FISCAL NOTE

Date Requested: February 04, 2019
Time Requested: 12:59 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1768 Introduced HB2829
CBD Subject:


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Decreases Existing Revenue, Increases Existing Expenses



Fiscal Note Summary


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


The stated purpose of this bill is to provide new graduates of an in-state or out-of-state higher educational institution, an in-state community or technical college, or an in-state trade school, a $1,000 tax credit on the income tax of the graduate for five taxable years; providing rule-making authority to the Tax Commissioner; and removing expired language from this section. According to our interpretation, the proposed bill would allow a tax credit of $1,000 for college graduates who complete a two-year, four-year, or post-graduate degree program. Qualifying students may receive up to three credits for completing qualifying degree programs, for a lifetime potential credit cap of $1,000, and may carryover unused credit for up to 5 years. The credit is nonrefundable and nontransferable. Based on our understanding, the proposed bill would result in a loss to General Revenues of roughly $9.1 million FY2021. The revenue loss would increase each year due to the addition of more graduates claiming the credit until it levels off at $45.5 million for the fifth year and beyond. Due to the lack of internal effective date, the provisions of this bill would first become effective as of the 2020 tax year. Additional administrative costs incurred by the State Tax Department would be $106,000 in FY2020 and $77,000 per year for each year thereafter.  



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 14,700 0 0
Personal Services 9,400 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 5,300 0 0
2. Estimated Total Revenues 0 -1,100,000 -1,200,000


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


According to our interpretation, the proposed bill would allow a tax credit of $1,000 for college graduates who complete a two-year, four-year, or post-graduate degree program. Qualifying students may receive up to three credits for completing qualifying degree programs, for a lifetime potential credit cap of $1,000, and may carryover unused credit for up to 5 years. The credit is nonrefundable and nontransferable. Based on our understanding, the proposed bill would result in a loss to General Revenues of roughly $9.1 million FY2021. The revenue loss would increase each year due to the addition of more graduates claiming the credit until it levels off at $45.5 million for the fifth year and beyond. Due to the lack of internal effective date, the provisions of this bill would first become effective as of the 2020 tax year. Additional administrative costs incurred by the State Tax Department would be $106,000 in FY2020 and $77,000 per year for each year thereafter.



Memorandum






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