Date Requested:January 12, 2007
Time Requested:03:45 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2007R0548 Introduced HB2074
CBD Subject: Cap on Increases
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 provide a five percent cap on any increase in assessment in any one year.
    
    Assuming tax rates do not rise, passage of this bill would result in the losses in potential property tax revenue of approximately $49.0 million for local governments and $200,000 for the State in the 2009 fiscal year. This loss would decrease slightly each year, but the decrease would be offset by the fiscal effect of the limitation on assessment increases in future years. Local governments may increase property tax rates to offset at least a portion of the revenue decrease associated with assessment limitations.
    
    As a result of passage of this bill, programming changes would be needed to track property on a property-by-property basis. The Tax Department would incur additional costs of $250,000 to make these changes. In addition, local governments would have increased personnel costs.
    
Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2007
Increase/Decrease
(use"-")		 2008
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
3. Explanation of above estimates (including long-range effect):
    Assuming tax rates do not rise, passage of this bill would result in the losses in potential property tax revenue of approximately $49.0 million for local governments and $200,000 for the State in the 2009 fiscal year. This loss would decrease slightly each year, but the decrease would be offset by the fiscal effect of the limitation on assessment increases in future years. Local governments may increase property tax rates to offset at least a portion of the revenue decrease associated with assessment limitations.
    
    As a result of passage of this bill, programming changes would be needed to track property on a property-by-property basis. The Tax Department would incur additional costs of $250,000 to make these changes. In addition, local governments would have increased personnel costs.
    

Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us
    The stated purpose of this bill is to provide a five percent cap on any increase in assessment in any one year.
    
    The bill specifically states “That in any given year, increases in valuations may not result in more than a five percent increase in assessment.” It is presumed that this means that there may not be more than a 5% increase in assessed value, which is 60% of market value, a requirement imposed by West Virginia Constitution X, Section 1b. As a result, it is possible for this amendment to be interpreted as a violation the Constitution.