FISCAL NOTE
Date Requested: January 14, 2026
Time Requested: 04:39 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1475 |
Introduced |
HB4028 |
|
|---|
| 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 provide contactors of school facilities with a tax exemption on construction materials.
According to our interpretation of this bill, purchases of building materials, tangible personal property, and services by a construction contractor or construction subcontractor used in the construction of a public-school facility would be exempt for the State Consumer Sales and Use Tax. Passage of this bill would reduce General Revenue Fund collections by $1.5 million per year and municipal sales and use tax collections by $125,000 per year in FY2027 and thereafter.
This proposal would add some complexity to tax compliance for contractors with the proposed tax exemption. Therefore, any net savings on school construction would be a bit less than the value of the new sales tax exemption. The State currently dedicates more than $32 million per year in Consumers Sales Tax collection towards School Building Authority funding for school construction. An increase in the current dedication would be more efficient if the desire is to increase school funds for construction.
Additional administrative costs incurred by the State Tax Department would be $1,100 in FY2027.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2026
Increase/Decrease
(use"-") |
2027
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
1,100 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
1,100 |
0 |
| 2. Estimated Total Revenues |
0 |
-1,500,000 |
-1,500,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation of this bill, purchases of building materials, tangible personal property, and services by a construction contractor or construction subcontractor used in the construction of a public-school facility would be exempt for the State Consumer Sales and Use Tax. Passage of this bill would reduce General Revenue Fund collections by $1.5 million per year and municipal sales and use tax collections by $125,000 per year in FY2027 and thereafter.
This proposal would add some complexity to tax compliance for contractors with the proposed tax exemption. Therefore, any net savings on school construction would be a bit less than the value of the new sales tax exemption. The State currently dedicates more than $32 million per year in Consumers Sales Tax collection towards School Building Authority funding for school construction. An increase in the current dedication would be more efficient if the desire is to increase school funds for construction.
Additional administrative costs incurred by the State Tax Department would be $1,100 in FY2027.
Memorandum
The stated purpose of this bill is to provide contactors of school facilities with a tax exemption on construction materials.
There are some problems with the language in this bill. Building materials would be limited to “any property or device” that does not become a permanent part of the “reality” upon completion of the construction, but there does not appear to be any limiting language regarding “tangible personal property”.
There may be an issue with determining what types of school facilities are applicable to the proposed Sales and Use Tax exemption. “Public school facility” is used several times throughout the bill when referencing the required purpose for qualifying for the tax exemption, however, this term is not defined.
There is an erroneous statutory reference in this bill. This bill does not create §11-13NN-15 but does create §11-13NN-5.
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov