FISCAL NOTE

Date Requested: January 20, 2023
Time Requested: 11:11 AM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2602 Introduced HB2822
CBD Subject: Roads and Transportation


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 return to the Division of Highways the sales tax collected from contractors for materials used in Highways construction and maintenance projects. As long as the contractors sales tax is going to the general revenue, DOH is paying sales tax to the state. No other agency of state government pays state sales tax. According to our interpretation, this bill would reinstate an annual revenue transfer from the General Revenue Fund to the State Road Fund equal to a calculation of 40 percent of total gross funds expended by the Division of Highways during the fiscal period for acquisition of materials used by contractors for construction and maintenance of highway projects. The Division of Highways is to provide an itemized listing of projects and funds expended on those projects to the Tax Commissioner by June 15th of each fiscal year. The amendments would be effective beginning January 1, 2023 and apply to “former sales made on and after that date.” Even though the proposed provisions are located among various sales tax exemptions, the proposed change does not create an additional sales tax exemption. Based on estimates received from the West Virginia Division of Highways, the proposed legislation would decrease General Revenue Fund collections by roughly $9.7 million in FY2023, $23.8 million in FY2024, and $24.2 million in FY2025. The legislation appears to indicate that the amendments would only apply to sales made on and after January 1, 2023. If it is determined that the amendment would apply to all sales made during FY2023, then the impact for FY2023 would double. It is anticipated that future transfers would vary considerably from year to year. There would be no additional administrative costs.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2023
Increase/Decrease
(use"-")
2024
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 -9,700,000 -23,800,000 -24,200,000


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


According to our interpretation, this bill would reinstate an annual revenue transfer from the General Revenue Fund to the State Road Fund equal to a calculation of 40 percent of total gross funds expended by the Division of Highways during the fiscal period for acquisition of materials used by contractors for construction and maintenance of highway projects. The Division of Highways is to provide an itemized listing of projects and funds expended on those projects to the Tax Commissioner by June 15th of each fiscal year. The amendments would be effective beginning January 1, 2023 and apply to “former sales made on and after that date.” Even though the proposed provisions are located among various sales tax exemptions, the proposed change does not create an additional sales tax exemption. Based on estimates received from the West Virginia Division of Highways, the proposed legislation would decrease General Revenue Fund collections by roughly $9.7 million in FY2023, $23.8 million in FY2024, and $24.2 million in FY2025. The legislation appears to indicate that the amendments would only apply to sales made on and after January 1, 2023. If it is determined that the amendment would apply to all sales made during FY2023, then the impact for FY2023 would double. It is anticipated that future transfers would vary considerably from year to year. There would be no additional administrative costs.



Memorandum






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