FISCAL NOTE
Date Requested: February 16, 2018
Time Requested: 01:56 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2698 |
Introduced |
SB571 |
|
|---|
| CBD Subject: |
Insurance, Taxation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Increases Revenue From Existing Sources, 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 fix the Public Employees Insurance Agency aggregate premium cost sharing at 85 percent for the employer and 15 percent for the employee; and establish a tax on sales, purchases, and uses of food and food ingredients intended for human consumption as a means of paying for the increased employer share.
According to our interpretation, the proposed bill would alter the employer-employee premium cost-sharing percentages for the Public Employees Insurance Agency (PEIA) and would re-impose the food tax on food and food ingredients for human consumption at a rate of 1.5 percent effective July 1, 2018. The bill provides that the necessity to continue or terminate this tax will be evaluated during the 2021-2022 interim period. It is implied that monies collected from this tax will be used for the purposes of the PEIA employer-employee premium cost-sharing, but this is not explicitly stated.
On an annualized basis, a 1.5 percent sales tax on food for home consumption would yield roughly $40 million per year. As the effective date is July 1, 2018, the proposed bill would result in 11 months of collections in FY2019 of roughly $37 million. Of the total estimated revenue yield, roughly $26.3 million would be collected at the State level in FY2019 and $39.2 million per year beginning in FY2020. The balance of roughly $0.7 million in FY2019 and $0.8 million per year beginning in FY2020 would be collected in a remitted to Sales Tax Increment Financing (STIF) Districts. In addition, municipalities that impose a local sales and use tax are expected to gain an aggregate of roughly $9 million per year for a full year of collections.
The presumed intent of this proposed bill is for the Legislature to set a budget to achieve the intended purpose to benefit PEIA with revenues resulting from re-imposing the tax on food for home consumption. Absent other direction, additional General Revenue Fund gain resulting from this tax is presumed to be appropriated for that purpose.
Additional administrative costs incurred by the State Tax Department would be $25,000 in FY2018 and $10,000 per year for each year thereafter.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2018
Increase/Decrease
(use"-") |
2019
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
25,000 |
10,000 |
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 |
25,000 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
36,300,000 |
39,200,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, the proposed bill would alter the employer-employee premium cost-sharing percentages for the Public Employees Insurance Agency (PEIA) and would re-impose the food tax on food and food ingredients for human consumption at a rate of 1.5 percent effective July 1, 2018. The bill provides that the necessity to continue or terminate this tax will be evaluated during the 2021-2022 interim period. It is implied that monies collected from this tax will be used for the purposes of the PEIA employer-employee premium cost-sharing, but this is not explicitly stated.
On an annualized basis, a 1.5 percent sales tax on food for home consumption would yield roughly $40 million per year. As the effective date is July 1, 2018, the proposed bill would result in 11 months of collections in FY2019 of roughly $37 million. Of the total estimated revenue yield, roughly $26.3 million would be collected at the State level in FY2019 and $39.2 million per year beginning in FY2020. The balance of roughly $0.7 million in FY2019 and $0.8 million per year beginning in FY2020 would be collected in a remitted to Sales Tax Increment Financing (STIF) Districts. In addition, municipalities that impose a local sales and use tax are expected to gain an aggregate of roughly $9 million per year for a full year of collections.
The presumed intent of this proposed bill is for the Legislature to set a budget to achieve the intended purpose to benefit PEIA with revenues resulting from re-imposing the tax on food for home consumption. Absent other direction, additional General Revenue Fund gain resulting from this tax is presumed to be appropriated for that purpose.
Additional administrative costs incurred by the State Tax Department would be $25,000 in FY2018 and $10,000 per year for each year thereafter.
Memorandum
The stated purpose of this bill is to fix the Public Employees Insurance Agency aggregate premium cost sharing at 85 percent for the employer and 15 percent for the employee; and establish a tax on sales, purchases, and uses of food and food ingredients intended for human consumption as a means of paying for the increased employer share.
As written, the proposed bill lacks language regarding dedication of the revenue collected from re-imposing the food tax. Although the bill implies that these funds are meant to be used to address the Public Employees Insurance Agency (PEIA) aggregate cost-sharing premiums (incorrectly cited as W.Va. Code ยง16-5-16), the bill provides no mechanism to ensure this occurs. The proposed bill also fails to specify whether the tax is intended to fund the entire 85 percent employer portion or some part of the employer portion.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov