FISCAL NOTE

Date Requested: March 09, 2017
Time Requested: 10:43 AM
Agency: Agriculture, WV Department of
CBD Number: Version: Bill Number: Resolution Number:
2125 Introduced SB183
CBD Subject: Agriculture


FUND(S):

Current Funds 0250, 3081, 3082, 3084, 3090, 3091, 8703

Sources of Revenue:

General Fund,Special Fund,Other Fund Federal

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


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


SB183 transfers all real and personal property of the Division of Forestry, resources in Fund 3081, and all Forestry employees, to the Department of Agriculture. The Department of Agriculture must have all other funds currently held by the Division of Forestry transferred effective July 1, 2017 as well (see 'Memorandum' section below). We believe that there are opportunities for efficiencies to be gained through realigning and consolidating activities currently performed by the Department of Commerce's Division of Forestry and the Department of Agriculture's Plant Industries Division. Consolidation of these activities will facilitate cross-utilization of staff expertise and resources across multiple programs, and eliminate any duplication of effort that currently exists between the functions.



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 6,160,000 6,160,000
Personal Services 0 4,500,000 4,500,000
Current Expenses 0 1,500,000 1,500,000
Repairs and Alterations 0 75,000 75,000
Assets 0 0 0
Other 0 85,000 85,000
2. Estimated Total Revenues 0 3,461,000 3,461,000


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


NOTE: THE FY 2018 AND FUTURE ESTIMATED REVENUES AND EXPENSES HAVE BEEN DEVELOPED WITH VERY LIMITED INFORMATION. THE AMOUNTS PRESENTED ABOVE REPRESENT OF THE TOTAL COST OF THE PROGRAM RATHER THAN INCREASES TO EXISTING FUNDING LEVELS FOR THE PROGRAM. While SB183 states that Fund 3081 will be transferred, all other Division of Forestry funds must also be transferred to the Department of Agriculture as well. The total amount of both General and Special Revenue funding currently available for operations is substantially insufficient and must continue to be supplemented with General Revenue appropriations to achieve a reasonable transition and give sufficient time to implement the changes necessary to evaluate and appropriately structure the function to achieve the greatest benefit for the State. Based on a review of Forestry revenue and expenditures from FY15 onward, the estimated annual operating cost is $6.1 million. When compared to anticipated revenue of $3.4 million (including federally-funded programs), there is an anticipated deficit of $2.7 million, which would require support via General Revenue. The current FY17 General Revenue appropriation is $2,507,738, so an increase would be required to ensure that operations are fully supported. Revenue is similarly difficult to estimate. Plans are being formulated to optimize the resources held by the Division of Forestry to closely align with and support economic growth in the industry. Some of the factors affecting expenses for the Department of Agriculture’s initial and subsequent years of responsibility for Forestry programs include the number, composition and current salary of Forestry staff during and after the transition (the number of full-time versus temporary positions, cost of fringe benefits, leave accruals of full-time employees [including Comp Time], and/or outstanding unemployment or workers' comp claims, for example), current and future utilization of facilities, and equipment. Included in the projected revenue amount is the Timber Severance Tax established under WV Code 11-13A-3b. Presently, WV Code has temporarily enacted this tax for the period of July 1, 2016, through July 1, 2019 (-3b(e)). This tax would need to be ongoing beyond 2019 in order to support Forestry operations at current levels. This projection does not include anticipated revenue and expenditures of the Outdoor Heritage Conservation Program's dedicated fund (3091), as that funding source is considered highly restricted and cannot be used to support general Forestry operations. Additionally, the above projection does not account for equipment replacement. Based on prior fiscal years' equipment expenditures, a portion of Forestry's vehicle fleet is new and would not require replacement for a period of time. Other existing equipment and equipment needs would have to be evaluated by the Department of Agriculture to determine if and when future capital outlays would occur.



Memorandum


Under the proposed language in SB183, WV Code 19-1-3b states that "...the Division of Forestry Fund (3081) shall be transferred to the Department of Agriculture." This language should be updated to read, "All Division of Forestry funds, including General Revenue appropriations, shall be transferred to the Department of Agriculture" to ensure that all resources currently available for program operations are transferred appropriately. Also, under this same section, lines 5-6 state, "All employees of the Division of Forestry shall be transferred to the Department of Agriculture, at their existing hourly rate or salary..." and should be updated to read "All positions of the Division of Forestry shall be transferred to the Department of Agriculture." Lastly, under 19-1A-5, the language on lines 5-6 states "The director shall be paid an annual salary as provided in section two-a, article seven, chapter six of this code: Provided, That the director's salary shall be paid solely from budget appropriations to the division." This language should be struck, as it references a section of the Code which is marked for removal.



    Person submitting Fiscal Note: Alan Clemans, on behalf of Sandra Gillispie, CFO
    Email Address: sgillispie@wvda.us