Date Requested:March 23, 2005
Time Requested:02:57 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005R1832 intro HB3176
CBD Subject: Property Exemption
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 clarify and exempt those homes for the aged or continuing care retirement communities operated by tax-exempt corporations from property tax.
    
    This exemption would result in an annual revenue loss of $5.0 million for local levying bodies and a decrease of $20,000 in General Revenue Fund collections. In addition, there would be a one-time collective loss of $4.3 million in potential revenue related to past taxes assessed by the counties and pending litigation in Cabell County and Monongalia County.
    
    There would be no additional administrative 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 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 -5,000,000 -5,000,000
3. Explanation of above estimates (including long-range effect):
    This exemption would result in an annual revenue loss of $5.0 million for local levying bodies and a decrease of $20,000 in General Revenue Fund collections. In addition, there would be a one-time collective loss of $4.3 million in potential revenue related to past taxes assessed by the counties and pending litigation in Cabell County and Monongalia County.
    
    There would be no additional administrative costs.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us
    The stated purpose of this bill is to clarify and exempt those homes for the aged or continuing care retirement communities operated by tax-exempt corporations from property tax.
    
    A primary concern is whether the Legislature has the authority under West Virginia Constitution Article X, Section 1, to exempt the property of retirement homes from ad valorem taxation. Only property used for certain activities (i.e., educational, literary, scientific, religious or charitable purposes) may be exempted. It is the use of the property, not the status of the owner or the property, that determines exemption from property tax.
    
    There is current litigation that involves several retirement homes where significant amounts are required to be paid to the respective retirement home for the person to move into the structure. Furthermore, once residency is established, the residents are required to pay $1,500 or more each month to retain residency. A person may not gain residency without paying these charges. Therefore, there is a question as to whether the usage of such facilities should be considered charitable use.