Date Requested: February 24, 2015
Time Requested: 03:14 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
3272 Introduced HB2975
CBD Subject: Natural Resources


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 provide that the assessment of an oil and gas mineral interest be based on the amount of oil or gas actually produced, during the first year and after the third year of production.
    
    According to our interpretation, the fiscal impact of part (a) of this bill is estimated to be $7.5 million. Passage of part (b) of this bill would result in significant changes in current codified valuation practices and legislative rules associated with current Law related to property taxes on oil and natural gas properties. The impact on local county commission finances and local school finances cannot be readily quantified due to the underlying complexity associated with such proposed change. The calculation of fiscal impact would involve significant study that could not be reasonably accomplished in short order.
    
    There would be a one-time cost of $30,000 to the State Tax Department for programming changes. There would be no additional costs to 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):


    According to our interpretation, the fiscal impact of part (a) of this bill is estimated to be $7.5 million. Passage of part (b) of this bill would result in significant changes in current codified valuation practices and legislative rules associated with current Law related to property taxes on oil and natural gas properties. The impact on local county commission finances and local school finances cannot be readily quantified due to the underlying complexity associated with such proposed change. The calculation of fiscal impact would involve significant study that could not be reasonably accomplished in short order.
    
    There would be a one-time cost of $30,000 to the State Tax Department for programming changes. There would be no additional costs to local governments.



Memorandum


    The stated purpose of this bill is to provide that the assessment of an oil and gas mineral interest be based on the amount of oil or gas actually produced, during the first year and after the third year of production.
    
    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. This bill provides that assessment of an oil and gas mineral interest be based on the amount of oil or gas actually produced, not on the value of the real property.
    
    



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