million dollars per year, and $41.5m over each 10-year permit period, from the State Excess Lottery Fund. HB 4338 merely represents a tax decrease and is a new iteration of a failed legislative attempt at providing LVL operators and retailers with a modernization fund that was introduced in the 2021 legislative session. The difference from HB 4338 and the bill introduced last year (and current modernization fund) is that HB 4338 functions as a rebate, which reduces the capital investment of LVL operators and retailers and does not incentivize the owners of such retailers and/or operators to use the rebate to enhance their business nor does it guarantee money from such establishments are used in state for infrastructure upgrades. Much has been done in recent years to recognize the contribution of LVL operators and retailers to the State and make it more affordable, and easier, to do business in West Virginia. Those measures include, but are not limited to the following:
1) The number of machines allowed per location has increased from 5 to 10 over the past 5 years;
2) Currently, the Lottery has proposed an amendment to the current LVL rule which will remove the prohibition on advertising for LVL establishments and allow said establishments to advertise pursuant to a new set of more relaxed guidelines;
3) Statutory change in W. Va. Code 29-22B-1107(s) allowing all current permit holders to acquire permits at the minimum stated bid price prior to allowing others to bid on said permits. This change resulted in an average bid of approximately $640 dollars less per permit in the 2021 bid cycle when compared to the 2011 bid cycle, which saved LVL Retailers/Operators (and cost the State) approximately $4-$5m in bid revenue.
4) Lottery amended the method in which it measures between locations so as maximize the number of possible locations in the State; and
5) Hours of operation have increased pursuant to the ABCA bill passed last year which increased the time frame in which establishments can sell alcohol on premises, which has led to an increase in LVL revenue.
6) The compound effect of these changes have resulted in an increase of Revenue from $347,555,459 in FY 2017 to $480,600,000 in FY 2021, an increase of approximately $132,500,000 over that span.
Person submitting Fiscal Note: W. Brian Nickerson, General Counsel
Email Address: bnickerson@wvlottery.com