Date Requested:January 14, 2012
Time Requested:01:12 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2011R1568 Carry Over HJR11
CBD Subject: HOMESTEAD EXEMPTION FROM $25 TO $30,000
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 purpose of this resolution is to increase the homestead exemption from $20,000 to $30,000.
    
    The increase in the Homestead Exemption from $20,000 to $30,000 would initially result in a revenue loss of $17.7 million annually for local levying bodies and an increase of $430,000 in General Revenue Fund collections. The number of senior citizens is expected to grow by nearly 37 percent over the next decade. Homestead Exemption costs will rise in similar fashion over the next decade.
    
    There would be a one-time cost of $20,000 to the State Tax Department for programming changes and changing and printing the Homestead Exemption forms. There would be no additional costs to local governments.

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 -17,300,000
3. Explanation of above estimates (including long-range effect):
    The increase in the Homestead Exemption would initially result in a loss of $17.7 million in local property tax revenue. General Revenue Fund collections would increase by $430,000 as the $70,000 decline 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.
    
    These estimates are based upon the assumption of no tax rate changes on the part of county commissions, municipalities and voters. Twenty-one county commissions, numerous municipalities (e.g. Charleston), and 34 school boards (excess levies) currently impose tax rates below their allowed constitutional caps. Some of these authorities may raise tax rates to partially offset any local revenue loss.
    
    There would be a one-time cost of $20,000 to the State Tax Department for programming changes and changing and printing the Homestead Exemption forms. There would be no additional costs to local governments.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov