FISCAL NOTE

Date Requested: February 26, 2021
Time Requested: 11:59 AM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2296 Introduced HB2778
CBD Subject: Taxation


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 give a tax credit against taxes actually owed, for qualifying expenses of parents or guardians of children in grade levels K through 12. Based on our interpretation, the proposed bill could result in an annual loss to the General Revenue Fund of up to $22.1 million per year, assuming full participation, beginning in FY2023. The bill allows a 100 percent tax credit for qualified educational expenses up to a maximum of $3,000 for each child enrolled in a private school in West Virginia. The bill becomes effective in Tax Year 2022. Administrative costs incurred by the State Tax Department are estimated to be $71,500 for FY2023 and $45,000 in subsequent fiscal years.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2021
Increase/Decrease
(use"-")
2022
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 45,000
Personal Services 0 0 45,000
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 -22,100,000


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


Based on our interpretation, the proposed bill could result in an annual loss to the General Revenue Fund of up to $22.1 million per year, assuming full participation, beginning in FY2023. The bill allows a 100 percent tax credit for qualified educational expenses up to a maximum of $3,000 for each child enrolled in a private school in West Virginia. The bill becomes effective in Tax Year 2022. Administrative costs incurred by the State Tax Department are estimated to be $71,500 for FY2023 and $45,000 in subsequent fiscal years. There is no requirement that expenses be incurred; however, significant review would be needed to assure eligibility.



Memorandum


The stated purpose of this bill is to give a tax credit against taxes actually owed, for qualifying expenses of parents or guardians of children in grade levels K through 12. The bill does not define “qualifying educational expenses” or “nonpublic school”. The bill does not require that the “qualifying educational expenses” must be paid by the parents or legal guardians. nor does it require that the “qualifying educational expenses” have to be incurred for the use of the children “participating in nonpublic schools.” The bill does not allow parents or legal guardians of students enrolled in public schools to take the tax credit even though they may also have incurred educational expenses. This distinction may be in conflict with the West Virginia Constitution. Article X of the West Virginia Constitution requires that taxation “be equal and uniform throughout the state…” Also, the proposed bill may arguably violate Section 10 of Article III of the West Virginia Constitution, which is the state’s equal protection clause.



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