FISCAL NOTE

Date Requested: January 14, 2016
Time Requested: 12:45 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
1190 Introduced SB125
CBD Subject: Tax


FUND(S):

General Revenue Fund

Sources of Revenue:

General 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 increase the cigarette tax incrementally by a total of $1 per pack in order to fund substance abuse and workforce development initiatives. The bill sets forth timing of increases. The bill details how the newly generated funds are to be distributed. Based on current cigarette tax revenue and the effective dates of the increases, an increase in the cigarette tax rate to $1.05 will increase revenue by up to $71.5 million in FY2017, an increase to $1.30 will increase revenue by up to $95.0 million in FY2018, and an increase to $1.55 will increase revenue by up to $115.3 million in each year thereafter. The bill dedicates portions of the revenue increases to “workforce development initiatives” and “substance abuse programs.” The bill incrementally increases these dedications of revenue. The revenue dedication is $10.0 million in FY2017, $15.0 million in FY2018, and $20.0 million in FY2019 and thereafter each for substance abuse programs and workforce development. This leaves $51.5 million in FY2017, $65.0 million in FY2018, and $75.3 million in FY2019 and thereafter in unallocated General Revenue Fund revenue. The provisions of the this bill that provide for the first $20 million (FY2017), $30 million (FY2018) and $40 million (FY2019) of tax collections to be dedicated to specific programs might result in a negative impact on cash flow for other General Revenue Fund programs at the beginning of each fiscal year. Administrative costs to the Tax Department will be $23,000 in the current fiscal year, $30,000 in FY2017, and $30,000 in each year 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 23,000 30,000 30,000
Personal Services 0 10,000 10,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 23,000 20,000 20,000
2. Estimated Total Revenues 0 71,500,000 115,300,000


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


Based on current cigarette tax revenue and the effective dates of the increases, an increase in the cigarette tax rate to $1.05 will increase revenue by up to $71.5 million in FY2017, an increase to $1.30 will increase revenue by up to $95.0 million in FY2018, and an increase to $1.55 will increase revenue by up to $115.3 million in each year thereafter. The bill dedicates portions of the revenue increases to “workforce development initiatives” and “substance abuse programs.” The bill incrementally increases these dedications of revenue. The revenue dedication is $10.0 million in FY2017, $15.0 million in FY2018, and $20.0 million in FY2019 and thereafter each for substance abuse programs and workforce development. This leaves $51.5 million in FY2017, $$65.0 million in FY2018, and $75.3 million in FY2019 and thereafter in unallocated General Revenue Fund revenue. The provisions of the this bill that provide for the first $20 million (FY2017), $30 million (FY2018) and $40 million (FY2019) of tax collections to be dedicated to specific programs might result in a negative impact on cash flow for other General Revenue Fund programs at the beginning of each fiscal year. Administrative costs to the Tax Department will be $23,000 in the current fiscal year, $30,000 in FY2017, and $30,000 in each year thereafter.



Memorandum


The stated purpose of this bill is to increase the cigarette tax incrementally by a total of $1 per pack in order to fund substance abuse and workforce development initiatives. The bill sets forth timing of increases. The bill details how the newly generated funds are to be distributed. The terms “substance abuse programs” and “workforce development initiatives” are not well defined. This could prove problematic.



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