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 $30,000. However, if the homeowner’s federal adjusted gross income is equal to or less than two hundred percent of the federal poverty level the exemption shall be the greater of $30,000 or fifty percent of the average sale price of homes in that county during the five preceding years, provided that the exemption may not be greater than fifty percent of the average sale price of homes in the state during those five preceding years.
The total loss of revenue to the State and local governments cannot be determined. In isolation and absent any offsetting tax rate increases on the part of local tax jurisdictions, the change to a minimum $30,000 Homestead Exemption would reduce local tax collections by $17.1 million and would increase State General Revenue Fund collections by $460,000. However, information tying taxpayer income to local residential property tax liability is generally not available.
There would be a one-time cost of $40,000 to the State Tax Department. Other additional administrative costs to the State Tax Department or local governments cannot be determined. However, administrative costs for local county assessors will increase as they seek information from taxpayers on their income to determine the level of individual Homestead Exemption.
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 |
0 |
Explanation of above estimates (including long-range effect):
The State Tax Department does not have sufficient data to estimate the revenue loss to the State and local governments due to passage of this bill. In isolation and absent any offsetting tax rate increases on the part of local tax jurisdictions, the change to a minimum $30,000 Homestead Exemption would reduce local tax collections by $17.1 million and would increase State General Revenue Fund collections by $460,000. However, information tying taxpayer income to local residential property tax liability is generally not available.
There would be a one-time cost of $40,000 to the State Tax Department. Other additional administrative costs to the State Tax Department or local governments cannot be determined. However, administrative costs for local county assessors will increase as they seek information from taxpayers on their income to determine the level of individual Homestead Exemption.
Memorandum
The stated purpose of this resolution is to increase the homestead exemption from $20,000 to $30,000. However, if the homeowner’s federal adjusted gross income is equal to or less than two hundred percent of the federal poverty level the exemption shall be the greater of $30,000 or fifty percent of the average sale price of homes in that county during the five preceding years, provided that the exemption may not be greater than fifty percent of the average sale price of homes in the state during those five preceding years.
The proposed amendment initially increases the amount of the assessed valuation of property subject to the Homestead Exemption from $20,000 to $30,000. The amendment then provides under a proviso a higher exemption that is determined solely on a needs basis. It appears that the requirement is fulfilled if only one owner has federal AGI that is equal to or less than 200% of the federal poverty level.
Because of the terminology, rather than using the first $30,000 of assessed valuation, the property owner can choose to use as the amount of the exemption 50% of the average home sale price for the five years immediately preceding the assessment in the county where the residence is located. However, the bill does not indicate how the average home sale price is to be determined.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov