FISCAL NOTE

Date Requested: February 14, 2017
Time Requested: 02:01 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2116 Introduced SB314
CBD Subject: Taxation


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


The stated purpose of this bill is to allow adjustment of gross income for calculating personal income liability for certain retirees entitled to reduced benefits related to a terminated defined benefit plan. Retirees receiving pensions from defined pension plans that terminated and are being paid a reduced maximum benefit guarantee from the federal Pension Benefit Guaranty Corporation (PBGC) received a personal income tax adjustment equal to the amount of pension income not received through Tax Year 2014. This bill would reinstate the allowance of that decreasing modification beginning in TY2017 and terminating after the end of Tax Year 2021. Passage of the proposed legislation would result in a potential loss from Tax Year 2017 returns of approximately $400,000 occurring in FY2018. Approximately $400,000 in annual revenue losses are expected for the remaining years until termination. Additional administrative costs to the State Tax Department would be $14,000 in FY2018 and $5,000 in subsequent years. No additional administrative costs are expected for the remainder of FY2017.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2017
Increase/Decrease
(use"-")
2018
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 14,000 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 9,000 0
2. Estimated Total Revenues 0 -400,000 -400,000


Explanation of above estimates (including long-range effect):


Retirees receiving pensions from defined pension plans that terminated and are being paid a reduced maximum benefit guarantee from the federal Pension Benefit Guaranty Corporation (PBGC) received a personal income tax adjustment equal to the amount of pension income not received through Tax Year 2014. This bill would reinstate the allowance of that decreasing modification beginning in TY2017 and terminating after the end of Tax Year 2021. Passage of the proposed legislation would result in a potential loss from Tax Year 2017 returns of approximately $400,000 occurring in FY2018. Approximately $400,000 in annual revenue losses are expected for the remaining years until termination. Additional administrative costs to the State Tax Department would be $14,000 in FY2018 and $5,000 in subsequent years. No additional administrative costs are expected for the remainder of FY2017.



Memorandum


The stated purpose of this bill is to allow adjustment of gross income for calculating personal income liability for certain retirees entitled to reduced benefits related to a terminated defined benefit plan. Use of the word “adjustment” in the proposed bill is inconsistent with the standard use of “modification” throughout Code. To make clear that the new subsection (b) is not in conflict with the earlier termination date in subsection (a), the use of a phrase noting that subsection (b) is effective “Notwithstanding any provision in this section to the contrary” should be considered.



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