FISCAL NOTE

Date Requested: February 19, 2016
Time Requested: 05:07 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
2686 Introduced HB4612
CBD Subject: Counties


FUND(S):

Local Governments

Sources of Revenue:

Other 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 generally concerns tax increment financing and economic opportunity development districts and expanding its use for financing and funding road projects in West Virginia. The bill permits certain agreements between the Division of Highways and counties or m municipalities regarding the development of districts. The bill permits financing of certain projects be with the proceeds of tax increment financing obligations. The bill permits road construction projects be done jointly by counties and municipalities. The bill establishes procedures. The bill permits the Division of Highways to propose a joint project. The bill establishes procedures for the West Virginia Development Office and the Tax Commissioner. The bill permits audits. The bill establishes a procedure for adding or removing property from an economic opportunity development district. The bill requires procedures relating to taxpayers. The bill provides for confidentiality. The bill provides for roads to be part of the state road system. The bill permits a fee to be assessed. The bill provides findings. The bill establishes an effective date. The bill defines terms. The provisions of this bill would allow counties and municipal governments to effectively shift incremental growth in both local property tax revenues and state sales tax revenues, including normal inflationary growth, from general funding purposes to road construction through the formation of tax increment financing districts. Such a shift would further limit any potential growth in general revenues necessary to fund various programs such as education, higher education, Medicaid and public safety among others. The tax increment financing mechanism also has the potential to detract from net overall government revenues through excess burdens related to additional taxpayer compliance and administration costs. In a State with population stagnation, potential additional revenues for road construction would be relatively small in most geographic areas. In the case of sales tax increment financing districts, if new retail trade displaces other regional retail trade, State General Revenues would potentially decrease due to such displacement.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2016
Increase/Decrease
(use"-")
2017
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):


The provisions of this bill would allow counties and municipal governments to effectively shift incremental growth in both local property tax revenues and state sales tax revenues, including normal inflationary growth, from general funding purposes to road construction through the formation of tax increment financing districts. Such a shift would further limit any potential growth in general revenues necessary to fund various programs such as education, higher education, Medicaid and public safety among others. The tax increment financing mechanism also has the potential to detract from net overall government revenues through excess burdens related to additional taxpayer compliance and administration costs. In a State with population stagnation, potential additional revenues for road construction would be relatively small in most geographic areas. In the case of sales tax increment financing districts, if new retail trade displaces other regional retail trade, State General Revenues would potentially decrease due to such displacement.



Memorandum


The stated purpose of this bill generally concerns tax increment financing and economic opportunity development districts and expanding its use for financing and funding road projects in West Virginia. The bill permits certain agreements between the Division of Highways and counties or m municipalities regarding the development of districts. The bill permits financing of certain projects be with the proceeds of tax increment financing obligations. The bill permits road construction projects be done jointly by counties and municipalities. The bill establishes procedures. The bill permits the Division of Highways to propose a joint project. The bill establishes procedures for the West Virginia Development Office and the Tax Commissioner. The bill permits audits. The bill establishes a procedure for adding or removing property from an economic opportunity development district. The bill requires procedures relating to taxpayers. The bill provides for confidentiality. The bill provides for roads to be part of the state road system. The bill permits a fee to be assessed. The bill provides findings. The bill establishes an effective date. The bill defines terms. The bill provides that intergovernmental agreements are not subject to provisions governing intergovernmental agreements elsewhere in the code. This means the confidentiality and disclosure of tax payer information requirements found in W. Va. Code ยง11-10-1 et seq. would not be applicable to the intergovernmental agreements under the West Virginia Tax Increment Financing Act. Counties and municipalities are authorized to be part of more than one intergovernmental agreement to finance in part contiguous projects on a cash basis or to pay debt service on bonds or notes. Administration of contiguous districts may be difficult. The tax department would have to determine which district border businesses are in and distribute the revenue likewise. An effective date was not established as indicated in the title. The bill would be effective 90 days from passage.



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