FISCAL NOTE
Date Requested: January 09, 2019
Time Requested: 05:37 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1033 |
Introduced |
SB59 |
|
|---|
| CBD Subject: |
Education (Higher), Taxation |
|---|
|
Date Requested: February 14, 2018
Time Requested: 01:58 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2629 |
Introduced |
SB537 |
|
|---|
| CBD Subject: |
Education (Higher), Taxation |
|---|
|
FUND(S):
General Revenue Fund, Business PROMISE+ Scholarship Fund
Sources of Revenue:
General Fund Business PROMISE+ Scholarship Fund
Legislation creates:
Decreases Existing Revenue, Increases Existing Expenses, Creates New Fund: Business PROMISE+ Scholarship Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to implement the Business PROMISE+ scholarship.
According to our interpretation, this bill would allow employers in the State to fund scholarships for certain PROMISE-eligible applicants. An eligible student may receive an award from either the PROMISE Scholarship program or the Business PROMISE+ Scholarship program, but not both, in any single academic term. A sponsored student would receive a Business PROMISE+ Scholarship in an amount of up to $15,000 annually, but not to exceed the amount donated by the eligible business. Any West Virginia business that donates $10,000 or more to the Business PROMISE+ Scholarship Fund would be eligible for a tax credit of 50 percent of the donation to offset Corporation Net Income Tax liabilities.
It is difficult to determine how many businesses may elect to make donations to the Business PROMISE+ Scholarship Fund and in what amounts those donations may be made. In addition, the proposed bill does not address whether tax credits earned may be carried forward to subsequent taxable periods. For some context, during the 2017 to 2018 academic year, more than 10,000 students received $47.2 million in PROMISE Scholarships. In total, the program has awarded more than $600 million in scholarships since its inception in 2002. Since 2010, eligible students have received the block award amount up to $4,750 or full tuition and fees, whichever is less.
Additional administrative costs incurred by the State Tax Department would be $15,000 in FY2021 and $10,000 per year in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2019
Increase/Decrease
(use"-") |
2020
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
10,000 |
| Personal Services |
0 |
0 |
10,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation, this bill would allow employers in the State to fund scholarships for certain PROMISE-eligible applicants. An eligible student may receive an award from either the PROMISE Scholarship program or the Business PROMISE+ Scholarship program, but not both, in any single academic term. A sponsored student would receive a Business PROMISE+ Scholarship in an amount of up to $15,000 annually, but not to exceed the amount donated by the eligible business. Any West Virginia business that donates $10,000 or more to the Business PROMISE+ Scholarship Fund would be eligible for a tax credit of 50 percent of the donation to offset Corporation Net Income Tax liabilities.
It is difficult to determine how many businesses may elect to make donations to the Business PROMISE+ Scholarship Fund and in what amounts those donations may be made. In addition, the proposed bill does not address whether tax credits earned may be carried forward to subsequent taxable periods. For some context, during the 2017 to 2018 academic year, more than 10,000 students received $47.2 million in PROMISE Scholarships. In total, the program has awarded more than $600 million in scholarships since its inception in 2002. Since 2010, eligible students have received the block award amount up to $4,750 or full tuition and fees, whichever is less.
Additional administrative costs incurred by the State Tax Department would be $15,000 in FY2021 and $10,000 per year in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to implement the Business PROMISE+ scholarship.
There are several concerns with the bill. First, the bill does not establish a maximum amount for which the tax credit can be claimed. It is silent as to credit carryover. The bill does not address what happens to tax credits claimed by businesses in situations where the scholarship recipients have failed to maintain the eligibility requirements for which the scholarship was granted, and the tax credit claimed. The bill does not limit the number of students a business may sponsor per $10,000 donation. Finally, the bill does not specify if the work experience provided to sponsored students by an eligible business is on a paid or unpaid basis.
The proposed legislation has no effective date for when the proposed tax credit first applies. According to the provisions of this bill, annually by July 1, the Tax Commissioner would provide to the Higher Education Policy Commission any data necessary to document recipients’ compliance with the requirement to work in West Virginia following graduation and shall implement a procedure for collecting repayment from recipients who are not in compliance and have not been granted a repayment waiver or deferral. To implement the annual report requirements by the Tax Department pertaining to this proposed credit as well as when this credit first applies, an internal effective date would be deemed necessary to satisfy the bill’s requirements.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov