FISCAL NOTE
FUND(S):
General Revenue Fund, local governments
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.
The stated purpose of this resolution is to increase the homestead exemption from $20,000 to $40,000. The bill also provides that the Legislature may adjust the exemption every ten years to reflect any increased rate of inflation.
The increase in the Homestead Exemption from $20,000 to $40,000 would result in a revenue loss of $29.8 million annually for local levying bodies and an increase of $1.7 million in General Revenue Fund collections.
There would be a one-time programming cost of $40,000 to the State Tax Department for computer programming changes on the statewide property tax computer network. Other additional administrative costs to the State Tax Department cannot be determined. There would be no additional administrative costs to local governments.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2011
Increase/Decrease
(use"-") |
2012
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 |
-28,200,000 |
Explanation of above estimates (including long-range effect):
The increase in the Homestead Exemption would result in a loss of $29.8 million in local property tax revenue. General Revenue Fund collections would increase by $1.7 million as the $120,000 decline in State property tax revenue would be offset by a gain in Personal Income Tax collections. As the level of the Homestead Exemption rises, the number of taxpayers who owe property taxes on their home declines. Therefore, the cost of the refundable property tax credit against Personal Income Tax liability for lower income households would also decline.
These estimates are based upon the assumption of no tax rate changes on the part of county commissions, municipalities and voters. Twenty-seven county commissions, numerous municipalities (e.g. Charleston), and 34 school boards (excess levies) currently impose tax rates below their allowed constitutional caps. Some of these authorities may raise tax rates to partially offset any local revenue loss.
There would be a one-time programming cost of $40,000 to the State Tax Department for computer programming changes on the statewide property tax computer network. Other additional administrative costs to the State Tax Department cannot be determined. There would be no additional administrative costs to local governments.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov