FISCAL NOTE
Date Requested: February 13, 2023
Time Requested: 01:21 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3762 |
Introduced |
HB3431 |
|
|---|
| CBD Subject: |
Actions, Suits and Liens |
|---|
|
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 eliminate the requirement that the apprenticeship training tax credit based be limited to wages paid to apprentices in the construction trades for tax years beginning on and after January 1, 2024.
According to our interpretation, this bill would modify the current West Virginia Apprenticeship Training Tax Credit by expanding the credit beyond wages paid to apprentices in the construction trades and allowing any apprentice in the State to qualify. The amount of credit per apprentice would still be a maximum of $2,000 and the tax credit would be calculated by multiplying $2 per hour by the total number of hours worked during the tax year by an apprentice working for the participating taxpayer. Effective for tax years on or after January 1, 2024, for the employer to qualify for the proposed modified credit, the apprentice would need to be registered with the U.S Department of Labor, Office of Apprenticeship, and West Virginia State Office in the tax year that the apprentice and employer who participate in a qualified apprenticeship training program.
According to the U.S. Department of Labor’s Office of Apprenticeship, between FY2013 and FY2022, the number of active apprentices in West Virginia nearly doubled from 2,604 to 5,423, an increase of 108 percent. In FY2021 among the top five apprentices nationally, there were 71,812 active apprentices who were electricians, 29,800 carpenters, 21,971 plumbers, 17,595 sprinkler fitters, and 15,009 construction craft laborers. This modified tax credit would generate a greater loss to the General Revenue Fund compared to the existing Apprenticeship Training Credit, which costs roughly $300,000 per year. We cannot readily quantify the number of additional apprentices who would qualify for the modified credit and cannot determine the loss to the General Revenue Fund in FY2024 and subsequent fiscal years. However, based on available information, most tax credit claims will likely continue to be related to the construction industry.
Additional administrative costs incurred by the State Tax Department would be $27,500 in FY2024 and $22,500 per year in subsequent fiscal years.
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 |
27,500 |
22,500 |
| Personal Services |
0 |
22,500 |
22,500 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
5,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation, this bill would modify the current West Virginia Apprenticeship Training Tax Credit by expanding the credit beyond wages paid to apprentices in the construction trades and allowing any apprentice in the State to qualify. The amount of credit per apprentice would still be a maximum of $2,000 and the tax credit would be calculated by multiplying $2 per hour by the total number of hours worked during the tax year by an apprentice working for the participating taxpayer. Effective for tax years on or after January 1, 2024, for the employer to qualify for the proposed modified credit, the apprentice would need to be registered with the U.S Department of Labor, Office of Apprenticeship, and West Virginia State Office in the tax year that the apprentice and employer who participate in a qualified apprenticeship training program.
According to the U.S. Department of Labor’s Office of Apprenticeship, between FY2013 and FY2022, the number of active apprentices in West Virginia nearly doubled from 2,604 to 5,423, an increase of 108 percent. In FY2021 among the top five apprentices nationally, there were 71,812 active apprentices who were electricians, 29,800 carpenters, 21,971 plumbers, 17,595 sprinkler fitters, and 15,009 construction craft laborers. This modified tax credit would generate a greater loss to the General Revenue Fund compared to the existing Apprenticeship Training Credit, which costs roughly $300,000 per year. We cannot readily quantify the number of additional apprentices who would qualify for the modified credit and cannot determine the loss to the General Revenue Fund in FY2024 and subsequent fiscal years. However, based on available information, most tax credit claims will likely continue to be related to the construction industry.
Additional administrative costs incurred by the State Tax Department would be $27,500 in FY2024 and $22,500 per year in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to eliminate the requirement that the apprenticeship training tax credit based be limited to wages paid to apprentices in the construction trades for tax years beginning on and after January 1, 2024.
There is some confusion in how this bill proposes to expand the existing Apprenticeship Training Tax Credit without deleting the limiting reference to apprentices employed in the construction trades in W.Va. Code §11-13W-1(a)(1). It might be easier to provide some reference in this bill to trades in addition to the construction industry, i.e., carpentry, plumbing, etc.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov