FISCAL NOTE
Date Requested: March 04, 2024
Time Requested: 08:51 AM |
| Agency: |
Tax & Revenue Department, WV State |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1035 |
Comm. Sub. |
HB4722 |
|
|---|
| CBD Subject: |
Taxation |
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|
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 purpose of this bill is to create a credit against the severance tax to encourage private companies to make infrastructure improvements to highways, roads, and bridges in the state. The bill limits the total amount of road and highway infrastructure improvement credits, which can be verified by the Secretary of Transportation.
The provisions of this bill would create a 50% tax credit for qualified expenses of a surface mine associated with the development of a certified road or highway infrastructure improvement project up to a total limit of $50,000 based on a maximum certification of no more than $100,000 in eligible expenses. The resulting tax credit may be used to offset up to 20% of the Taxpayer’s coal severance tax liability with excess tax credits carried over for up to nine additional years. The tax credit for highway improvement projects would require pre-certification from the Secretary of Transportation with a limit of no more than $100,000 in total expenditures eligible for the tax credit. The proposed tax credit is first effective for tax years beginning on or after January 1, 2024. Based on the assumption that the overall expenditure limitation on all projects is $100,000 per year, passage of this bill would result in an annual revenue loss to the State General Revenue Fund of between $0 and $50,000 based on the amount of qualified expenses certified by the Secretary of Transportation for an eligible highway infrastructure improvement project. The loss to the General Revenue Fund, if any, would be offset by some benefit to the State Road Fund associated with this type of outside funding of an eligible highway infrastructure improvement project.
Additional administrative costs incurred by the State Tax Department would be $15,000 in FY2024 and $5,000 per year in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2024
Increase/Decrease
(use"-") |
2025
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
15,000 |
5,000 |
5,000 |
| Personal Services |
0 |
5,000 |
5,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
15,000 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
The provisions of this bill would create a 50% tax credit for qualified expenses of a surface mine associated with the development of a certified road or highway infrastructure improvement project up to a total limit of $50,000 based on a maximum certification of no more than $100,000 in eligible expenses. The resulting tax credit may be used to offset up to 20% of the Taxpayer’s coal severance tax liability with excess tax credits carried over for up to nine additional years. The tax credit for highway improvement projects would require pre-certification from the Secretary of Transportation with a limit of no more than $100,000 in total expenditures eligible for the tax credit. The proposed tax credit is first effective for tax years beginning on or after January 1, 2024. Based on the assumption that the overall expenditure limitation on all projects is $100,000 per year, passage of this bill would result in an annual revenue loss to the State General Revenue Fund of between $0 and $50,000 based on the amount of qualified expenses certified by the Secretary of Transportation for an eligible highway infrastructure improvement project. The loss to the General Revenue Fund, if any, would be offset by some benefit to the State Road Fund associated with this type of outside funding of an eligible highway infrastructure improvement project.
Additional administrative costs incurred by the State Tax Department would be $15,000 in FY2024 and $5,000 per year in subsequent fiscal years.
Memorandum
The purpose of this bill is to create a credit against the severance tax to encourage private companies to make infrastructure improvements to highways, roads, and bridges in the state. The bill limits the total amount of road and highway infrastructure improvement credits, which can be verified by the Secretary of Transportation.
The Secretary of Transportation is authorized to certify a maximum of $100,000 for road or highway infrastructure improvements as being eligible for the proposed tax credit. It is unclear whether this $100,000 limit applies for each year the credit is available or for the entirety of the life of the proposed credit. Further, it is uncertain whether this proposed credit applies to any single project or all projects statewide. It is unclear whether the Transportation Secretary is to award credits on a first-come, first-served basis or pick and choose the projects he or she considers to be the best.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov