Date Requested:February 21, 2012
Time Requested:11:34 AM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
Introduced HJR113
CBD Subject: HOMESTEAD EXEMPTION INCREASE AMENDMENT
FUND(S)
General Revenue Fund, local governments
Sources of Revenue
General Fund,Other Fund local property tax revenu
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 amendment is extend the homestead exemption to a surviving spouse who is under sixty-five years of age and not totally disabled under certain circumstances after the death of the qualifying spouse; and to allow each county the option to increase the homestead exemption from $20,000 to an amount not more than fifty percent of the average residential property value, subject to legislative review and approval, and subject to approval by a majority of the county’s voters voting at an election.
    
    This bill proposes an amendment to the West Virginia Constitution extending the Homestead Exemption to a surviving spouse who is under sixty-five years of age and not totally disabled under certain circumstances after the death of the qualifying spouse. In addition the proposed amendment would allow each county the option to increase the homestead exemption from $20,000 to an amount no greater than fifty percent of the average residential property value. The impact of this proposal on State and local property tax revenue cannot be determined because the proposal does not change the Homestead Exemption to any specific amount. However, if the Homestead Exemption were raised to the greater of $20,000 or 50 percent of the average price of a home for each county, local property tax revenues would initially decrease by roughly $46 million and state revenues would increase by roughly $3 million. 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. Also, the Homestead Exemption for each county would be expected to adjust upward or downward each year with changes in the calculated average value of a home.
    
    Many, but not all, local governments would be able to raise their property tax rates to offset some portion of the potential revenue decline. Average overall property tax rates in West Virginia are roughly 17 percent lower today than in 1990. Rates are significantly lower than Constitutional maximums particularly in counties experiencing significant increases in assessed values since 1990. Recent experience suggests that local governments tend to raise tax rates when taxable valuations decrease.
    
    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 0
3. Explanation of above estimates (including long-range effect):
    This bill proposes an amendment to the West Virginia Constitution extending the Homestead Exemption to a surviving spouse who is under sixty-five years of age and not totally disabled under certain circumstances after the death of the qualifying spouse. In addition the proposed amendment would allow each county the option to increase the homestead exemption from $20,000 to an amount no greater than fifty percent of the average residential property value. The impact of this proposal on State and local property tax revenue cannot be determined because the proposal does not change the Homestead Exemption to any specific amount. However, if the Homestead Exemption were raised to the greater of $20,000 or 50 percent of the average price of a home for each county, local property tax revenues would initially decrease by roughly $46 million and state revenues would increase by roughly $3 million. 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. Also, the Homestead Exemption for each county would be expected to adjust upward or downward each year with changes in the calculated average value of a home.
    
    Many, but not all, local governments would be able to raise their property tax rates to offset some portion of the potential revenue decline. Average overall property tax rates in West Virginia are roughly 17 percent lower today than in 1990. Rates are significantly lower than Constitutional maximums particularly in counties experiencing significant increases in assessed values since 1990. Recent experience suggests that local governments tend to raise tax rates when taxable valuations decrease.
    
    There would be a one-time cost of $20,000 to the State Tax Department. Other additional administrative costs to the State Tax Department or local governments cannot be determined.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    The stated purpose of this amendment is extend the homestead exemption to a surviving spouse who is under sixty-five years of age and not totally disabled under certain circumstances after the death of the qualifying spouse; and to allow each county the option to increase the homestead exemption from $20,000 to an amount not more than fifty percent of the average residential property value, subject to legislative review and approval, and subject to approval by a majority of the county’s voters voting at an election.
    
    By allowing each county to set its own Homestead Exemption, the proposed amendment would be inconsistent with West Virginia Constitution Article X, Section 1, which requires that property taxes be equal and uniform throughout the State.