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 resolution is to change the homestead exemption for citizens of this state and who are sixty-five years of age or older or are permanently and totally disabled, from exempting the first $20,000 of assessed valuation of any real property to exempting an amount equal to the first fifty percent of the average sale of real property in that county over the five years preceding the assessment, and to permit the Legislature to exempt from ad valorem taxation tangible personal property directly used in commercial and industrial businesses, or such components thereof as the Legislature may in its discretion designate.
The change in the Homestead Exemption would result in a loss of $45.2 million in local property tax revenue and an increase in General Revenue Fund collections of at least $5.6 million.
In addition to increasing the Homestead Exemption, the proposal permits the Legislature discretion in enacting, or not enacting, laws pertaining to tangible personal property directly used in commercial and industrial businesses in the future. Since this portion of the proposal merely permits the Legislature to act in the future, this portion would have no impact on the current revenue of the State or local governments.
Additional administrative costs for the State Tax Department for computer programming changes on the statewide property tax computer network cannot be determined. There would be no additional administrative costs for local governments.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2010
Increase/Decrease
(use"-") |
2011
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 |
-39,600,000 |
Explanation of above estimates (including long-range effect):
The change in the Homestead Exemption would result in a loss of $45.2 million in local property tax revenue. General Revenue Fund collections would increase by at least $5.6 million as a decline of $180,000 in State property tax revenue would be offset by a gain in Personal Income Tax collections. As the level of the Homestead Exemption rises, the number of taxpayers who owe property taxes on their home declines. Therefore, the cost of the refundable property tax credit against Personal Income Tax liability for lower income households would also decline.
In addition to increasing the Homestead Exemption, the proposal permits the Legislature discretion in enacting, or not enacting, laws pertaining to tangible personal property directly used in commercial and industrial businesses in the future. Since this portion of the proposal merely permits the Legislature to act in the future, this portion would have no impact on the current revenue of the State or local governments.
Additional administrative costs for the State Tax Department for computer programming changes on the statewide property tax computer network cannot be determined. There would be no additional administrative costs for local governments.
Memorandum
The stated purpose of this Resolution is to change the homestead exemption for citizens of this state and who are sixty-five years of age or older or are permanently and totally disabled, from exempting the first $20,000 of assessed valuation of any real property to exempting an amount equal to the first fifty percent of the average sale of real property in that county over the five years preceding the assessment.
There are some concerns in a percentage exemption based on sales in that county alone in that the exemption amount would be larger in some counties than it would be in others. While this proposal would change the Constitution to allow for this, it does not change the provision of the Constitution that calls for fair and equal taxation. Therefore, there would be conflicting constitutional provisions.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov