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 limiting the valuation of any property still owned by the same person or persons who owned the property at the time of the previous periodic valuation, the property’s assessed value may not be greater than one and seventy-five thousandths times the previous assessed valuation. Assuming the tax rates remain unchanged, passage of this bill would result in the losses in potential property tax revenue of approximately $74.2 million for local governments and $300,000 for the State in 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 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


Effect of Proposal Fiscal Year
2009
Increase/Decrease
(use"-")
2010
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 250,000 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 -74,700,000


Explanation of above estimates (including long-range effect):


Assuming the tax rates remain unchanged, passage of this bill would result in the losses in potential property tax revenue of approximately $74.2 million for local governments and $300,000 for the State in 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 Tax Department would incur additional costs of $250,000 to make these changes. In addition, local governments would have increased personnel costs.



Memorandum


The stated purpose of this bill is to limiting the valuation of any property still owned by the same person or persons who owned the property at the time of the previous periodic valuation, the property’s assessed value may not be greater than one and seventy-five thousandths times the previous assessed valuation. The bill limits annual increases in assessed value of real property to 7.5 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, 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