Date Requested: January 23, 2015
Time Requested: 03:38 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
1287 Introduced HJR1
CBD Subject: Const. Amendments


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 permit the Legislature to exempt from ad valorem taxation tangible personal property directly used in commercial and industrial businesses, or such components thereof as the Legislature may in its discretion designate.
    
    As written, this resolution proposes an amendment to the Constitution of the State of West Virginia to be submitted to the voters of the State at the next general election to be held in the year 2016. Passage of this resolution, in and of itself, will have no impact on current State and local revenue. If the proposed Amendment is subsequently ratified by voters, the Legislature would have authority to enact laws to exempt all or portions of tangible personal property directly used in commercial and industrial businesses. The exemption of new tangible personal property directly used in commercial and industrial businesses would result in a revenue loss of $87.0 million in the first year the exemption is in effect, and each year, for the next nine years, an additional $18.0 million would be lost annually. After that, it is estimated that the revenue loss would be an additional $11.0 million annually. After fifteen years, nearly all machinery and equipment would be subject to the exemption, and this exemption would result in a revenue loss of $304.0 million annually. Of this $304.0 million, the revenue loss would be roughly $89.9 million to the State General Revenue Fund, $111.6 million to local county school boards, $80.8 million to county commissions and $21.7 million to municipalities. The distribution of estimated cost is based on information from taxes levied as reported in the FY 2015 Classified Assessed Valuations Taxes Levied publication of the State Tax Department and the incorporation of the calculation of local property tax share within the State Aid to Schools Formula.
    
    Additional administrative costs to the State Tax Department or local governments would be minimal.
    
    



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 resolution proposes an amendment to the Constitution of the State of West Virginia to be submitted to the voters of the State at the next general election to be held in the year 2016. Passage of this resolution, in and of itself, will have no impact on current State and local revenue. If the proposed Amendment is subsequently ratified by voters, the Legislature would have authority to enact laws to exempt all or portions of tangible personal property directly used in commercial and industrial businesses. The first year exemption would include all business inventory in addition to new machinery and equipment. The exemption of tangible personal property directly used in commercial and industrial businesses would result in a revenue loss of $87.0 million in the first year the exemption is in effect, and each year, for the next nine years, an additional $18.0 million would be lost annually. After that, it is estimated that the revenue loss would be an additional $11.0 million annually. After fifteen years, this exemption would result in a revenue loss of $304.0 million annually. Of this $304.0 million, the revenue loss would be roughly $89.9 million to the State General Revenue Fund, $111.6 million to local county school boards, $80.8 million to county commissions and $21.7 million to municipalities. The distribution of estimated cost is based on information from taxes levied as reported in the FY 2015 Classified Assessed Valuations Taxes Levied publication of the State Tax Department and the incorporation of the calculation of local property tax share within the State Aid to Schools Formula.
    
    Additional administrative costs to the State Tax Department or local governments would be minimal.
    
    
    



Memorandum


    



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