Date Requested:February 21, 2012
Time Requested:11:34 AM
Agency: Education, Department of
CBD Number: Version: Bill Number: Resolution Number:
Introduced HJR113
CBD Subject: HOMESTEAD EXEMPTION INCREASE AMENDMENT
FUND(S)
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 purpose of this bill is to provide a local option of increasing the homestead exemption from $20,000 to an amount not more than 50% of the average residential property value in a county, subject to legislative review and approval, and subject to approval by a majority of voters, and to extend the homestead exemption to a surviving spouse who is under 65 years of age upon the death of the eligible spouse.

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 12,161,563 12,161,563
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 -46,000,000 -46,000,000
3. Explanation of above estimates (including long-range effect):
    Based on the assumption that every county would elect the option, it is estimated that the effect of implementing the provisions of this resolution would reduce the local share calculation by $12.2 million for the 2013-14 year and thereafter, which means that state aid to schools would have to increase by this amount, a State cost.
    
    This would be in addition to the estimated decrease in the total projected gross property tax collections computed by the State Tax Department of $46 million. Of this total, the percent of property taxes collected for school purposes is approximately 66%, which means that the effect on the school boards would be approximately $30.3 million. The additional state aid of $12.2 million would offset a portion of this difference, but the school districts would still suffer a reduction of $18.1 million in property tax collections, consisting of approximately $1.5 million in regular levy tax collections (10% difference between the gross collections and the 90% local share percentage), $13.7 million in excess levy collections, and $1.7 million in bond levies. Of course the $1.7 million of bond levy funds would be made up by increasing the levy rates, as would be required by the Municipal Bond Commission, but this would mean that property taxes on the remaining citizens would be increased to make up for this difference.
    
    Two additional noted to keep in mind is that the exemption would increase or decrease each year with changes in the value of an average home in each county. Therefore, the impact upon the school districts would change more significantly than under current law each year. In addition, the number of senior citizens in West Virginia is projected to grow by 37% over the next decade, so the financial impact would continue to increase.


Memorandum
Person submitting Fiscal Note:
Brenda Freed
Email Address:
bfreed@access.k12.wv.us