FISCAL NOTE

Date Requested: January 09, 2019
Time Requested: 05:37 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1033 Introduced SB59
CBD Subject: Education (Higher), Taxation
Date Requested: February 14, 2018
Time Requested: 01:58 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2629 Introduced SB537
CBD Subject: Education (Higher), Taxation


FUND(S):

General Revenue Fund, Business PROMISE+ Scholarship Fund

Sources of Revenue:

General Fund Business PROMISE+ Scholarship 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 implement the Business PROMISE+ scholarship.
    
    According to our interpretation, this bill would allow employers in the State to fund scholarships for certain PROMISE-eligible applicants. An eligible student may receive an award from either the PROMISE Scholarship program or the Business PROMISE+ Scholarship program, but not both, in any single academic term. A sponsored student would receive a Business PROMISE+ Scholarship in an amount of up to $15,000 annually, but not to exceed the amount donated by the eligible business. Any West Virginia business that donates $10,000 or more to the Business PROMISE+ Scholarship Fund would be eligible for a tax credit of 50 percent of the donation to offset Corporation Net Income Tax liabilities.
    
    It is difficult to determine how many businesses may elect to make donations to the Business PROMISE+ Scholarship Fund and in what amounts those donations may be made. In addition, the proposed bill does not address whether tax credits earned may be carried forward to subsequent taxable periods. For some context, in 2016 more than 3,500 high school graduates were awarded PROMISE Scholarships, valued at up to $4,750 per student annually. In total, the program has awarded more than $548 million in scholarships and funding to more than 40,000 students as of the 2016-2017 school year.
    
    Additional administrative costs incurred by the State Tax Department would be $15,000 in FY2020 and $10,000 per year for fiscal years involving form development for the tax credit. Administrative costs in out years could be significant depending on the design and scope of the proposed credit. It is unclear whether and to what extent the Tax Department would be assisting the Commissioner in tracking recipients of the Business PROMISE+ Scholarship and which entity would be responsible for evaluating student compliance.
    
    



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, this bill would allow employers in the State to fund scholarships for certain PROMISE-eligible applicants. An eligible student may receive an award from either the PROMISE Scholarship program or the Business PROMISE+ Scholarship program, but not both, in any single academic term. A sponsored student would receive a Business PROMISE+ Scholarship in an amount of up to $15,000 annually, but not to exceed the amount donated by the eligible business. Any West Virginia business that donates $10,000 or more to the Business PROMISE+ Scholarship Fund would be eligible for a tax credit of 50 percent of the donation to offset Corporation Net Income Tax liabilities.
    
    It is difficult to determine how many businesses may elect to make donations to the Business PROMISE+ Scholarship Fund and in what amounts those donations may be made. In addition, the proposed bill does not address whether tax credits earned may be carried forward to subsequent taxable periods. For some context, in 2016 more than 3,500 high school graduates were awarded PROMISE Scholarships, valued at up to $4,750 per student annually. In total, the program has awarded more than $548 million in scholarships and funding to more than 40,000 students as of the 2016-2017 school year.
    
    Additional administrative costs incurred by the State Tax Department would be $15,000 in FY2020 and $10,000 per year for fiscal years involving form development for the tax credit. Administrative costs in out years could be significant depending on the design and scope of the proposed credit. It is unclear whether and to what extent the Tax Department would be assisting the Commissioner in tracking recipients of the Business PROMISE+ Scholarship and which entity would be responsible for evaluating student compliance.
    



Memorandum


    The stated purpose of this bill is to implement the Business PROMISE+ scholarship.
    
    There are several concerns with this bill. It does not establish a maximum amount for which the tax credit can be claimed. The bill is also silent as to credit carryover and does not specify an effective date for which the tax credit first applies.
    
    As written, the proposed bill does not address what happens to tax credits claimed by businesses in situations where the scholarship recipients have failed to maintain the eligibility requirements for which the scholarship was granted and the tax credit claimed. Given that scholarship recipients who do not comply will likely, or may often, be located out-of-state, this would complicate collection. Further, this bill does not limit the number of students a business may sponsor per $10,000 donation. The bill does not clarify if the work experience provided to sponsored students by an eligible business is on a paid or unpaid basis.
    
    



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