Date Requested:February 22, 2005
Time Requested:04:46 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005R30 Intro HB2063
CBD Subject: Property Assessment Increase Phased In
FUND(S)
General Revenue Fund, local governments
Sources of Revenue
General Fund,Other Fund Local property tax
Legislation creates:
Neither Program nor Fund

Fiscal Note Summary

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

    The stated purpose of this bill is to phase in increased assessments on property that are 25% or more over the assessed values of the previous year. The phase-in period is 5 years with no more than 20% of the increased assessment due in each of the 5 years.
    
    Passage of this bill would result in losses of potential revenue as shown below.
    
     State Loss to Local
    
     Loss Governments
    
    Year 1 $152,000 $37,900,000
    
    Year 2 122,000 30,300,000
    
    Year 3 91,000 22,700,000
    
    Year 4 61,000 15,100,000
    
    Year 5 30,000 7,600,000
    
    These estimates were made using one-year growth to figure five-year losses. There would be additional losses in years 2 through 5 due to new growth in assessments. These estimates also do not account for new construction or new properties.
    
    The Tax Department would incur $200,000 in additional costs in the first year and $20,000 per year thereafter for programming costs.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2005
Increase/Decrease
(use"-")
2006
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 200,000 20,000 20,000
Personal Services 0 0 0
Current Expenses 200,000 20,000 20,000
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 -38,000,000 -38,000,000
3. Explanation of above estimates (including long-range effect):
    Passage of this bill would result in losses of potential revenue as shown below.
    
     State Loss to Local
    
     Loss Governments
    
    Year 1 $152,000 $37,900,000
    
    Year 2 122,000 30,300,000
    
    Year 3 91,000 22,700,000
    
    Year 4 61,000 15,100,000
    
    Year 5 30,000 7,600,000
    
    These estimates were made using one-year growth to figure five-year losses. There would be additional losses in years 2 through 5 due to new growth in assessments. These estimates also do not account for new construction or new properties.
    
    The Tax Department would incur $200,000 in additional costs in the first year and $20,000 per year thereafter for programming costs.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us
    The bill does not adjust for assessment increases due to additions, new construction or beginning recovery of natural resources under one interpretation of “same property”. If, however, “same property” means identical property, any changes would exclude these properties from assessment limitations contained in the bill. The bill could result in properties of similar value being taxed dissimilarly and may violate equal protection provisions.
    
    The West Virginia Constitution directs that the assessment level be 60 percent of market value. This bill adds a proviso that directs an assessor to avoid assessing property at any specific percentage and to ignore market changes on property where the changes result in increases that are more than three percent. In areas where market value is increasing rapidly, properties will be held to a level removed from the market. In slower market counties, the allowable increase may well capture the market increase.