FISCAL NOTE
Date Requested: February 10, 2021
Time Requested: 04:20 PM |
| Agency: |
Tax & Revenue Department, WV State |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1373 |
Introduced |
HB2101 |
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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 reinstate the film tax credits removed by the Legislature in 2018 by the passage of Enrolled Senate Bill 263.
According to our interpretation of this bill, the Film Tax Credit would be reinstated and apply to all taxable years after December 31, 2020, and retroactively to all tax years prior to the enactment of the bill’s amendments. Prior law had allocated up to $5.0 million per year in tax credits for qualified film production. The average cost of the former Film Tax Credit between calendar years 2010 and 2018 was $1.8 million per year with a maximum credit amount during this same period of $4.7 million in 2018. There is often significant delay between the allotment of tax credits, and their utilization on tax returns given that most of these tax credits are sold to third parties. Passage of this bill could result in a loss to the General Revenue Fund of roughly $5.0 million in FY2022 and in subsequent fiscal years.
Additional administrative costs incurred by the State Tax Department would be $20,000 in FY2022 and $5,000 in subsequent fiscal 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 |
20,000 |
5,000 |
| Personal Services |
0 |
5,000 |
5,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
15,000 |
0 |
| 2. Estimated Total Revenues |
0 |
-5,000,000 |
-5,000,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation of this bill, the Film Tax Credit would be reinstated and apply to all taxable years after December 31, 2020, and retroactively to all tax years prior to the enactment of the bill’s amendments. Prior law had allocated up to $5.0 million per year in tax credits for qualified film production. The average cost of the former Film Tax Credit between calendar years 2010 and 2018 was $1.8 million per year with a maximum credit amount during this same period of $4.7 million in 2018. There is often significant delay between the allotment of tax credits, and their utilization on tax returns given that most of these tax credits are sold to third parties. Passage of this bill could result in a loss to the General Revenue Fund of roughly $5.0 million in FY2022 and in subsequent fiscal years.
Additional administrative costs incurred by the State Tax Department would be $20,000 in FY2022 and $5,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to reinstate the film tax credits removed by the Legislature in 2018 by the passage of Enrolled Senate Bill 263.
There are some concerns with this bill. The bill title does not mention that the bill is retroactive or that it reestablishes the Film Office. The bill is to be applied retroactively to all tax years prior to the enactment of the bill’s amendments in 2021. This will have the effect of treating the film tax credit as if it were never eliminated. There may be administrative challenges to potentially untangle credit applicants’ attempts to deal with the previous elimination of the credit while applying the credit retroactively as if the repeal did not happen.
It is unclear whether this bill also reestablishes the Film Office, since the language ceasing its operations has been stricken. Furthermore, it is unclear how these credits will be claimed without the operation of the Film Office given the current statutory language.
This bill strikes the language related to the former Film Credit. As some lingering credit remains, it is unclear whether the striking of that language eliminates any remaining Film credits.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov