FISCAL NOTE

Date Requested: February 12, 2019
Time Requested: 01:01 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
3195 Introduced HB3047
CBD Subject:


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Creates New Revenue, Creates New Expense, 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 provide that moneys in the West Virginia Emergency Medical Services Retirement Fund are exempt from any state or municipal tax, are not subject to execution, garnishment, attachment or any other process whatsoever with the exception that the benefits or contributions under the system shall be subject to “qualified domestic relations orders,” and are generally unassignable. The bill puts EMS members on equal retirement fund footing as firefighters, deputy sheriffs and other first responders’ personnel.
    
    This bill exempts from all state taxes both the funds and the proceeds of the emergency medical services retirement fund. Under the provisions of this bill, pension benefits from the West Virginia Emergency Medical Services Retirement Fund would be exempt from Personal Income Tax. The exemption of these pension benefits would result in be a loss of $150,000 in State revenue beginning in FY2021. Retirees from this Fund would also be eligible for the $8,000 modification for senior citizens or persons who are totally and personally disabled if they had income in addition to this pension income. Therefore, passage of this bill as written would effectively provide emergency medical services retirees over age 65 with a greater tax preference than retired firefighters, deputy sheriffs, military and other law enforcement personal.
    
    Additional administrative costs would be minimal in FY2020.
    
    



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 1,000 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 -150,000


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


    This bill exempts from all state taxes both the funds and the proceeds of the emergency medical services retirement fund. Under the provisions of this bill, pension benefits from the West Virginia Emergency Medical Services Retirement Fund would be exempt from Personal Income Tax. The exemption of these pension benefits would result in be a loss of $150,000 in State revenue beginning in FY2021. Retirees from this Fund would also be eligible for the $8,000 modification for senior citizens or persons who are totally and personally disabled if they had income in addition to this pension income. Therefore, passage of this bill as written would effectively provide emergency medical services retirees over age 65 with a greater tax preference than retired firefighters, deputy sheriffs, military and other law enforcement personal.
    
    Additional administrative costs would be minimal in FY2020.
     
    



Memorandum


    The stated purpose of this bill is to provide that moneys in the West Virginia Emergency Medical Services Retirement Fund are exempt from any state or municipal tax, are not subject to execution, garnishment, attachment or any other process whatsoever with the exception that the benefits or contributions under the system shall be subject to “qualified domestic relations orders,” and are generally unassignable. The bill puts EMS members on equal retirement fund footing as firefighters, deputy sheriffs and other first responders’ personnel.
    
    W. Va. Code §11-21-12(c)(6), which refers to pension benefits of police, fire, and sheriff’s deputies, eliminates Personal Income Tax on retirement income they receive. Under subdivisions (8) and (9) of W. Va. Code §11-21-12(c), taxpayers age 65 or older or permanently disabled, or their surviving spouse, are allowed to subtract $8,000 from any source from their federal adjusted gross income; however, that amount may be reduced or eliminated depending upon what other modifications the taxpayer may have taken such as those under subdivision (6) (pension benefits of police, fire, and sheriff’s deputies). This limit of $8,000 modification would not apply to pension benefits from the West Virginia Emergency Medical Services Retirement Fund. As written, it appears that an eligible taxpayer may be able to take the exemption under new §16-5V-36 for their retirement benefits as well as claim the $8,000 modification under subdivisions (8) and (9).
    
    There are some concerns about the recent United States Supreme Court decision concerning exemption of state employees’ retirement funds and the discriminatory effect on federal employee retirement funds. Very few taxpayers would qualify for the modification for benefits from the West Virginia Emergency Medical Services Fund, but extension to federal retirees would become exceedingly expensive.
    
    



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