FISCAL NOTE

Date Requested: February 05, 2019
Time Requested: 08:41 AM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2520 Introduced HB2734
CBD Subject: Utilities


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Decreases Existing Revenue



Fiscal Note Summary


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


The stated purpose of this bill is to provide reduced rates for low-income residential customers of privately owned sewer utilities. According to our interpretation of this bill, the legislation would expand the current Low-Income Utility Credit to privately owned sewer utilities who are also subject to the Business & Occupation Tax and the Corporation Net Income Tax. Current law allows public utilities who provide electric, water and gas utility services at special reduced rates to low income residential customers to be eligible for a tax credit. According to the Public Service Commission, there are 29 active private sewer companies. However, these companies have minimum Business &Occupation Tax liability. Electricity and natural gas companies account for roughly 80 percent of the Business & Occupation Tax liabilities with water making most of the remaining 20 percent. The current Low-Income Utility Credit costs roughly $6.7 million per year with the majority of the credit offsetting the Business & Occupation Tax. Passage of this bill would result in minimal losses to the General Revenue Fund in FY2020 and thereafter. Additional administrative costs incurred by the State Tax Department would be minimal.



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 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):


According to our interpretation of this bill, the legislation would expand the current Low-Income Utility Credit to privately owned sewer utilities who are also subject to the Business & Occupation Tax and the Corporation Net Income Tax. Current law allows public utilities who provide electric, water and gas utility services at special reduced rates to low income residential customers to be eligible for a tax credit. According to the Public Service Commission, there are 29 active private sewer companies. However, these companies have minimum Business &Occupation Tax liability. Electricity and natural gas companies account for roughly 80 percent of the Business & Occupation Tax liabilities with water making most of the remaining 20 percent. The current Low-Income Utility Credit costs roughly $6.7 million per year with the majority of the credit offsetting the Business & Occupation Tax. Passage of this bill would result in minimal losses to the General Revenue Fund in FY2020 and thereafter. Additional administrative costs incurred by the State Tax Department would be minimal.



Memorandum


The stated purpose of this bill is to provide reduced rates for low-income residential customers of privately owned sewer utilities. There is a title defect as the bill title does not mention that the bill also adds sewer utilities to the tax credit for reducing utility charges to low-income families. There is no internal date indicating when the changes to the proposed credit would occur. The bill does not update language for sewer utilities in relation to “eligible taxpayer”, “qualified low-income residential customer” and “special reduced rates” per W.Va. Code §11-13F-1.



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