FISCAL NOTE
Date Requested: February 14, 2022
Time Requested: 01:19 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1417 |
Amendment |
HB4080 |
|
|---|
| CBD Subject: |
Economic Development |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue, 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 create the West Virginia Technical Assistance Program. The bill provides for certain legislative findings relating to the necessity of the program and explaining its inception. The bill creates a position of executive director for the West Virginia Technical Apprenticeship Program and establishes the duties of the executive director in carrying out the program. The bill provides for definitions related to the program as a whole. The bill creates the West Virginia Technical Apprenticeship Program. The bill provides for students to obtain high school and college credit for participation in the program. The bill provides a tax credit for companies who participate in the program and specifies that students may obtain an interview. The bill creates an internship opportunity for students who participate in the program and defines terms of such an internship. Finally, the bill and defining terms of the program as a whole and for any internship.
According to our interpretation, this bill would create an executive board of the West Virginia Technical Apprenticeship Program made up of the State Superintendent of Schools, the Chancellor of the West Virginia Council for Community and Technical College Education, and the Secretary of the West Virginia Department of Economic Development or his or her designee. Companies that participate in the proposed program are required to provide a student who has successfully completed the program with an interview, but not a job. A company who hires a student after their successful completion of the West Virginia Technical Apprenticeship Program would be eligible for a 6-month payroll tax credit for each participating student they hire. We cannot determine the revenue loss from this provision because the bill does not define payroll tax credit.
This bill also allows a second tax credit in the form of a tax write off for companies who donate new or used equipment to vocational and technical centers for use in the proposed Technical Apprenticeship program. The proposed credits in the bill are not clearly defined and we do not know which taxes would be exempted in the proposed donation credit. Therefore, we would be unable to determine the fiscal impact of this credit.
Additional administrative costs incurred by the State Tax Department would be $20,000 in FY2022.
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 |
20,000 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
20,000 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation, this bill would create an executive board of the West Virginia Technical Apprenticeship Program made up of the State Superintendent of Schools, the Chancellor of the West Virginia Council for Community and Technical College Education, and the Secretary of the West Virginia Department of Economic Development or his or her designee. Companies that participate in the proposed program are required to provide a student who has successfully completed the program with an interview, but not a job. A company who hires a student after their successful completion of the West Virginia Technical Apprenticeship Program would be eligible for a 6-month payroll tax credit for each participating student they hire. We cannot determine the revenue loss from this provision because the bill does not define payroll tax credit.
This bill also allows a second tax credit in the form of a tax write off for companies who donate new or used equipment to vocational and technical centers for use in the proposed Technical Apprenticeship program. The proposed credits in the bill are not clearly defined and we do not know which taxes would be exempted in the proposed donation credit. Therefore, we would be unable to determine the fiscal impact of this credit.
Additional administrative costs incurred by the State Tax Department would be $20,000 in FY2022.
Memorandum
The stated purpose of this bill is to create the West Virginia Technical Assistance Program. The bill provides for certain legislative findings relating to the necessity of the program and explaining its inception. The bill creates a position of executive director for the West Virginia Technical Apprenticeship Program and establishes the duties of the executive director in carrying out the program. The bill provides for definitions related to the program as a whole. The bill creates the West Virginia Technical Apprenticeship Program. The bill provides for students to obtain high school and college credit for participation in the program. The bill provides a tax credit for companies who participate in the program and specifies that students may obtain an interview. The bill creates an internship opportunity for students who participate in the program and defines terms of such an internship. Finally, the bill and defining terms of the program as a whole and for any internship.
It is unclear what the bill means by a “6-month payroll credit”. If a payroll tax is the same as the employer withholding obligations pursuant to W.Va. Code §11-21-71, then this provision would be problematic as the amount withheld is the employee’s money, not the employer’s; therefore, the employer would still be required to remit this tax. If the “payroll tax” is meant to refer to such employer payroll contributions as the Federal Insurance Contributions Act (FICA) or the Federal Unemployment Tax Act (FUTA), then the state cannot empower a private company to simply disregard their federal obligations. If a payroll tax credit is meant to provide a state tax credit in the amount of a company’s federal payroll tax obligations, that that needs clarification. If a payroll tax credit means a credit in the amount of payroll, then this bill needs to identify whether the payroll is attributable to the hired student or the entire workforce, the calculation procedure for the credit, and the meaning of the 6-month qualifier. The lack of clarity makes this proposed credit difficult to administer.
It is also not clear how the proposed tax credit is applied for and who applies for it. It is vaguely implied that the executive board of the West Virginia Technical Apprenticeship Program informs the Tax Commissioner who is eligible. It is also not clear whether equipment obtained through ARC grants is eligible for tax credits. There is no dollar limitation on this proposed credit, nor a description of how the credit is calculated. It is not known whether this credit is refundable. There are no definitions or parameters, such as whether temporary or parttime employment would be considered when qualifying for this proposed credit. It is not certain which taxes this credit offsets. Further, this bill does not identify what is an “appropriate tax write-off”.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov