FISCAL NOTE
Date Requested: February 14, 2024
Time Requested: 08:39 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3002 |
Comm. Sub. |
HB4971 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund, local governments
Sources of Revenue:
General Fund local property tax revenue
Legislation creates:
Decreases Existing Revenue, Increases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The purpose of this bill is to limit property tax on critical materials manufacturing.
The bill provides that property that processes or manufactures critical materials, as defined by the United States Secretary of Energy pursuant to the Energy Act of 2020, shall be appraised, for ad valorem property tax purposes, at a value not greater than its salvage value, which the bill defines as five percent of its fair market value. The list of critical materials includes aluminum, cobalt, copper, dysprosium, electrical steels, fluorine, gallium, iridium, magnesium, natural graphite, neodymium, nickel, platinum, praseodymium, silicon carbide and terbium. The special valuation method would apply to all assessments of critical materials manufacturing equipment made on or after July 1, 2024. Critical material manufacturing equipment is defined as any personal or real property, which are designed, constructed, or installed primarily for the purpose of processing, concentrating, converting, transforming, or manufacturing critical minerals into a raw material. Personal or real property is not critical manufacturing equipment when it turns raw materials into finished goods.
Beginning with property tax assessments occurring on July 1, 2024, both existing and new manufacturing equipment and possibly fixtures associated with any manufacturing activity which converts a critical material into a raw material would be taxed at salvage value. We are not readily able to fully quantify the potential revenue loss for local governments associated with a reduction in property valuation to salvage value. However, the impact would result in some revenue loss in a couple counties.
Additional administrative costs to the Tax Department to adjust the database would be $50,000. Other additional costs to the State or local governments cannot be determined.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2024
Increase/Decrease
(use"-") |
2025
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):
The bill provides that property that processes or manufactures critical materials, as defined by the United States Secretary of Energy pursuant to the Energy Act of 2020, shall be appraised, for ad valorem property tax purposes, at a value not greater than its salvage value, which the bill defines as five percent of its fair market value. The list of critical materials includes aluminum, cobalt, copper, dysprosium, electrical steels, fluorine, gallium, iridium, magnesium, natural graphite, neodymium, nickel, platinum, praseodymium, silicon carbide and terbium. The special valuation method would apply to all assessments of critical materials manufacturing equipment made on or after July 1, 2024. Critical material manufacturing equipment is defined as any personal or real property, which are designed, constructed, or installed primarily for the purpose of processing, concentrating, converting, transforming, or manufacturing critical minerals into a raw material. Personal or real property is not critical manufacturing equipment when it turns raw materials into finished goods.
Beginning with property tax assessments occurring on July 1, 2024, both existing and new manufacturing equipment and possibly fixtures associated with any manufacturing activity which converts a critical material into a raw material would be taxed at salvage value. We are not readily able to fully quantify the potential revenue loss for local governments associated with a reduction in property valuation to salvage value. However, the impact would result in some revenue loss in a couple counties.
Additional administrative costs to the Tax Department to adjust the database would be $50,000. Other additional costs to the State or local governments cannot be determined.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov