Date Requested:February 11, 2005
Time Requested:02:53 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005r802 intro hb2283
CBD Subject: real estate increase cap
FUND(S)
General Revenue Fund
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.

    Passage of this bill would result in losses of potential revenue as shown below.
    
     State Loss to Local
    
     Loss Governments
    
    Year 1 $221,000 $54,900,000
    
    Year 2 193,000 47,900,000
    
    Year 3 182,000 45,400,000
    
    These estimates were made using one-year growth to figure three-year losses. There would be additional losses in years 2 and 3 due to new growth in assessments. These estimates also do not account for new construction or new properties.
    
    The Tax Department would incur $200,000 in additional costs in the first year and $20,000 per year thereafter for programming costs.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2005
Increase/Decrease
(use"-")
2006
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 200,000 20,000 20,000
Personal Services 0 0 0
Current Expenses 200,000 20,000 20,000
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 -55,100,000 -55,100,000
3. Explanation of above estimates (including long-range effect):
    Passage of this bill would result in losses of potential revenue as shown below.
    
     State Loss to Local
    
     Loss Governments
    
    Year 1 $221,000 $54,900,000
    
    Year 2 193,000 47,900,000
    
    Year 3 182,000 45,400,000
    
    These estimates were made using one-year growth to figure three-year losses. There would be additional losses in years 2 and 3 due to new growth in assessments. These estimates also do not account for new construction or new properties.
    
    The Tax Department would incur $200,000 in additional costs in the first year and $20,000 per year thereafter for programming costs.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@tax.state.wv.us
    The bill does not adjust for assessment increases due to additions, new construction or beginning recovery of natural resources. These events could result in assessment increases above the 15 percent threshold.
    
    The West Virginia Constitution requires that all property be equally and uniformly taxed in proportion to its value. This bill authorizes the assessed value increase to be phased-in over a three-year period if the assessed value increases between 5 percent and 15 percent in a year. By allowing the increased value to be phased-in over a three-year period, it is not until the third year that the property is being taxed in the same proportion to its value as other property. This could be interpreted as a violation of the Constitution.