FISCAL NOTE

Date Requested: January 24, 2023
Time Requested: 11:35 AM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
3037 Introduced SB430
CBD Subject: Finance and Administration


FUND(S):

Lottery, 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 ensure that all spending units utilize the State Treasurer’s contracts and agreements with financial institutions for banking goods and services. This bill would require the Department of Revenue to utilize the Treasurer’s contracts or agreements for any banking goods or services. There could be unintended consequences resulting from this bill. Revenue Agencies do have contracts and agreements in place that utilize vendors which could be construed to have a banking component. Many revenue agencies perform roles like private businesses and serve the public while generating revenue, such as Insurance, Banking, Municipal Bond Commission, WVABCA., Lottery and Tax. Currently the West Virginia Lottery Commission contracts with companies that provide hardware, software, interface, maintenance for limited video lottery (LVL) machines, and other services. The Lottery Commission estimates the annual, recurring cost of the call center and services to be $200,000, the cost of converting to the Treasurer’s Office system to be $1 million, and the cost of lost ticket sales during conversion could be up to $4 million per year. Taken together, the Lottery Commission could experience revenue losses of approximately $5.2 million in year one of conversion and $4.2 million during the second year, with additional costs in the out years. According to the West Virginia Tax Commissioner, the Tax Department collects approximately $6 billion of tax each year. Tax has concerns for revenue collected from Taxpayers’ established accounts using Tax’s MyTaxes portal. The proposed code language could be used to force Tax to utilize the Treasurer’s office systems for the collection of revenue through new processes. Many taxpayers have already set up accounts and banking information in Tax’s MyTaxes portal that works very well. Tax also has many delinquent taxpayers on payment plans with auto withdrawal features on their accounts that could be disrupted by new banking system requirements. The provisions of this bill could result in delays of processing, loss of confidence, and noncompliance issues among the taxpayers due to the re-bidding of contracts currently held by the Tax Department. Though there is an insufficient amount of data to reasonably estimate the revenue impact of this legislation, the loss could be significant. Administrative costs incurred by the Tax Department are not readily known but could be significant if there is a requirement to abandon current infrastructure in favor of alternative requirements imposed by the Office of the Treasurer.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2023
Increase/Decrease
(use"-")
2024
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):


This bill would require the Department of Revenue to utilize the Treasurer’s contracts or agreements for any banking goods or services. There could be unintended consequences resulting from this bill. Revenue Agencies do have contracts and agreements in place that utilize vendors which could be construed to have a banking component. Many revenue agencies perform roles like private businesses and serve the public while generating revenue, such as Insurance, Banking, Municipal Bond Commission, WVABCA., Lottery and Tax. Currently the West Virginia Lottery Commission contracts with companies that provide hardware, software, interface, maintenance for limited video lottery (LVL) machines, and other services. The Lottery Commission estimates the annual, recurring cost of the call center and services to be $200,000, the cost of converting to the Treasurer’s Office system to be $1 million, and the cost of lost ticket sales during conversion could be up to $4 million per year. Taken together, the Lottery Commission could experience revenue losses of approximately $5.2 million in year one of conversion and $4.2 million during the second year, with additional costs in the out years. According to the West Virginia Tax Commissioner, the Tax Department collects approximately $6 billion of tax each year. Tax has concerns for revenue collected from Taxpayers’ established accounts using Tax’s MyTaxes portal. The proposed code language could be used to force Tax to utilize the Treasurer’s office systems for the collection of revenue through new processes. Many taxpayers have already set up accounts and banking information in Tax’s MyTaxes portal that works very well. Tax also has many delinquent taxpayers on payment plans with auto withdrawal features on their accounts that could be disrupted by new banking system requirements. The provisions of this bill could result in delays of processing, loss of confidence, and noncompliance issues among the taxpayers due to the re-bidding of contracts currently held by the Tax Department. Though there is an insufficient amount of data to reasonably estimate the revenue impact of this legislation, the loss could be significant. Administrative costs incurred by the Tax Department are not readily known but could be significant if there is a requirement to abandon current infrastructure in favor of alternative requirements imposed by the Office of the Treasurer.



Memorandum






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