Date Requested: January 21, 2015
Time Requested: 10:54 AM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
1848 Introduced SB269
CBD Subject: Tax


FUND(S):

General Revenue Fund, local government funds

Sources of Revenue:

General Fund,Other Fund local government

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 bill is to create a $20,000 annual flood zone homestead property tax exemption for property owners residing on homestead properties in designated flood plains.
    
    As written, this bill would create an exemption from Property Tax for the first $20,000 of assessed value of a homestead in a high risk area. The bill defines “high risk area” as meaning “an area with a one percent annual chance of flooding and a twenty-six percent chance over [sic] flooding over the life of a thirty-year mortgage.” The exemption would be in addition to any other exemptions for which the homeowner may qualify.
    
    The State Tax Department does not have sufficient information to determine how many homes would be in the high risk area, as defined by the bill. While we are unable to accurately estimate the potential revenue reduction attributable to passage of this bill, it could be significant in most counties.
    
    Passage of this bill would increase administrative costs of local governments.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2015
Increase/Decrease
(use"-")
2016
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):


    Passage of this bill would create an exemption from Property Tax for the first $20,000 of assessed value of a homestead in a high risk area. The bill defines “high risk area” as meaning “an area with a one percent annual chance of flooding and a twenty-six percent chance over [sic] flooding over the life of a thirty-year mortgage.” The exemption would be in addition to any other exemptions for which the homeowner may qualify.
    
    The State Tax Department does not have sufficient information to determine how many homes would be in the high risk area, as defined by the bill. While we are unable to accurately estimate the potential revenue reduction attributable to passage of this bill, it could be significant in most counties.
    
    Passage of this bill would increase administrative costs of local governments.
    
    



Memorandum


    The stated purpose of this bill is to create a $20,000 annual flood zone homestead property tax exemption for property owners residing on homestead properties in designated flood plains.
    
    The bill defines “high risk area” as meaning “an area with a one percent annual chance of flooding and a twenty-six percent chance over [sic] flooding over the life of a thirty-year mortgage.” It is assumed the definition should be stated as “an area with a one percent annual chance of flooding and a twenty-six percent chance of flooding over the life of a thirty-year mortgage.” While the bill purports to match the Federal Emergency Management Agency (FEMA) definition, the assumed definition actually corresponds to the FEMA definition of a “coastal high hazard area.”
    
    The bill also provides that the new exemption would be in addition to any other exemptions for which the homeowner may qualify. The bill also contains language that could be construed to grant exemptions for multiple homesteads owned by a single person, a practice not allowed for the ordinary homestead exemption.
    
    Also, the bill does not specify which agency of the State will have authority to determine what areas are “high risk areas,” nor does it provide for such areas to be determined by reference to some other government agency (such as FEMA).
    
    



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov