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 limit classification of real property as managed timberland to prevent county property tax revenues from decreasing by more than 5 percent. As written, this bill would permit counties, whenever the appraisal of managed timberland within a county would result in decrease in the county’s property tax revenue, to reduce the number of acres classified as managed timberland so that the potential tax revenue loss will not exceed 5 percent. The reduction in acreage classified as managed timberland would be prorated among all owners of such property based upon the total number of acres of managed timberland owned by each taxpayer. According to our interpretation and based upon a computer simulation of current appraisals, passage of this bill would have limited tax revenue decreases in two counties. If the provisions of this bill had been in place for the 2008 tax year, the reduction in Hampshire County revenues would have been $770,000 less and the reduction in Wirt County revenues would have been $160,000 less. Thus, additional potential revenue of $770,000 and $160,000 would have been available for Hampshire and Wirt counties, respectively. It is assumed that this bill’s effect on future revenue would be similar to the simulation. The State General Revenue Fund would also receive a minimal amount of additional revenue. There would be no additional administrative costs to the State Tax Department and counties associated with passage of this bill.



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 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 0 930,000 930,000


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


Passage of this bill would permit counties, whenever the appraisal of managed timberland within a county would result in decrease in the county’s property tax revenue, to reduce the number of acres classified as managed timberland so that the potential tax revenue loss will not exceed 5 percent. The reduction in acreage classified as managed timberland would be prorated among all owners of such property based upon the total number of acres of managed timberland owned by each taxpayer. According to our interpretation and based upon a computer simulation of current appraisals, passage of this bill would have limited tax revenue decreases in two counties. If the provisions of this bill had been in place for the 2008 tax year, the reduction in Hampshire County revenues would have been $770,000 less and the reduction in Wirt County revenues would have been $160,000 less. Thus, additional potential revenue of $770,000 and $160,000 would have been available for Hampshire and Wirt counties, respectively. It is assumed that this bill’s effect on future revenue would be similar to the simulation. The State General Revenue Fund would also receive a minimal amount of additional revenue. There would be no additional administrative costs to the State Tax Department and counties associated with passage of this bill.



Memorandum


The stated purpose of this bill is to limit classification of real property as managed timberland to prevent county property tax revenues from decreasing by more than 5 percent. As written, this bill proposes to permit counties to reclassify managed timberland when “the appraisal of managed timberland results in a decrease in a county’s property tax revenues of more than five percent . . . ” Such a reclassification raises issues of fairness and equality, as the West Virginia Constitutional requires that all taxation be “equal and uniform.”



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