Date Requested: January 28, 2015
Time Requested: 01:54 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
1756 Introduced HB2076
CBD Subject: Tax


FUND(S):

General Revenue Fund, local governments

Sources of Revenue:

General Fund,Other Fund local governments

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 allow quarterly payment of real and personal property taxes.
    
    As written, this bill provides that beginning July 1, 2015, current taxes on real and personal property may be paid as follows: the first quarterly installment is payable on September 1 of the year for which the assessment is made and becomes delinquent on October 1; the second quarterly installment is payable on the following January 1 and becomes delinquent on February 1; the third quarterly installment is payable on the following March 1 and becomes delinquent on April 1, and the fourth quarterly installment is payable on the following August 1 and becomes delinquent on September 1.
    
    According to our interpretation, passage of this bill would not change the amount of current taxes assessed and due on real and personal property. However, since the proposed fourth quarterly installment would be made in a fiscal year different from the first three quarterly installments, there would be a one-time shift in funds that would have been collected in FY2016 to FY2017. The State Tax Department does not have sufficient information to determine how much revenue would be moved out of FY2016 because some taxpayers would continue paying their bill either once a year or possibly in two or three installments. The change in revenue deposit timing would significantly impact county budgets, school budgets and municipal budgets for FY2016. There would also be an impact to the State General Revenue Fund if the Legislature desires to incorporate the expected shift in funding in the FY2016 School Aid Formula. Assuming that some current tax collections are deposited into interest bearing accounts prior to their expenditure, the additional installment payments may result in a minor reduction in earned interest.
    
    Passage of this bill would result in some additional administrative costs to County Sheriff’s Offices.
    



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):


    As written, this bill provides that beginning July 1, 2015 current taxes on real and personal property may be paid as follows: the first quarterly installment is payable on September 1 of the year for which the assessment is made and becomes delinquent on October 1; the second quarterly installment is payable on the following January 1 and becomes delinquent on February 1; the third quarterly installment is payable on the following March 1 and becomes delinquent on April 1, and the fourth quarterly installment is payable on the following August 1 and becomes delinquent on September 1.
    
    According to our interpretation, passage of this bill would not change the amount of current taxes assessed and due on real and personal property. However, since the proposed fourth quarterly installment would be made in a fiscal year different from the first three quarterly installments, there would be a one-time shift in funds that would have been collected in FY2016 to FY2017. The State Tax Department does not have sufficient information to determine how much revenue would be moved out of FY2016 because some taxpayers would continue paying their bill either once a year or possibly in two or three installments. Currently, mortgage companies are required to make payments of property taxes from escrow accounts twice a year.
    
    The change in revenue deposit timing would significantly impact county budgets, school budgets and municipal budgets for FY2016. Based on very limited information, we anticipate that between 5 and 10 percent of property tax collections could be shifted from FY2016 to FY2017, and counties, municipalities and school boards could face deficits in FY2016. If the one-time shift is limited to roughly 5 percent, the county school boards would collectively lose nearly $54 million, county commissions roughly $30 million, and municipalities roughly $6 million in FY2016. The one-time loss would increase if the revenue shift is ultimately greater than 5 percent. There would also be an impact to the State General Revenue Fund if the Legislature desires to incorporate any expected shift in funding in the FY2016 School Aid Formula. Assuming that some current tax collections are deposited into interest bearing accounts prior to their expenditure, the additional installment payments may result in a minor reduction in earned interest.
    
    Passage of this bill would result in some additional administrative costs to County Sheriff’s Offices.
    
    



Memorandum


    



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