Date Requested:February 16, 2013
Time Requested:11:55 AM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2013R1885 Introduced HB2430
CBD Subject: SOLAR ENERGY ADDITIONS
FUND(S)
General Revenue Fund, Local Government Revenue
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 bill is to exempt the construction or addition of active solar energy systems from real and personal property taxation. The bill defines terms. The bill provides a partial exclusion for certain equipment. The bill determines who may claim the exemption.
    
     As written, the bill defines “active solar energy system” as “a system that uses solar devices, that 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.” 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 bill also provides that County Assessors are to evaluate claims for property to be designated as active solar energy systems and to determine the portion that is attributable to the active solar energy system.
    
     The reduction in revenue to the State and to local governments cannot be determined because the actual revenue decrease would be heavily dependent upon the methodology used to determine the value of the active solar energy system.
    
     Additional costs to the State Tax Department and local governments associated with this bill would be minimal.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2013
Increase/Decrease
(use"-")
2014
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, the bill defines “active solar energy system” as “a system that uses solar devices, that 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.” 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 bill also provides that County Assessors are to evaluate claims for property to be designated as active solar energy systems and to determine the portion that is attributable to the active solar energy system.
    
     The reduction in revenue to the State and to local governments cannot be determined because the actual revenue decrease would be heavily dependent upon the methodology used to determine the value of the active solar energy system.
    
     Additional costs to the State Tax Department and local governments associated with this bill would be minimal.


Memorandum
Person submitting Fiscal Note:
Mark B. Muchow
Email Address:
Roger.D.Cox@wv.gov
     The stated purpose of this bill is to exempt the construction or addition of active solar energy systems from real and personal property taxation. The bill defines terms. The bill provides a partial exclusion for certain equipment. The bill determines who may claim the exemption.
    
     The proposed exemption appears to be contrary to the West Virginia Constitution’s requirement that property be taxed in proportion to its value. Additionally, the bill proposes that the exemption is generally only available to the initial purchaser. 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.