FISCAL NOTE

Date Requested: February 21, 2017
Time Requested: 01:35 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2559 Introduced SB377
CBD Subject:


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 create a fixed income tax credit for low-income workers; establish procedures for claiming credit; and define terms. According to our interpretation, the proposed bill would allow a credit of up to $200 per low-income senior citizen based on the individual’s fixed income. Eligible individuals must be residents of West Virginia and have a Federal Adjusted Gross Income (FAGI) that is at most 150 percent of the federal poverty guideline. The proposed bill could result in revenue losses to the General Revenue Fund of up to $10.0 million in FY2019. We note that the language of the proposed bill suggests that this credit may be allowed for only TY2018. If the intent of the bill is to provide this credit for in taxable years beginning on and after January 1, 2018, revenue losses would continue beyond FY2019. Additional administrative costs incurred by the State Tax Department are expected to be $48,000 in FY2019 and $32,000 for each year thereafter that the credit applies.



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 0 48,000
Personal Services 0 0 32,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 1,000
Other 0 0 15,000
2. Estimated Total Revenues 0 0 -10,000,000


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


According to our interpretation, the proposed bill would allow a credit of up to $200 per low-income senior citizen based on the individual’s fixed income. Eligible individuals must be residents of West Virginia and have a Federal Adjusted Gross Income (FAGI) that is at most 150 percent of the federal poverty guideline. The proposed bill could result in revenue losses to the General Revenue Fund of up to $10.0 million in FY2019. We note that the language of the proposed bill suggests that this credit may be allowed for only TY2018. If the intent of the bill is to provide this credit for in taxable years beginning on and after January 1, 2018, revenue losses would continue beyond FY2019. Additional administrative costs incurred by the State Tax Department are expected to be $48,000 in FY2019 and $32,000 for each year thereafter that the credit applies.



Memorandum


The stated purpose of this bill is to create a fixed income tax credit for low-income workers; establish procedures for claiming credit; and define terms. The proposed bill states (emphasis added) “[f]or the tax year beginning on and after January 1, 2018…” As written, this could be interpreted as the credit being made effective for only one tax year. Should the intent be to make this credit available for tax years beginning on and after January 1, 2018, it is recommended the wording be revised. The bill also refers to a “family unit” without providing a definition for this term. This could lead to administrative difficulties and ambiguity. Typical wording related to the federal poverty guidelines is “the number of persons in the household.” Is it plausible a qualified senior citizen may be in a household with only one other resident but be part of a “family unit” of many more individuals.



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