FISCAL NOTE
Date Requested: February 10, 2021
Time Requested: 05:10 PM |
| Agency: |
Tax & Revenue Department, WV State |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1689 |
Introduced |
SB117 |
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| CBD Subject: |
|
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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 establish the “Stay in the state Act” tax credit that allows residents of this state who remain in state after graduating with an undergraduate or associate degree from a state institution to be granted a tax credit for the total cost of tuition and interest for student loans used to obtain their degree. The bill provides this tax credit is against personal income tax in West Virginia and is awarded over a 10-year period. The bill provides that employers are also allowed to claim the credit for employees that qualify for the credit. The bill provides that in-state high schools, colleges and universities are required to inform and assist students with obtaining the tax credit.
According to our interpretation, this bill would allow a Personal Income Tax credit for student loan payments made by graduates who work in West Virginia. In addition, a credit is allowed for employers who make loan payments for their employees. The State Tax Department does not have sufficient information to accurately estimate the amount of credits or decreasing modifications that would be taken for student loan payments. We are unable to accurately estimate the revenue loss to the General Revenue Fund attributable to passage of this bill, but the loss would be substantial.
Administrative costs would be $107,000 in FY 2022 and $80,000 in subsequent 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 |
107,000 |
80,000 |
| Personal Services |
0 |
80,000 |
80,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
2,000 |
0 |
| Other |
0 |
25,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation, this bill would allow a Personal Income Tax credit for student loan payments made by graduates who work in West Virginia. In addition, a credit is allowed for employers who make loan payments for their employees. The State Tax Department does not have sufficient information to accurately estimate the amount of credits or decreasing modifications that would be taken for student loan payments. We are unable to accurately estimate the revenue loss to the General Revenue Fund attributable to passage of this bill, but the loss would be substantial. In Tax Year 2017, 57,200 returns claimed nearly $60 million in student loan interest deductions in West Virginia.
Administrative costs would be $107,000 in FY 2022 and $80,000 in subsequent years. This bill creates a complicated tax credit against student loan payments made by college graduates who remain in West Virginia following graduation. Because of the complexity that comes with the calculation and review of tax credits and eligibility, additional personnel would be required as well as the purchase of office equipment and tax form development and testing.
Memorandum
The stated purpose of this bill is to establish the “Stay in the state Act” tax credit that allows residents of this state who remain in state after graduating with an undergraduate or associate degree from a state institution to be granted a tax credit for the total cost of tuition and interest for student loans used to obtain their degree. The bill provides this tax credit is against personal income tax in West Virginia and is awarded over a 10-year period. The bill provides that employers are also allowed to claim the credit for employees that qualify for the credit. The bill provides that in-state high schools, colleges and universities are required to inform and assist students with obtaining the tax credit.
The bill creates a complicated tax credit against student loan payments made by college graduates who remain in West Virginia following graduation. The credit calculation methodology first makes an incorrect cross reference to (d)(1) and (d)(2), where it appears to refer to (e)(1) and (e)(2). The first of these cross references applies to a “benchmark loan payment” which appears to be fairly convoluted or an actual loan payment. The lesser of these numbers is to then be applied against a proration factor, the numerator of which is the number of credit hours earned after January 1, 2015, for a bachelors or associates degree, the denominator is the total number of credit hours. This calculation will be difficult to calculate as it will result in the Tax Department needing to figure out whether a credit hour is earned in furtherance of such a degree. The credit is also not refundable, unless the degree was in science, technology, engineering, or mathematics. This will further complicate review to determine whether such degree sufficiently qualifies under these fields. There are other convoluted rules related to eligibility that will be difficult to review and enforce.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov