FISCAL NOTE
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 change the time for periodic valutions and assessments of real and personal property from every three years to every five years and provide 10% cap on any increase in assessment in any one year.
This bill would change the time for periodic valuations and assessments of real and personal property from every three years to every five years. The bill would also provide a cap on increases to assessments. This cap would apply to individual assessments. Assuming the tax rates remain unchanged, passage of this bill would result in a loss in potential property tax revenue of approximately $10.6 million for local governments and a minimal decline for the State in the Fiscal Year 2011. 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 could recoup a portion of the revenue loss by raising property tax rates.
As a result of passage of this bill, programming changes would be needed to track property on a property-by-property basis. The State Tax Department would incur additional costs of $25,000 to make these changes. There would be no additional costs to the State or local governments.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2009
Increase/Decrease
(use"-") |
2010
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
25,000 |
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):
This bill would change the time for periodic valuations and assessments of real and personal property from every three years to every five years. The bill would also provide a cap on increases to assessments. This cap would apply to individual assessments. Assuming the tax rates remain unchanged, passage of this bill would result in a loss in potential property tax revenue of approximately $10.6 million for local governments and a minimal decline for the State in the Fiscal Year 2011. 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 could recoup a portion of the revenue loss by raising property tax rates.
As a result of passage of this bill, programming changes would be needed to track property on a property-by-property basis. The State Tax Department would incur additional costs of $25,000 to make these changes. There would be no additional costs to the State or local governments.
Memorandum
The stated purpose of this bill is to change the time for periodic valutions and assessments of real and personal property from every three years to every five years and provide 10% cap on any increase in assessment in any one year.
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 bill limits annual increases in assessed value of real property to ten percent. Article X, Section 1 of the West Virginia Constitution provides that “all property, both real and personal, shall be taxed in proportion to its value to be ascertained as directed by law”. By limiting such increases in value to a maximum of 10 percent per year, the bill allows some property to be taxed in a way that is not proportionate to its value, which may possibly violate the constitutional provision.
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us