Date Requested:February 22, 2012
Time Requested:04:34 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
Amendment HB2741
CBD Subject: ACTIVE SOLAR ENERGY SYSTEMS
FUND(S)
General Revenue Fund, local government revenue
Sources of Revenue
General Fund,Other Fund local government revenue
Legislation creates:
Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    As written, this bill would extend Property Tax treatment of pollution control facilities to solar energy systems.
    
    Solar energy systems, which the bill defines as “a system that uses solar devices, which are thermally isolated from living space or any other area where the energy is used, to provide for the collection, storage, or distribution of solar energy,” would be considered to be personal property and would be accorded salvage value (typically 5 percent of total value) for Property Tax purposes. The bill also indicates that solar energy systems do not include solar swimming pool heaters or hot tub heaters and do not include auxiliary equipment, such as furnaces and hot water heaters that use a source of power other than solar energy to provide usable energy. Some dual use equipment, such as ducts and hot water tanks, that is utilized by both auxiliary equipment and solar energy equipment is considered solar energy system property only to the extent of 75 percent of its full cash value.
    
    The reduction in revenue to the State and to local governments cannot be determined because actual revenue decrease would be heavily dependent upon the methodology used to split the building value between the real estate component and the personal property component.
    
    Additional costs to the State Tax Department and local governments cannot be determined, but could be significant.

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):
    As written, this bill would extend Property Tax treatment of pollution control facilities to solar energy systems.
    
    Solar energy systems, which the bill defines as “a system that uses solar devices, which are thermally isolated from living space or any other area where the energy is used, to provide for the collection, storage, or distribution of solar energy,” would be considered to be personal property and would be accorded salvage value (typically 5 percent of total value) for Property Tax purposes. The bill also indicates that solar energy systems do not include solar swimming pool heaters or hot tub heaters and do not include auxiliary equipment, such as furnaces and hot water heaters that use a source of power other than solar energy to provide usable energy. Some dual use equipment, such as ducts and hot water tanks, that is utilized by both auxiliary equipment and solar energy equipment is considered solar energy system property only to the extent of 75 percent of its full cash value.
    
    The reduction in revenue to the State and to local governments cannot be determined because actual revenue decrease would be heavily dependent upon the methodology used to split the building value between the real estate component and the personal property component.
    
    Additional costs to the State Tax Department and local governments cannot be determined, but could be significant due to the requirement to allocate some portions of project property as solar energy system personal property or as normal property.
    


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kerri.r.petry@wv.gov
    As written, this bill would extend Property Tax treatment of pollution control facilities to solar energy systems.
    
    The bill assesses dual use property at 75% of its “full cash value”. However, “full cash value” is not defined. Dual use property is explained as equipment used “by both auxiliary equipment and solar energy equipment”, but the distinction between auxiliary equipment and dual use is not clear.