FISCAL NOTE
Date Requested: February 01, 2022
Time Requested: 01:59 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2502 |
Introduced |
SB533 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to eliminate the direction of proceeds of the soda tax into special medical school fund. The bill provides for the eventual elimination of the tax. The bill provides for a sunset date. The bill directs a portion of insurance premium tax to health sciences and medical schools in this state. The bill sets out findings. The bill provides for specific amounts to be directed to Health Sciences Center at West Virginia University, Marshall University School of Medicine and West Virginia Osteopathic School. Finally, the bill provides that the amounts directed from premium tax shall not limit total appropriation to the health sciences and medical schools.
According to our interpretation, the provisions of this bill would remove the current dedication of proceeds from the Soft Drink Excise Tax to the School of medicine, dentistry, and nursing of West Virginia University upon the effective date of implementation. Future proceeds would be deposited in the State General Revenue Fund. Upon the effective date of implementation, a portion of Insurance Premium Tax collections otherwise deposited in the State General Revenue Fund would be allocated as special revenue transfers to the Health Sciences Center of West Virginia University at a level of $14 million per year. In addition, $5.5 million of Insurance Premium Tax collections would be allocated as special revenue transfers to the School of Medicine at Marshall University and $3.9 million of Insurance Premium Tax collections would be allocated as special revenue transfers to the West Virginia School of Osteopathic Medicine. Actual Soft Drink Excise Tax collections totaled slightly less than $13.9 million in Fiscal Year 2021. Under the assumption, that existing annual General Revenue Fund budget allocations to both the School of Medicine at Marshall University and the West Virginia School of Osteopathic Medicine would be adjusted downward to reflect the alternative source of funding, the provisions of this bill would be roughly budget neutral in FY2023. Current funding would be preserved for all three medical schools.
The State General Revenue Fund would gain up to $14.0 million beginning in FY2023 from the addition of the Soft Drinks Tax but would lose $23.4 due to reallocation of Insurance Premium Tax collections. The net change in General Revenue Fund collections would be a reduction of roughly $9.4 million per year. The reduction may be balanced with a reduction in General Revenue Fund appropriations equal to the amount of special revenue dedications.
Even though our interpretation is based on a July 1, 2022, effective date, the provisions of this bill lack internal effective dates regarding both the removal of the current dedication of Soft Drink Excise Tax revenues and the allocation of Insurance Premium Tax as special funds dedicated to the medical schools. Passage of this bill without such internal effective dates might result in some unintended variation in timing of the proposed changes.
Other current special revenue dedications out of General Revenue Fund taxes (e.g., sales tax for school construction) usually contain provisions for an equal pro-rated transfer of funds over a twelve-month period or specific guidance over the exact months when such transfer or portion thereof is to occur.
The provisions of this bill would also repeal the Soft Drink Excise Tax effective July 1, 2024. General Revenue Fund collections would decrease by up to $14 million per year beginning in FY2025 because of this proposed change.
The State Tax Department would be no longer administering the program resulting in cost savings of $90,000 in FY2025 and subsequent fiscal years. The State Tax Department would incur $10,000 in costs in FY2024 to close out the tax.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2022
Increase/Decrease
(use"-") |
2023
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
10,000 |
-90,000 |
| Personal Services |
0 |
0 |
-75,000 |
| Current Expenses |
0 |
0 |
-15,000 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
10,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation, the provisions of this bill would remove the current dedication of proceeds from the Soft Drink Excise Tax to the School of medicine, dentistry, and nursing of West Virginia University upon the effective date of implementation. Future proceeds would be deposited in the State General Revenue Fund. Upon the effective date of implementation, a portion of Insurance Premium Tax collections otherwise deposited in the State General Revenue Fund would be allocated as special revenue transfers to the Health Sciences Center of West Virginia University at a level of $14 million per year. In addition, $5.5 million of Insurance Premium Tax collections would be allocated as special revenue transfers to the School of Medicine at Marshall University and $3.9 million of Insurance Premium Tax collections would be allocated as special revenue transfers to the West Virginia School of Osteopathic Medicine. Actual Soft Drink Excise Tax collections totaled slightly less than $13.9 million in Fiscal Year 2021. Under the assumption, that existing annual General Revenue Fund budget allocations to both the School of Medicine at Marshall University and the West Virginia School of Osteopathic Medicine would be adjusted downward to reflect the alternative source of funding, the provisions of this bill would be roughly budget neutral in FY2023. Current funding would be preserved for all three medical schools.
The State General Revenue Fund would gain up to $14.0 million beginning in FY2023 from the addition of the Soft Drinks Tax but would lose $23.4 due to reallocation of Insurance Premium Tax collections. The net change in General Revenue Fund collections would be a reduction of roughly $9.4 million per year. The reduction may be balanced with a reduction in General Revenue Fund appropriations equal to the amount of special revenue dedications.
Even though our interpretation is based on a July 1, 2022, effective date, the provisions of this bill lack internal effective dates regarding both the removal of the current dedication of Soft Drink Excise Tax revenues and the allocation of Insurance Premium Tax as special funds dedicated to the medical schools. Passage of this bill without such internal effective dates might result in some unintended variation in timing of the proposed changes.
Other current special revenue dedications out of General Revenue Fund taxes (e.g., sales tax for school construction) usually contain provisions for an equal pro-rated transfer of funds over a twelve-month period or specific guidance over the exact months when such transfer or portion thereof is to occur.
The provisions of this bill would also repeal the Soft Drink Excise Tax effective July 1, 2024. General Revenue Fund collections would decrease by up to $14 million per year beginning in FY2025 because of this proposed change.
The State Tax Department would be no longer administering the program resulting in cost savings of $90,000 in FY2025 and subsequent fiscal years. The State Tax Department would incur $10,000 in costs in FY2024 to close out the tax.
Memorandum
The stated purpose of this bill is to eliminate the direction of proceeds of the soda tax into special medical school fund. The bill provides for the eventual elimination of the tax. The bill provides for a sunset date. The bill directs a portion of insurance premium tax to health sciences and medical schools in this state. The bill sets out findings. The bill provides for specific amounts to be directed to Health Sciences Center at West Virginia University, Marshall University School of Medicine and West Virginia Osteopathic School. Finally, the bill provides that the amounts directed from premium tax shall not limit total appropriation to the health sciences and medical schools.
Since the Soft Drink Excise Tax is not an annual tax, the provisions of W.Va. Code ยง11-10-5p does not apply to this bill. Further, despite the bill eliminating the special medical school fund, it does not redirect the revenues for the interim between passage of the bill and elimination of the tax. That being the case, the W.Va. Code requires that unless otherwise specified by the Legislature, monies are to be deposited into the General Revenue Fund.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov