Date Requested: February 24, 2015
Time Requested: 01:39 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
3104 Introduced HB3015
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 enact enabling legislation for the "Nonprofit Youth Organization Tax Exemption Support Amendment" to Article X of the Constitution of the State of West Virginia passed by the voters of the state at the general election of November 4, 2014. The bill exempts from property tax certain properties in this state owned by nonprofit youth organizations and built at cost of at least $100 million whether or not the property is used for the nonprofit youth organization's charitable or nonprofit purpose to help raise funds for the benefit of the nonprofit youth organization. The bill provides exceptions to the exemption. The bill sets forth programs that are to be considered charitable nonprofit uses. The bill provides for that three percent of gross revenues are to be paid in certain instances. The bill setting forth where that revenue is to be transferred. The bill establishes terms.
    
    Passage of this bill would have no effect on State or local Property Tax revenue. The property in question is already exempt. We are unable to estimate the potential revenue for the Tourism Promotion Fund or the science, technology, engineering, art and math (STEAM) program in Fayette, Nicholas and Raleigh counties from the three percent tax on gross revenue from uses of the exempt property are used in a manner outside the restrictions of this bill.
    
    Additional administrative costs to local governments and the State Tax Department will 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):


    Passage of this bill would have no effect on State or local Property Tax revenue. The property in question is already exempt. We are unable to estimate the potential revenue for the Tourism Promotion Fund or the science, technology, engineering, art and math (STEAM) program in Fayette, Nicholas and Raleigh counties from the three percent tax on gross revenue from uses of the exempt property are used in a manner outside the restrictions of this bill.
    
    Additional administrative costs to local governments and the State Tax Department will be minimal.
    



Memorandum


    The stated purpose of this bill is to enact enabling legislation for the "Nonprofit Youth Organization Tax Exemption Support Amendment" to Article X of the Constitution of the State of West Virginia passed by the voters of the state at the general election of November 4, 2014. The bill exempts from property tax certain properties in this state owned by nonprofit youth organizations and built at cost of at least $100 million whether or not the property is used for the nonprofit youth organization's charitable or nonprofit purpose to help raise funds for the benefit of the nonprofit youth organization. The bill provides exceptions to the exemption. The bill sets forth programs that are to be considered charitable nonprofit uses. The bill provides for that three percent of gross revenues are to be paid in certain instances. The bill setting forth where that revenue is to be transferred. The bill establishes terms.
    
    A change in some of the terminology in W. Va. Code § 11-3-9(a)(17) results in a change of taxpayers eligible for the exemption. W. Va. Code § 11-3-9 (a)(17) currently exempts "[p]roperty belong to any public institution for the education of the deaf, dumb or blind or any hospital not held or leased out for profit. The bill deletes the word "dumb," and replaces it with the term "intellectually disabled." The change in terms changes the application of the exemption from persons with an inability to speak to persons having an IQ score below 70, in addition to deficits in two or more adaptive behaviors that affect everyday, general living. The title of the bill does not reference the change of terms, nor the effect of the change, which could be interpreted as a title defect.
    
    W. Va. Constitution Article X, §12 authorizes the Legislature to adopt enabling legislation authorizing the exemption's implementation and concurrently prescribing requirements, limitations and conditions for the use of the tax exempt facility that protect local and regionally located businesses from use of the tax exempt facility in a manner that causes unfair competition and unreasonable loss of revenue to those businesses. It does not authorize legislation to impose penalties if exempt properties are used in manner outside the restrictions of section 3. The proposed enabling legislation may be unconstitutionally outside the provisions of the constitutional amendment as passed.
    



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