FISCAL NOTE

Date Requested: January 09, 2019
Time Requested: 05:26 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2070 Introduced SB6
CBD Subject: Education (Higher), Education (K12), Taxation


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 create income tax credits against personal income tax for educational expenses incurred by teachers for the purchase of supplementary educational materials or professional development costs. The proposed bill would create a Personal Income Tax credit of up to $250 for classroom teachers employed by a public or private school for the purchase of supplementary education materials or professional development costs. However, the bill is silent on a number of other provisions, including but not limited to whether a qualifying teacher may teach in a public or private school, if the teacher must be a West Virginia resident, or if the teacher must teach in a West Virginia school. For the purpose of this analysis, we assume a qualifying teacher must teach in a West Virginia-based primary or secondary school and that teachers in either public or private settings would qualify. Based on our understanding, the revenue loss from this credit for classroom teachers would be $5.0 million per year beginning in FY2020. In addition, the bill would create a nonrefundable Personal Income Tax credit for any taxpayer for expenses incurred relative to the education of a child under the age of 21 who is a West Virginia resident. We are unable to quantify the revenue loss from the tax credit for educational expenses of students in the State because of the broad language of the bill. The bill would provide a credit all expenses incurred relative to a child’s education. The language could be interpreted as providing a credit in the amount of private school and college tuition among other things. The credit could be available for all students in elementary and secondary schools and colleges in West Virginia for West Virginia residents. Additional administrative costs would be $261,000 in FY2020 and $240,000 per year in fiscal years thereafter.  



Fiscal Note Detail


Effect of Proposal Fiscal Year
2019
Increase/Decrease
(use"-")
2020
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 261,000 240,000
Personal Services 0 240,000 240,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 6,000 0
Other 0 15,000 0
2. Estimated Total Revenues 0 0 0


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


The proposed bill would create a Personal Income Tax credit of up to $250 for classroom teachers employed by a public or private school for the purchase of supplementary education materials or professional development costs. However, the bill is silent on a number of other provisions, including but not limited to whether a qualifying teacher may teach in a public or private school, if the teacher must be a West Virginia resident, or if the teacher must teach in a West Virginia school. For the purpose of this analysis, we assume a qualifying teacher must teach in a West Virginia-based primary or secondary school and that teachers in either public or private settings would qualify. Based on our understanding, the revenue loss from this credit for classroom teachers would be $5.0 million per year beginning in FY2020. In addition, the bill would create a nonrefundable Personal Income Tax credit for any taxpayer for expenses incurred relative to the education of a child under the age of 21 who is a West Virginia resident. We are unable to quantify the revenue loss from the tax credit for educational expenses of students in the State because of the broad language of the bill. The bill would provide a credit all expenses incurred relative to a child’s education. The language could be interpreted as providing a credit in the amount of private school and college tuition among other things. The credit could be available for all students in elementary and secondary schools and colleges in West Virginia for West Virginia residents. Additional administrative costs would be $261,000 in FY2020 and $240,000 per year in fiscal years thereafter.



Memorandum


The stated purpose of this bill is to create income tax credits against personal income tax for educational expenses incurred by teachers for the purchase of supplementary educational materials or professional development costs. The bill sets a maximum credit of $250. Subsection (a) of the bill appears to create two separate credits, one for “any taxpayer” and one for a “classroom teacher.” The credit for “any taxpayer” can be taken for “expenses incurred relative to the education of a child under the age of 21 who is a resident of the state.” This broad language, unaided by definitions, could be interpreted as providing a credit in the amount of private school tuition, including college, among other things. Subsection (c) provides examples of “qualifying educational expenses,” which include expenditures for “computer equipment including education related software and services, textbooks, workbooks, curricula and other written or supplementary materials used for curricular or cocurricular or extra-curricular instruction and expenses for curricular or cocurricular activities.” The language of the bill does not limit the “qualifying educational expenses” to those enumerated, which essentially renders the definition open-ended. The language of the bill is overly expansive and could be used for purposes that go beyond the costs of education – “extracurricular activities” is not defined or otherwise limited in the bill, but the credit would be available for such expenditures. Additionally, the text of the proposed bill does not contain the limitation stated in the bill’s stated purpose. Although the stated intent is to provide a credit for teachers, at least part of the credit, as stated in the bill, would be available to “any taxpayer.”



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