FISCAL NOTE

Date Requested: February 24, 2017
Time Requested: 01:30 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2497 Introduced HB2709
CBD Subject: Municipalities


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 authorize the City of South Charleston to levy a special district excise tax for the benefit of the South Charleston Park Place Economic Opportunity Development District.
    
    According to our interpretation, the proposed bill would authorize the development of the South Charleston Park Place Economic Opportunity Development District, encompassing an area of approximately 3,100 acres. It is our understanding that subsequent to the introduction of this bill, the proposed size of the District was revised to encompass a smaller geography. Any future State sales tax receipts associated with commercial activities within the District in excess of current tax receipts would be diverted as Special District Excise Tax (SDET) to support development bonds issued on behalf of the District. In addition, any future regular-levy property tax receipts associated with the activities in the District in excess of current regular-levy property taxes would be diverted to support development bonds issued on behalf of the District. Retail trade activity in this geographic area of West Virginia is already fairly saturated, and the customer base will likely be largely unchanged, particularly in the near term. We would anticipate new retail trade to at least partially displace existing retail trade within the Kanawha Valley.
    
    The amount of General Revenue Fund losses that would result from the development of this SDET is not readily quantifiable and will be impacted by new businesses that may choose to locate within this District. We assume the bill would allow the City of South Charleston to retain all Business and Occupation (B&O) and local sales taxes in lieu of using its gains toward the tax increment financing. Therefore, the State General Revenue Fund would bear the fiscal burden of this legislation.
    
    Additional costs incurred by the State Tax Department would be $102,000 in FY2018 and $48,000 for each year 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 0 102,000 48,000
Personal Services 0 45,000 45,000
Current Expenses 0 3,000 3,000
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 54,000 0
2. Estimated Total Revenues 0 0 0


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


    According to our interpretation, the proposed bill would authorize the development of the South Charleston Park Place Economic Opportunity Development District, encompassing an area of approximately 3,100 acres. It is our understanding that subsequent to the introduction of this bill, the proposed size of the District was revised to encompass a smaller geography. Any future State sales tax receipts associated with commercial activities within the District in excess of current tax receipts would be diverted as Special District Excise Tax (SDET) to support development bonds issued on behalf of the District. In addition, any future regular-levy property tax receipts associated with the activities in the District in excess of current regular-levy property taxes would be diverted to support development bonds issued on behalf of the District. Retail trade activity in this geographic area of West Virginia is already fairly saturated, and the customer base will likely be largely unchanged, particularly in the near term. We would anticipate new retail trade to at least partially displace existing retail trade within the Kanawha Valley.
    
    The amount of General Revenue Fund losses that would result from the development of this SDET is not readily quantifiable and will be impacted by new businesses that may choose to locate within this District. We assume the bill would allow the City of South Charleston to retain all Business and Occupation (B&O) and local sales taxes in lieu of using its gains toward the tax increment financing. Therefore, the State General Revenue Fund would bear the fiscal burden of this legislation.
    
    Additional costs incurred by the State Tax Department would be $102,000 in FY2018 and $48,000 for each year thereafter.
    



Memorandum


    



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