FISCAL NOTE

Date Requested: January 12, 2018
Time Requested: 12:32 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1666 Introduced
CBD Subject: Governor -- Bills Requested By, Taxation


FUND(S):

General Revenue Fund, State Road Fund

Sources of Revenue:

General Fund State Road Fund

Legislation creates:





Fiscal Note Summary


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


    The stated purpose of this bill is to eliminate the refundable exemption for road construction contractors. The bill prohibits the transfer of revenues collected from the state’s consumers sales and service tax and the state’s use tax to the State Road Fund. The bill requires the Tax Commissioner to transfer $12.5 million collected pursuant to the state’s consumers sales and service tax via the General Revenue Fund to the state road fund by June 15 of each fiscal year. The bill makes technical corrections. The bill specifies the effective date.
    
    According to our interpretation, the proposed bill would eliminate the refundable exemption for road construction contractors effective July 1, 2018 and would prohibit the existing transfer of Consumer Sales Tax funds to the State Road Fund effective January 1, 2018. Also according to our interpretation, the bill would require the Tax Commissioner to transfer $12.5 million of Consumer Sales Taxes collected in the General Revenue Fund to the State Road Fund by June 15th of each fiscal year.
    
    The official estimate for General Revenue Fund Consumer Sales Tax in FY2019 assumes passage of this bill and accounts for a $12.5 million annual transfer from General Revenue Fund to the State Road Fund beginning in FY2018.
    
    Absent passage of the proposed bill, the expected FY2019 revenue loss to the General Revenue Fund is roughly $16.0 million. It is important to note there is a high level of uncertainty in this estimate as current Law requires a transfer from the General Revenue Fund to the State Road Fund equal to 6 percent of 40 percent of executed highway contracts. Given that current Law does not require spending to have occurred on such contracts – including spending on labor and materials used for the construction, repair, and maintenance of highways in the State – timing of monetary input and economic benefit associated with highway spending can deviate widely from when contracts are put in place. Due to the uncertainty as to when these contracts may be executed relative to actual spending of highway monies, losses in the out years could potentially be higher than the FY2019 estimate absent passage of the proposed legislation.
    
    There are no additional administrative costs expected by the State Tax Department.
    



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):


    According to our interpretation, the proposed bill would eliminate the refundable exemption for road construction contractors effective July 1, 2018 and would prohibit the existing transfer of Consumer Sales Tax funds to the State Road Fund effective January 1, 2018. Also according to our interpretation, the bill would require the Tax Commissioner to transfer $12.5 million of Consumer Sales Taxes collected in the General Revenue Fund to the State Road Fund by June 15th of each fiscal year.
    
    The official estimate for General Revenue Fund Consumer Sales Tax in FY2019 assumes passage of this bill and accounts for a $12.5 million annual transfer from General Revenue Fund to the State Road Fund beginning in FY2018.
    
    Absent passage of the proposed bill, the expected FY2019 revenue loss to the General Revenue Fund is roughly $16.0 million. It is important to note there is a high level of uncertainty in this estimate as current Law requires a transfer from the General Revenue Fund to the State Road Fund equal to 6 percent of 40 percent of executed highway contracts. Given that current Law does not require spending to have occurred on such contracts – including spending on labor and materials used for the construction, repair, and maintenance of highways in the State – timing of monetary input and economic benefit associated with highway spending can deviate widely from when contracts are put in place. Due to the uncertainty as to when these contracts may be executed relative to actual spending of highway monies, losses in the out years could potentially be higher than the FY2019 estimate absent passage of the proposed legislation.
    
    There are no additional administrative costs expected by the State Tax Department.
    
    



Memorandum


    



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