FISCAL NOTE
Date Requested: January 22, 2019
Time Requested: 01:11 PM |
| Agency: |
Alcohol Beverage Control Administration |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2500 |
Introduced |
HB2603 |
|
|---|
| CBD Subject: |
Alcoholic Liquors and Beers |
|---|
|
FUND(S):
General
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
Summarize in a clear and concise manner what impact this measure will have on costs and revenues of state government.
This issue arose previously as an addendum letter issued in February 2017 to a Legislative Auditor Post Audit report which stated, among other things, that, at the time, the Legislative Auditor felt that the WVABCA operating fund (as detailed in the letter - excluding bailment inventory) had excess funds.
As drafted, HB 2603 would hamper the WVABCA’s ability to sell and pay for liquor and negatively impact revenue to the State.
1. From the 2017 Legislative Audit, the $8M limit that is listed in HB 2603 was the WVABCA operating budget in 2017, but now (2019-2020) the WVABCA’s budget is closer to $9M plus possible in operating budget increases with the possible pay raise at $9.4M.
Therefore the $8m limit in the bill is not even accurate number for 2019/2020 based on the WVABCA’s operating budget and further future budgets may need to account for pay raise, pension or OPEB expenses. The strict limit does not account for changing budgets.
2. It is important to note, the WVABCA was not in violation of the W. Va. Code §60-3-17 in 2017 (and the code section as currently written) since the WVABCA operating fund was below $20 million.
3. The 2017 report does not account for the fact that monies in the operating fund are not just the monies for WVABCA’s operating budget, but are monies owed and payable to distillers and mini-distillers for liquor purchased by retail liquor stores. There is money in the WVABCA operating fund that is not the state’s money so it cannot be arbitrarily transferred to General Revenue.
Generally, the state receives payments from retail liquor stores for liquor product, the State takes its share (32%) and twice a month transfers the amount owed as liquor payments to distillers and mini-distillers. Additionally, the WVABCA, at the direction of the Budget office, has scheduled monthly General Revenue transfers.
The WVABCA needs to have residual funds in the operating fund to pay distillers and mini-distillers on a rolling basis and across fiscal years. I believe the Lottery, and perhaps other Revenue agencies, retain certain funds month to month and fiscal year to fiscal year.
The WVABCA performs a government/regulatory function but also has a business function and needs the flexibility in the operating fund to perform these functions.
4. On any given month there are timing issues of when WVABCA staff enters payments into wvOasis and when the State Auditor’s staff actually approves or processes payments in wvOasis, so the operating fund can appear to be overstated month to month depending on when transactions are entered into wvOasis and processed through wvOasis at the State Auditor’s office.
5. Again, in any given fiscal year, the WVABCA has scheduled General Revenue monthly transfers to (scheduled by the Budget office) that allows the WVABCA the flexibility to sell and pay for liquor on day to day and month to month basis (even crossing fiscal years). At the end of the fiscal year, the WVABCA works with Budget and transfers any excess amount above what is needed for operating the WVABCA, and also for operating the warehouse for liquor sales and payments.
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 |
0 |
| Personal Services |
0 |
0 |
0 |
| 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):
Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years.
While its difficult to quantify lost sales at any one point in time, $8 million would clearly be an insufficient amount for the WVABCA to operate and pay its distillers and mini-distillers at current purchases, sales and volume.
There would be a negative impact on state revenues.
Memorandum
Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form.
As noted above, HB 2603 as written does not work with an $8 million limit on the WVABCA’s operating fund.
HB 2603 would have a negative impact on the state’s revenue.
The WVABCA must have the flexibility to pay its bills, staff and distillers and mini-distillers who are owed monies from the purchase of their liquor products by retail liquor stores.
A possible suggestion would be to leave the $20 million value for the operational fund to operate and delete the code section language regarding the inventory stock.
Person submitting Fiscal Note: Anoop Bhasin on behalf of the WVABCA
Email Address: Anoop.k.Bhasin@wv.gov