Date Requested:January 12, 2012
Time Requested:02:07 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2012R1156 Introduced SB124
CBD Subject: HOMESTEAD TAX CREDIT QUALIFICATION CHANGE
FUND(S)
General Revenue Fund
Sources of Revenue
General Fund
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 qualifier for low income to three hundred percent or less of the federal poverty guideline from one hundred fifty percent or less of the federal poverty guideline for a senior citizens’ homestead tax credit.
    
    As written, this bill, would extend the Senior Citizens’ Tax Credit for Property Tax Paid on the first $20,000 of taxable assessed value of a homestead to taxpayers whose federal adjusted gross income is less than or equal to 300 percent of the federal poverty guideline based upon family size. Currently, the eligibility criterion is federal adjusted gross income of less than or equal to 150 percent of the federal poverty guideline. According to our interpretation, passage of this bill would result in an initial annual reduction in the General Revenue Fund of roughly $5 million to $8 million. The number of senior citizens in West Virginia is expected to grow by nearly 37% over the next decade. The annual reduction in General Revenue Fund collections would grow with the increase in number of senior citizens.
    
    Assuming that all Personal Income Tax returns claiming the credit would be accepted as filed, additional administrative costs for the State Tax Department would be minimal.
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2012
Increase/Decrease
(use"-")
2013
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):
    Passage of this bill would extend the Senior Citizens’ Tax Credit for Property Tax Paid on the first $20,000 of taxable assessed value of a homestead to taxpayers whose federal adjusted gross income is less than or equal to 300 percent of the federal poverty guideline based upon family size. Currently, the eligibility criterion is federal adjusted gross income of less than or equal to 150 percent of the federal poverty guideline. According to our interpretation, passage of this bill would result in an initial annual reduction in the General Revenue Fund of roughly $5 million to $8 million. The number of senior citizens in West Virginia is expected to grow by nearly 37% over the next decade. The annual reduction in General Revenue Fund collections would grow with the increase in number of senior citizens.
    
    The change in the definition of low income for purposes of the Senior Citizen Tax Credit for Property Tax Paid to federal adjusted gross income that is 300 percent or less of the federal Poverty Guideline would increase the number of credit claimants from roughly 50,000 to roughly 90,000.
    
    Assuming that all Personal Income Tax returns claiming the credit would be accepted as filed, additional administrative costs for the State Tax Department would be minimal.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to change the qualifier for low income to three hundred percent or less of the federal poverty guideline from one hundred fifty percent or less of the federal poverty guideline for a senior citizens’ homestead tax credit.
    
    The stated purpose refers to a “senior citizens’ homestead tax credit” while the West Virginia Code refers to the credit as the “Senior citizens’ tax credit for property tax paid on . . . a homestead.”The proposed addition appears to alter the character of the subdivision in which the proposed language was added from a definition to a qualification. Also, the proposed revision includes the phrase “Beginning on or after July 1, 2012 . . . ” Generally, the periods for the annual federal poverty guidelines and the Personal Income Tax filing year are based upon a year beginning the first of January. Thus, the proposed changes could be subject to different interpretation than intended.