Date Requested:January 14, 2012
Time Requested:01:07 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R1192 Carry Over HB2082
CBD Subject: PROPERTY TAX REAPPRAISAL
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 require the reevaluation cycle of real property be lengthened from every three years to every five years. The bill also limits any assessment increase to ten percent 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 no changes in tax rates, passage of this bill would result in the loss in potential property tax revenue of approximately $73.7 million for local governments and $300,000 for the State in the 2014 fiscal year. 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 jurisdictions may increase their property tax rates to offset at least a portion of the revenue loss tied to valuation limitations.
    
    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 $20,000 to make these changes.

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):
    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 no changes in tax rates, passage of this bill would result in the loss in potential property tax revenue of approximately $73.7 million for local governments and $300,000 for the State in the 2014 fiscal year. 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 jurisdictions may increase their property tax rates to offset at least a portion of the revenue loss tied to valuation limitations.
    
    Since assessments and tax increases would need to be tracked on a property-by-property basis, the State Tax Department would incur a one-time programming cost $20,000 to enable such tracking.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this bill is to require the reevaluation cycle of real property be lengthened from every three years to every five years. The bill also limits any assessment increase to ten percent in any one year.
    
    The bill limits annual increases in assessed value of real and personal 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.
    
    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 of the State Constitution.