FISCAL NOTE

Date Requested: January 20, 2016
Time Requested: 03:49 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
2238 Introduced HB2852
CBD Subject:


FUND(S):

General Revenue Fund, State Road Fund, Veterans' Facilities Support Fund

Sources of Revenue:

General Fund,Special Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    The stated purpose of this bill is to legalize and regulate the selling of fireworks; to allocate sales tax proceeds to special funds; and to modify criminal penalties.
    
    Based on our interpretation, the proposed bill creates three sources of revenue: a public fireworks display permit fee; consumer fireworks certificate fee collected from retailers; and sales taxes on sales of fireworks. The public fireworks display permit fee would raise an estimated $12,000 per year in revenue for the first full year of implementation. The consumer fireworks certificate fee would raise an estimated $32,000 per year for the first full year of implementation. Revenue generated from State sales tax collections on the sale of fireworks is estimated to be $900,000 for the first full year of implementation. Collectively, total revenue is estimated to be $944,000 for the first full year of implementation.
    
    The proposed bill would distribute 2 percent of sales tax collections to both the State Road Fund and the Veterans’ Facilities Support Fund. The amount of this transfer would be approximately $18,000 to each fund annually. The remaining balance to be deposited into the General Revenue Fund from sales of fireworks in the State would be approximately $864,000 per year.
    
    Administrative costs to the State Tax Department will be $8,270 for the remainder of FY 2016, $50,290 for FY 2017 and $46,300 thereafter.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2016
Increase/Decrease
(use"-")
2017
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 8,270 50,290 46,300
Personal Services 0 46,300 46,300
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 8,270 3,990 0
2. Estimated Total Revenues 0 944,000 944,000


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


    Based on our interpretation, the proposed bill creates three sources of revenue: a public fireworks display permit fee; consumer fireworks certificate fee collected from retailers; and sales taxes on sales of fireworks. The public fireworks display permit fee would raise an estimated $12,000 per year in revenue for the first full year of implementation. The consumer fireworks certificate fee would raise an estimated $32,000 per year for the first full year of implementation. Revenue generated from State sales tax collections on the sale of fireworks is estimated to be $900,000 for the first full year of implementation. Collectively, total revenue is estimated to be $944,000 for the first full year of implementation.
    
    The proposed bill would distribute 2 percent of sales tax collections to both the State Road Fund and the Veterans’ Facilities Support Fund. The amount of this transfer would be approximately $18,000 to each fund annually. The remaining balance to be deposited into the General Revenue Fund from sales of fireworks in the State would be approximately $864,000 per year.
    
    Given that there is no internal effective date for the tax changes proposed by this bill and considering the seasonality of fireworks and similar commodities, partial-year revenues if implemented at a time other than July 1 may vary.
    
    Administrative costs to the State Tax Department will be $8,270 for the remainder of FY 2016, $50,290 for FY 2017 and $46,300 thereafter.
    



Memorandum


    The stated purpose of this bill is to legalize and regulate the selling of fireworks; to allocate sales tax proceeds to special funds; and to modify criminal penalties.
    
    Conflicts of law occur with respect to the allocation of sales tax proceeds and funding of the Veterans’ Facilities Support Fund. With respect to the former, West Virginia Code §11-15-30(a) specifies where sales tax collections may be deposited if not in the General Revenue Fund; neither the State Road Fund nor Veterans’ Facilities Support Fund are specified. With respect to the latter, sales tax proceeds are not listed among the funding sources of the Veterans’ Facilities Support Fund.
    
    There are inconsistent code citations. For example, on Page 7, Lines 5 and 7, notation varies from “chapter seventeen, article three of this code” to “article one, chapter nine-a of this code.”
    
    



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