FISCAL NOTE
Date Requested: January 10, 2018
Time Requested: 03:01 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1390 |
Introduced |
SB123 |
|
|---|
| CBD Subject: |
Military and Veterans, Public Safety |
|---|
|
FUND(S):
Special Fund
Sources of Revenue:
Other Fund Veterans' Facility Support Fund
Legislation creates:
Creates New Revenue
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to find sufficient funding for the Veterans’ Facility Support Fund to fund a veteran’s nursing home and improve funding to volunteer fire departments by eliminating a current tax exemption and redirecting certain revenue.
Based on our interpretation, the proposed bill would remove the exemption from Consumers Sales Tax Law for memberships or services provided by health and fitness organizations effective July 1, 2018. The bill dedicates the monies collected from removing this exemption to the Veterans’ Facility Support Fund account in the State Treasury. In addition, the bill would redirect the distribution of the portion of Fireworks Safety Fees currently dedicated to the Veterans’ Facility Support Fund to the Fire Protection Fund.
The proposed bill could result in roughly $2.0 million per year in transfers to the Veterans’ Facility Support Fund as a result of diverting monies from the repealed sales tax exemption but would remove roughly $0.5 million per year in transfers from proceeds of the Fireworks Safety Fee. As a result, net benefit to the Veterans’ Facility Support Fund is expected to be $1.4 million in FY2019 and $1.6 million per year for each year thereafter. We note that the FY2019 net benefit includes consideration of a partial year of collections from repealing the sales tax exemption for memberships or services provided by health and fitness organizations.
As written, it is unclear what would happen to sales tax collections resulting from repeal of this exemption for sales occurring in Sales Tax Increment Financing (STIF) districts or municipalities that levy a local sales tax. This fiscal note only addresses the impact associated with the State sales tax.
Additional administrative costs incurred by the State Tax Department are expected to be $10,000 in FY2018. There are no additional administrative costs anticipated thereafter.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2018
Increase/Decrease
(use"-") |
2019
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
10,000 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
10,000 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
1,400,000 |
1,600,000 |
Explanation of above estimates (including long-range effect):
Based on our interpretation, the proposed bill would remove the exemption from Consumers Sales Tax Law for memberships or services provided by health and fitness organizations effective July 1, 2018. The bill dedicates the monies collected from removing this exemption to the Veterans’ Facility Support Fund account in the State Treasury. In addition, the bill would redirect the distribution of the portion of Fireworks Safety Fees currently dedicated to the Veterans’ Facility Support Fund to the Fire Protection Fund.
The proposed bill could result in roughly $2.0 million per year in transfers to the Veterans’ Facility Support Fund as a result of diverting monies from the repealed sales tax exemption but would remove roughly $0.5 million per year in transfers from proceeds of the Fireworks Safety Fee. As a result, net benefit to the Veterans’ Facility Support Fund is expected to be $1.4 million in FY2019 and $1.6 million per year for each year thereafter. We note that the FY2019 net benefit includes consideration of a partial year of collections from repealing the sales tax exemption for memberships or services provided by health and fitness organizations.
As written, it is unclear what would happen to sales tax collections resulting from repeal of this exemption for sales occurring in Sales Tax Increment Financing (STIF) districts or municipalities that levy a local sales tax. This fiscal note only addresses the impact associated with the State sales tax.
Additional administrative costs incurred by the State Tax Department are expected to be $10,000 in FY2018. There are no additional administrative costs anticipated thereafter.
Memorandum
The stated purpose of this bill is to find sufficient funding for the Veterans’ Facility Support Fund to fund a veteran’s nursing home and improve funding to volunteer fire departments by eliminating a current tax exemption and redirecting certain revenue.
The proposed bill does not address the exception of rendering personal services by personal trainers under W. Va. Code §11-15-8. The exception under section 8 and the exemption under section 9 may overlap. Further, the bill is silent as to whether monies collected from applicable sales occurring in Sales Tax Increment Financing (STIF) districts or municipalities that levy a local sales tax would be transferred to those entities or to the Veterans’ Facility Support Fund.
The requirement that “all revenue generated from the elimination of this exemption” be applied for the benefit of the Veterans’ Facility Support Fund creates a conflict with existing Law. Specifically, current Law requires the Tax Commissioner to distribute all funds collected from Sales Tax Increment Financing (STIF) districts and municipalities with a local sales tax to those entities. As written, the proposed bill seems to require all monies – inclusive of those already dedicated to STIF districts and certain municipalities – to be distributed to the specified Fund.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov