FISCAL NOTE
Date Requested: February 12, 2025
Time Requested: 08:26 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1601 |
Introduced |
HB2161 |
|
|---|
| 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.
Summarize in a clear and concise manner what impact this measure will have on costs and revenues of state government.
The stated purpose of this bill is to change the threshold jobs creation number from 300 to 50; and to making stylistic changes, which authorizes an exemption for qualified purchases of computers and computer software, primary material handling equipment, racking and racking systems, and components, building materials and certain tangible personal property to be incorporated into a qualified, new or expanded warehouse or distribution facility.
Based on our interpretation, the legislation would expand the existing consumer sales and service and use tax for qualified purchases to be incorporated into a qualified new or expanded warehouse or distribution facility by reducing the jobs creation threshold for eligibility for the exemption from 300 to 50 full-time or full-time equivalent jobs. The period of eligibility for the exemption remains one year prior to the start of the construction or expansion and ends one year after the substantial completion of the construction or expansion of the facility with a maximum eligibility period of five years. In addition, the minimum direct investment of $50 million in the facility is retained.
According to our interpretation, construction of a new or expanded facility is required. Therefore, the tax foregone as a result of the new exemption arguably would not diminish revenue from current sources but would come from a “new source, comprised of a “new” investment in a new or expanded facility. Passage of the legislation would have a minimal effect on General Revenue collections. While there will be some sale and use tax foregone due to the exemption, the exemption would not reduce any tax derived from current sources. There will likely be other direct or indirect increases in tax revenue attributable to the new or expanded facility that will offset the sales and use tax foregone.
Additional administrative costs incurred by the State Tax Division will be $1,100 in FY2026.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2025
Increase/Decrease
(use"-") |
2026
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 |
0 |
0 |
Explanation of above estimates (including long-range effect):
Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years.
Based on our interpretation, the legislation would expand the existing consumer sales and service and use tax for qualified purchases to be incorporated into a qualified new or expanded warehouse or distribution facility by reducing the jobs creation threshold for eligibility for the exemption from 300 to 50 full-time or full-time equivalent jobs. The period of eligibility for the exemption remains one year prior to the start of the construction or expansion and ends one year after the substantial completion of the construction or expansion of the facility with a maximum eligibility period of five years. In addition, the minimum direct investment of $50 million in the facility is retained.
According to our interpretation, construction of a new or expanded facility is required. Therefore, the tax foregone as a result of the new exemption arguably would not diminish revenue from current sources but would come from a “new source, comprised of a “new” investment in a new or expanded facility. Passage of the legislation would have a minimal effect on General Revenue collections. While there will be some sale and use tax foregone due to the exemption, the exemption would not reduce any tax derived from current sources. There will likely be other direct or indirect increases in tax revenue attributable to the new or expanded facility that will offset the sales and use tax foregone.
Additional administrative costs incurred by the State Tax Division will be $1,100 in FY 2026.
Memorandum
Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form.
Person submitting Fiscal Note: Mark Muchow
Email Address: radfiscal@wv.gov