FISCAL NOTE

Date Requested: February 08, 2017
Time Requested: 05:56 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1514 Introduced HB2182
CBD Subject: 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 continue providing a personal income tax adjustment to the gross income of certain retirees receiving pensions from defined pension plans that terminated and are being paid a reduced maximum benefit guarantee.
    
    Retirees receiving pensions from defined pension plans that terminated and are being paid a reduced maximum benefit guarantee from the federal Pension Benefit Guaranty Corporation (PBGC) received a personal income tax adjustment equal to the amount of pension income not received through Tax Year 2014. This bill would reinstate the allowance of that decreasing modification beginning in TY2017 and terminating after the end of Tax Year 2019. Passage of the proposed legislation would result in a potential loss from Tax Year 2017 returns of approximately $400,000 occurring in FY2018. Approximately $400,000 in annual revenue losses are expected for the remaining years until termination.
    
    Additional administrative costs to the State Tax Department would be $14,000 in FY2018 and $5,000 in subsequent years. No additional administrative costs are expected for the remainder of FY2017.
    



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 14,000 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 0 9,000 0
2. Estimated Total Revenues 0 -400,000 -400,000


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


    The stated purpose of this bill is to continue providing a personal income tax adjustment to the gross income of certain retirees receiving pensions from defined pension plans that terminated and are being paid a reduced maximum benefit guarantee.
    
    Retirees receiving pensions from defined pension plans that terminated and are being paid a reduced maximum benefit guarantee from the federal Pension Benefit Guaranty Corporation (PBGC) received a personal income tax adjustment equal to the amount of pension income not received through Tax Year 2014. This bill would reinstate the allowance of that decreasing modification beginning in TY2017 and terminating after the end of Tax Year 2019. Passage of the proposed legislation would result in a potential loss from Tax Year 2017 returns of approximately $400,000 occurring in FY2018. Approximately $400,000 in annual revenue losses are expected for the remaining years until termination.
    
    Additional administrative costs to the State Tax Department would be $14,000 in FY2018 and $5,000 in subsequent years. No additional administrative costs are expected for the remainder of FY2017.
    



Memorandum


    The stated purpose of this bill is to continue providing a personal income tax adjustment to the gross income of certain retirees receiving pensions from defined pension plans that terminated and are being paid a reduced maximum benefit guarantee.
    
    The title of the proposed bill fails to state that there is an internal effective date or that the bill contains a provision terminating the modification after December 31, 2019. The title also states this is an “adjustment to gross income” rather than a modification reducing federal adjusted gross income.
    
    The use of the word “continue” in the bill’s stated purpose (i.e., “continue providing a personal income tax adjustment…”) is not entirely accurate due to the termination or non-availability of the modification for Tax Years 2015 and 2016. The term “reinstate” may be preferred. However, this is not fatal to the bill.
    
    The proposed bill contains a typographical error by incorrectly stating that this modification was terminated for Tax Years on or after January 1, 2012. West Virginia Code §11-12-12d states this modification was terminated for Tax Years on or after January 1, 2015. Such an error could cause confusion and misinterpretation of the intent of the proposed bill.
    
    



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