FISCAL NOTE

Date Requested: January 10, 2020
Time Requested: 03:54 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1725 Introduced HB4019
CBD Subject: Taxation


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

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 create the Downstream Natural Gas Manufacturing Investment Tax Credit Act of 2020. The amount of credit allowable depends upon the cost of the qualified investment property and the number of new jobs created. The allowable credit is taken over a 10-year period at the rate of one-tenth per year. Unused credit may be carried forward for another 10 years. Property that qualifies for another tax credit in chapter 11 of the West Virginia Code is not eligible for credit under this bill. Similarly, qualified investment property under this bill is not eligible for another credit under chapter 11 of the Code. The bill includes rules for administration and enforcement of the credit. If enacted, the credit would apply to qualified investment property placed in service or use at a downstream natural gas manufacturing facility in this state.
    
    According to our interpretation of this bill, an eligible taxpayer for this credit would be any person subject to the Personal Income Tax or Corporation Net Income Tax who makes a qualified investment in a new or expanded downstream natural gas manufacturing facility located in West Virginia and creates at least five new jobs in the State. Downstream natural gas manufacturing refers to oil and gas manufacturing operations after the production and processing phases and includes, but is not limited to, facilities that use oil, natural gas liquids, or the products produced by ethane crackers as raw materials to manufacture industrial and commercial products. When the qualified investment is at least $20 million or more, the new employees are paid a prevailing wage, and 50 or more new employees are hired, then the new jobs percentage would be 5% higher than the regular applicable new jobs percentage. This proposed credit cannot be taken in conjunction with another tax credit based on the same investment property. This bill requires a Tax Credit Review and Accountability Report related to this proposed credit to be submitted by the Tax Commissioner every three years to the Governor, President of the Senate, and the Speaker of the House of Delegates Currently any business in West Virginia that engages in downstream natural gas manufacturing would qualify for the Economic Opportunity Tax Credit. Passage of this bill would result in no revenue loss to the General Revenue Fund in FY2021 and in fiscal years thereafter.
    
    Additional administrative costs incurred by the State Tax Department would be $35,000 in FY2021 and $10,000 in subsequent fiscal years.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2020
Increase/Decrease
(use"-")
2021
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 35,000 10,000
Personal Services 0 10,000 10,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 25,000 0
2. Estimated Total Revenues 0 0 0


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


    According to our interpretation of this bill, an eligible taxpayer for this credit would be any person subject to the Personal Income Tax or Corporation Net Income Tax who makes a qualified investment in a new or expanded downstream natural gas manufacturing facility located in West Virginia and creates at least five new jobs in the State. Downstream natural gas manufacturing refers to oil and gas manufacturing operations after the production and processing phases and includes, but is not limited to, facilities that use oil, natural gas liquids, or the products produced by ethane crackers as raw materials to manufacture industrial and commercial products. When the
    qualified investment is at least $20 million or more, the new employees are paid a prevailing wage, and 50 or more new employees are hired, then the new jobs percentage would be 5% higher than the regular applicable new jobs percentage. This proposed credit cannot be taken in conjunction with another tax credit based on the same investment property. This bill requires a Tax Credit Review and Accountability Report related to this proposed credit to be submitted by the Tax Commissioner every three years to the Governor, President of the Senate, and the Speaker of the House of Delegates Currently any business in West Virginia that engages in downstream natural gas manufacturing would qualify for the Economic Opportunity Tax Credit. Passage of this bill would result in no revenue loss to the General Revenue Fund in FY2021 and in fiscal years thereafter.
    
    Additional administrative costs incurred by the State Tax Department would be $35,000 in FY2021 and $10,000 in subsequent fiscal years.
    
    
    



Memorandum


    



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