Date Requested:March 03, 2008
Time Requested:01:36 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2008R1564 Comm. Sub. SB239
CBD Subject: Creating Senior Citizen Property Tax Payment Deferment Act
FUND(S)
General Revenue Fund, local governments
Sources of Revenue
General Fund,Other Fund local property tax
Legislation creates:
A New Program

Fiscal Note Summary

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

    The stated purpose of this bill is to authorize the deferment of property tax increases for property owned, use and occupied by senior citizens.
    
    The State Tax Department does not have data to quantify the loss of revenue to the State or local governments. Information is not available on the income level of applicants to determine if individuals will qualify for the Property Tax Payment rebate or the Senior Citizens Property Tax Relief Credit.
    West Virginia would join 25 other states and the District of Columbia in allowing certain qualified senior citizens to defer at least a portion of their annual property tax bill. The tax deferment option would provide additional flexibility to senior citizens when paying local property taxes. Senior citizens may also take advantage of the local Homestead Exemption, and the refundable Homestead Exemption Tax Credit for families with federal adjusted gross income at or below 150% of the poverty guidelines. Beginning in 2008, any taxpayer whose owner-occupied residential property tax bill exceeds 4% of their gross household income may claim a refundable State income tax credit for the difference up to a maximum of $1,000. According to a study by the Tax Foundation, West Virginia ranked third lowest among the 50 states in the share of median income for home owners devoted to the payment of residential property taxes in 2006. Given all of the tax benefits associated with home ownership in West Virginia, we would anticipate only a small fraction of the 1,573 eligible homeowners would opt to participate in the proposed tax deferment program. If every eligible homeowner with gross income above $25,000 opts to defer their tax increase payment into the future, then the maximum annual temporary cost to local governments is significantly less than $900,000. The State General Revenue Fund would decrease slightly due to the additional refundable tax credit provisions.
    
    Additional administrative costs cannot be determined. The State Tax Department would have a one-time cost of $25,000 for programming. In addition, the Tax Department and the county sheriffs would incur additional costs because the deferment and acquired interest would have to be tracked annually on a parcel by parcel basis.
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2008
Increase/Decrease
(use"-")
2009
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):
    The State Tax Department does not have data to quantify the loss of revenue to the State or local governments. Information is not available on the income level of applicants to determine if individuals will qualify for the Property Tax Payment rebate or the Senior Citizens Property Tax Relief Credit. However, based on comparisons of Tax Year 2007 and Tax Year 2008 assessment data, less than 1,573 taxpayers currently receiving the Homestead Exemption had an increase in taxes of $300 or more on their parcel of property. If each of these taxpayers applied for and was granted the deferment, there would be a temporary loss of less than $900,000 in local property tax revenues per year due to the temporary deferral of property tax increases. Local governments would eventually recoup any lost funds upon the sale of the home or change in the homeowner. The decision to defer payment of the tax increase would be optional on the part of the homeowner.
    
    West Virginia would join 25 other states and the District of Columbia in allowing certain qualified senior citizens to defer at least a portion of their annual property tax bill. The tax deferment option would provide additional flexibility to senior citizens when paying local property taxes. Senior citizens may also take advantage of the local Homestead Exemption, and the refundable Homestead Exemption Tax Credit for families with federal adjusted gross income at or below 150% of the poverty guidelines. Beginning in 2008, any taxpayer whose owner-occupied residential property tax bill exceeds 4% of their gross household income may claim a refundable State income tax credit for the difference up to a maximum of $1,000. According to a study by the Tax Foundation, West Virginia ranked third lowest among the 50 states in the share of median income for home owners devoted to the payment of residential property taxes in 2006. Given all of the tax benefits associated with home ownership in West Virginia, we would anticipate only a small fraction of the 1,573 eligible homeowners would opt to participate in the proposed tax deferment program. If every eligible homeowner with gross income above $25,000 opts to defer their tax increase payment into the future, then the maximum annual temporary cost to local governments is significantly less than $900,000. The State General Revenue Fund would decrease slightly due to the additional refundable tax credit provisions.
    
    Additional administrative costs cannot be determined. The State Tax Department would have a one-time cost of $25,000 for programming. In addition, the Tax Department and the county sheriffs would incur additional costs because the deferment and acquired interest would have to be tracked annually on a parcel by parcel basis.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us