FISCAL NOTE

Date Requested: February 10, 2017
Time Requested: 01:04 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1489 Introduced HB2093
CBD Subject: Education (K12), Taxation


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 exempt personal income earned by individuals working as teachers at primary and secondary schools from personal income tax.
    
    The bill, as written, would exempt income earned by an individual from working as a teacher at a primary or secondary school in West Virginia. If the bill is interpreted to only include pay received by teachers for their employment by county boards of education or a private school, passage of this bill would result in a loss of revenue to the State General Revenue Fund of at least $36.8 million per year beginning in FY2019. If the bill is interpreted to include all income received by teachers, the impact would be greater. There could be some revenue decrease in FY2018 due to changes in withholding payments.
    
    Additional administrative costs to the State Tax Department would be $42,000 a year in FY2019 and thereafter.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2017
Increase/Decrease
(use"-")
2018
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 42,000
Personal Services 0 0 32,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 1,000
Other 0 0 9,000
2. Estimated Total Revenues 0 0 -36,800,000


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


    The bill, as written, would exempt income earned by an individual from working as a teacher at a primary or secondary school in West Virginia. If the bill is interpreted to only include pay received by teachers for their employment by county boards of education or a private school, passage of this bill would result in a loss of revenue to the State General Revenue Fund of at least $36.8 million per year beginning in FY2019. If the bill is interpreted to include all income received by teachers, the impact would be greater. There could be some revenue decrease in FY2018 due to changes in withholding payments.
    
    Additional administrative costs to the State Tax Department would be $42,000 a year in FY2019 and thereafter.
    



Memorandum


    The stated purpose of this bill is to exempt personal income earned by individuals working as teachers at primary and secondary schools from personal income tax.
    
    The bill does not make it clear that income has to be earned from work as a teacher. It could be argued that all income of a teacher at a primary or secondary school would be exempt.
    
    The bill does not define teacher or primary and secondary school. It is unclear whether teacher’s aides, coaches, speech therapists or individuals working in similar positions at a primary or secondary school would be entitled to the modification. It is also unclear whether teachers providing services to homebound students would be entitled to the modification because they work inside the student’s home rather than at the primary or secondary school.
    
    The modification is limited to teachers that work in primary and secondary school in West Virginia. A West Virginia resident who works as a teacher in a primary or secondary school in another state would not be eligible for this modification.
    
    
    



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