FISCAL NOTE
Date Requested: February 19, 2025
Time Requested: 04:31 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1963 |
Introduced |
HB2601 |
|
|---|
| CBD Subject: |
Motor Vehicles; Real and Personal Property |
|---|
|
FUND(S):
General Revenue Fund, local governments
Sources of Revenue:
General Fund local property tax revenue
Legislation creates:
Decreases Existing Revenue, Decreases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to exempt motor vehicles from personal property tax.
Under the provisions of this bill, motor vehicles would not be subject to Property Tax. This exemption of motor vehicles would result in a revenue loss of $188.5 million annually. The estimated revenue loss would be roughly $53.9 million to the State General Revenue Fund, $74.5 million to local county school boards, $49.5 million to county commissions and $10.6 million to municipalities. The distribution of estimated cost is based on information from taxes levied as reported in the Classified Assessed Valuations Taxes Levied for 2018 Tax Year publication of the State Tax Department and the incorporation of the calculation of local property tax share within the State Aid to Schools Formula. The Property Tax loss from motor vehicles owned by public utilities is not included in this estimate. Public utility property is assessed on a unitary basis. Motor vehicles owned by public utilities are not assessed separately.
Under current law, Property Taxes that are timely paid can be taken as a refundable Personal Income Tax credit. The State would see an increase in Personal Income Tax revenue, but the increase would not be as high as the $188.5 million Property Tax increase because not all Property Taxes are timely paid. The gain in revenue to the General Revenue Fund from the Personal Income Tax increase would be partially offset by the $53.9 million loss in Property Taxes.
There would be a savings in costs to the State Tax Department. Since there would be no Property Taxes on motor vehicles, there would be no credit for Property Taxes paid on motor vehicles on the Personal Income Tax return. The savings in costs to the State Tax Department would be $605,000. There would also be a cost savings to county assessors since they would no longer need to assess motor vehicles.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2025
Increase/Decrease
(use"-") |
2026
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 |
Explanation of above estimates (including long-range effect):
Under the provisions of this bill, motor vehicles would not be subject to Property Tax. This exemption of motor vehicles would result in a revenue loss of $188.5 million annually. The estimated revenue loss would be roughly $53.9 million to the State General Revenue Fund, $74.5 million to local county school boards, $49.5 million to county commissions and $10.6 million to municipalities. The distribution of estimated cost is based on information from taxes levied as reported in the Classified Assessed Valuations Taxes Levied for 2018 Tax Year publication of the State Tax Department and the incorporation of the calculation of local property tax share within the State Aid to Schools Formula. The Property Tax loss from motor vehicles owned by public utilities is not included in this estimate. Public utility property is assessed on a unitary basis. Motor vehicles owned by public utilities are not assessed separately.
In most counties, decreased tax revenue due to the elimination of Property Tax revenue on motor vehicles would likely be at least partially offset by higher tax rates and tax burdens on other types of property, including both real property taxes and personal property taxes on business inventory, machinery and equipment.
Under current law, Property Taxes that are timely paid can be taken as a refundable Personal Income Tax credit. The State would see an increase in Personal Income Tax revenue, but the increase would not be as high as the $188.5 million Property Tax increase because not all Property Taxes are timely paid. The gain in revenue to the General Revenue Fund from the Personal Income Tax increase would be partially offset by the $53.9 million loss in Property Taxes.
There would be a savings in costs to the State Tax Department. Since there would be no Property Taxes on motor vehicles, there would be no credit for Property Taxes paid on motor vehicles on the Personal Income Tax return. The savings in costs to the State Tax Department would be $605,000. There would also be a cost savings to county assessors since they would no longer need to assess motor vehicles.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov