FISCAL NOTE

Date Requested: February 06, 2018
Time Requested: 02:28 PM
Agency: Auditor, State of WV
CBD Number: Version: Bill Number: Resolution Number:
2094 Introduced HB4438
CBD Subject: Taxation


FUND(S):

State Funds; Local Government

Sources of Revenue:

General Fund

Legislation creates:

Creates New Program



Fiscal Note Summary


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


The purpose of proposed House Bill 4438 is to reallocate and dedicate three percent of oil and gas severance tax collections, up to $20 Million annually to the oil and gas producing counties of origin and their respective municipalities. The proposed legislation establishes State and Local Oil and Gas County reallocated severance tax funds and provides for distribution of the revenues to the county commissions and governing bodies of the municipalities by the State Treasurer. Further, the proposed legislation establishes a procedure for determination of the amounts each oil and gas producing county and their respective municipalities are to receive and requires the creation of local funds into which moneys are to be deposited. Also, the proposed legislation requires the funds to be used solely for economic development projects and infrastructure projects. In addition, the Bill provides restrictions of fund expenditures and sets forth the duties of the State Tax Commissioner with respect to these funding allocations. The proposed legislation requires a report of expenditures by specified dates to be made to the Joint Committee on Government and Finance by each county or governing board of a municipality receiving a distribution of funds under the Code section. The proposed legislation provides for audits of distributed funds to be made by the Legislative Auditor when authorized by the Joint Committee on Government and Finance at no cost to the county commission audited. And, lastly, the proposed legislation authorizes the promulgation of both legislative and emergency rules.



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 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0


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


We believe the adoption of this legislation is essentially revenue-neutral on a State-wide perspective as the intent of the legislation is to take revenues currently collected and expended at the State-level and move a portion of those revenues to the county-level for specific expenditures. The impact of the legislation is a re-allocation of revenues from the General Revenue Fund of the State of West Virginia to the respective oil and gas producing counties. We understand a Fiscal Note Request has also been submitted to the West Virginia State Tax Department and we would recommend reliance on the information forthcoming from the State Tax Department to better understand the likely full and complete fiscal impacts of the Bill on the State General Revenue Fund.



Memorandum


We believe the adoption of the legislation would be beneficial for the oil and gas producing counties in terms of providing them with a revenue source for economic development and infrastructure projects which would have a component of local control. We are unable to evaluate any potential impacts resulting from the potential loss of three percent of oil and gas severance tax collections, up to $20 Million, from State coffers. In addition, we note the legislation would enable possible audit activities of county commissions receiving distributed funds by the Legislative Auditor. Currently, these county commissions are audited by the State Auditor’s Office or by independent CPAs under guidelines established by the State Auditor’s Office consistent with the provisions of Chapter 6, Article 9 of the West Virginia Code.



    Person submitting Fiscal Note: Michael E. Sizemore, CPA
    Email Address: Mike.Sizemore@wvsao.gov