Date Requested: January 30, 2015
Time Requested: 02:50 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
2460 Introduced HB2503
CBD Subject: Tax


FUND(S):

General Revenue Fund, local government funds

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 bill is to provide that the minimum appraised value of a motor vehicle is $700 and that the appraised value of an antique motor vehicle is $5000 for purposes of ad valorem property taxes.
    
    As written, the bill’s primary changes are setting the assessed value of motor vehicles to be the greater of 60 percent of the lowest value or 60 percent of $700 and assigning an appraised value of $5,000 to any vehicle that is registered as an antique vehicle and is not used for general transportation.
    
    According to our interpretation, increasing the minimum appraised value of any vehicle to $700 would result in additional revenue, primarily for local governments, of roughly $740,000 per year. The State Tax Department does not have sufficient information to determine which vehicles are registered as an antique vehicle; however, if all vehicles more than 25 years old and currently appraised at more than $5,000 were reappraised with a value of $5,000, the reduction in revenue would be roughly $240,000 per year. The revenue reduction would be borne primary by local governments. Statewide, the aggregate net revenue impact would be an increase of roughly $500,000, with some counties experiencing a net increase in revenue and some counties experiencing a net reduction in revenue.
    
    The State Tax Department would incur additional administrative costs of $30,000 for programming changes attributable to passage of this bill. Additionally, county assessors would incur additional administrative costs attributable to passage of this bill to compile and maintain information on qualifying antique vehicles.
    



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 0 500,000


Explanation of above estimates (including long-range effect):


    As written, the bill’s primary changes are setting the assessed value of motor vehicles to be the greater of 60 percent of the lowest value or 60 percent of $700 and assigning an appraised value of $5,000 to any vehicle that is registered as an antique vehicle and is not used for general transportation.
    
    According to our interpretation, increasing the minimum appraised value of any vehicle to $700 would result in additional revenue, primarily for local governments, of roughly $740,000 per year. The State Tax Department does not have sufficient information to determine which vehicles are registered as an antique vehicle; however, if all vehicles more than 25 years old and currently appraised at more than $5,000 were reappraised with a value of $5,000, the reduction in revenue would be roughly $240,000 per year. The revenue reduction would be borne primary by local governments. The average tax savings for antique vehicles currently valued over $5,000 would be $56 per year. Statewide, the aggregate net revenue impact would be an increase of roughly $500,000, with some counties experiencing a net increase in revenue and some counties experiencing a net reduction in revenue.
    
    Under the provisions of this bill, the range of tax liability based on the current range of tax rates follows:
    
    New Minimum Tax Per Vehicle Over 25 Years of Age: Low Tax Jurisdiction to High Tax Jurisdiction
    
    Rural Barbour County: $700 X 60% assessed valuation X 1.3196% = $5.54
    Barboursville, WV: $700 X 60% assessed valuation X 3.4944% = $14.68
    Average Rural Class III: $700 X 60% assessed valuation X 2.19% = $9.20
    Average Urban Class IV: $700 X 60% assessed valuation X 2.87% = $12.05
    
    Maximum Tax Per Antique Vehicle: Low Tax Jurisdiction to High Tax Jurisdiction
    
    Rural Barbour County: $5,000 X 60% assessed valuation X 1.3196% = $39.59
    Barboursville, WV: $5,000 X 60% assessed valuation X 3.4944% = $104.83
    Average Rural Class III: $5,000 X 60% assessed valuation X 2.19% = $65.70
    Average Urban Class IV: $5,000 X 60% assessed valuation X 2.87% = $86.10
    
    The State Tax Department would incur additional administrative costs of $30,000 for programming changes attributable to passage of this bill. Additionally, county assessors would incur additional administrative costs attributable to passage of this bill to compile and maintain information on qualifying antique vehicles.
    



Memorandum


    The stated purpose of this bill is to provide that the minimum appraised value of a motor vehicle is $700 and that the appraised value of an antique motor vehicle is $5000 for purposes of ad valorem property taxes.
    
    Article X, Section 1 of the W. Va. Constitution requires taxation to be equal and uniform throughout the State, property is taxed in proportion to its value, and no one species of property which is taxed may be taxed higher than any other species of property of equal value.
    
    The proposed bill amends W. Va. Code §11-3c-5 requiring the assessed value of motor vehicles to be the greater of 60 percent of the lowest value or 60 percent of $700 . This provision potentially violates constitutional provisions of Article X, Section 1.
    
    The proposed bill also assigns the value of $5,000 for all antique vehicles as defined in W. Va. Code §17A-10-3a, that is, vehicles more than 25 years old and owned solely as a collector’s item. This provision also potentially violates the constitutional provisions of Article X, Section 1.
    



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