Date Requested: February 16, 2015
Time Requested: 01:44 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
2960 Introduced SB495
CBD Subject: Counties


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 is provide for the County Local Powers Act. The bill allows county commissions to pay for the cost of infrastructure capital improvements in their respective counties utilizing impact fees, service fees and certain property tax collections and other revenues. The bill provides for fees, taxes and expenditures for county development. The bill restates short title. The bill amends its purpose and legislative findings. The bill amends certain definitions and adds definitions. The bill amends criteria and requirements to implement and collect certain fees. The bill amends authorization for county commissions to impose impact fees, services fees and other taxes. The bill provides that certain fees and taxes collected may be deposited in special fund and used to pay debt service on revenue bonds issued to finance capital improvements or to finance them on a pay-as-you-go basis. The bill makes technical corrections. The bill allows county commissions and Commissioner of Highways to enter into intergovernmental agreements for construction and modernization of state roads, bridges and related infrastructure and financing in their respective counties. The bill provides procedures for creation and finalization or project plans and amendments of plans. The bill requires notice to certain locally elected public officials and general public on proposed road, bridge and related infrastructure construction projects and project amendments, with opportunity for public comment, provides means to finance cost of proposed road, bridge and related infrastructure construction projects and project amendments. The bill allows reallocation of ad valorem property taxes after ratification of constitutional amendment of certain property tax collections to finance, in whole or in part, capital improvements to infrastructure. The bill provides for applications for a construction project and the contents of applications. The bill creates a special fund. The bill requires approval of boards of education to reallocation of regular property tax levies. The bill provides for termination of reallocation of levies. The bill authorizes Commissioner of Highways to issue revenue bonds and refunding bonds to finance road, bridge and related infrastructure projects financed, in whole or in part, by county commissions. The bill provides that all bonds are exempt from tax, are negotiable and are lawful investments. The bill provides procedures for issuance of bonds. The bill allows projects to also be constructed on pay-as-you-go basis. The bill provides that these powers are supplemental powers of county commissions and Commissioner of Highways. The bill requires reports. The bill exempts public officials from personal liability. The bill provides a severability clause and effective dates.
    
    The bill allows for the reallocation of property tax revenues to finance capital improvements to infrastructure for approved projects. In Tax Year 2016, the provisions of this bill would only apply to projects in Tyler County, but by Tax Year 2023, the provisions would apply to seven counties. By Tax Year 2023, the reallocations would be $4.0 million annually with a loss in revenue of $2.1 million to the General Revenue Fund, $1.6 million to county commissions and $240,000 to county school boards. 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.
    
    The bill also provides that the term “growth county” applies to all fifty-five counties effective July 1, 2015. As of that date, counties would be permitted to enact impact fees and have similar taxing authority to municipalities. We are unable to measure the fiscal impact associated with this new taxing authority. However, potential revenue from impact fees could be significant.
    
    Additional administrative costs to the State Tax Department would be minimal. Additional costs to local governments cannot be determined.
    



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):


    The bill allows for the reallocation of property tax revenues to finance capital improvements to infrastructure for approved projects. In Tax Year 2016, the provisions of this bill would only apply to projects in Tyler County, but by Tax Year 2023, the provisions would apply to seven counties. By Tax Year 2023, the reallocations would be $4.0 million annually with a loss in revenue of $2.1 million to the General Revenue Fund, $1.6 million to county commissions and $240,000 to county school boards. 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.
    
    The bill also provides that the term “growth county” applies to all fifty-five counties effective July 1, 2015. As of that date, counties would be permitted to enact impact fees and have similar taxing authority to municipalities. We are unable to measure the fiscal impact associated with this new taxing authority. However, potential revenue from impact fees could be significant.
    
    Additional administrative costs to the State Tax Department would be minimal. Additional costs to local governments cannot be determined.
    



Memorandum


    The stated purpose is provide for the County Local Powers Act. The bill allows county commissions to pay for the cost of infrastructure capital improvements in their respective counties utilizing impact fees, service fees and certain property tax collections and other revenues. The bill provides for fees, taxes and expenditures for county development. The bill restates short title. The bill amends its purpose and legislative findings. The bill amends certain definitions and adds definitions. The bill amends criteria and requirements to implement and collect certain fees. The bill amends authorization for county commissions to impose impact fees, services fees and other taxes. The bill provides that certain fees and taxes collected may be deposited in special fund and used to pay debt service on revenue bonds issued to finance capital improvements or to finance them on a pay-as-you-go basis. The bill makes technical corrections. The bill allows county commissions and Commissioner of Highways to enter into intergovernmental agreements for construction and modernization of state roads, bridges and related infrastructure and financing in their respective counties. The bill provides procedures for creation and finalization or project plans and amendments of plans. The bill requires notice to certain locally elected public officials and general public on proposed road, bridge and related infrastructure construction projects and project amendments, with opportunity for public comment, provides means to finance cost of proposed road, bridge and related infrastructure construction projects and project amendments. The bill allows reallocation of ad valorem property taxes after ratification of constitutional amendment of certain property tax collections to finance, in whole or in part, capital improvements to infrastructure. The bill provides for applications for a construction project and the contents of applications. The bill creates a special fund. The bill requires approval of boards of education to reallocation of regular property tax levies. The bill provides for termination of reallocation of levies. The bill authorizes Commissioner of Highways to issue revenue bonds and refunding bonds to finance road, bridge and related infrastructure projects financed, in whole or in part, by county commissions. The bill provides that all bonds are exempt from tax, are negotiable and are lawful investments. The bill provides procedures for issuance of bonds. The bill allows projects to also be constructed on pay-as-you-go basis. The bill provides that these powers are supplemental powers of county commissions and Commissioner of Highways. The bill requires reports. The bill exempts public officials from personal liability. The bill provides a severability clause and effective dates.
    
    The most fundamental change by the proposed bill is the manner in which county road and related infrastructure projects are funded. The manner is unconstitutional and is, therefore, predicated on the passage of a constitutional amendment to reallocate certain ad valorem property taxes from schools to a fund for county road and bridge construction and other infrastructure capital improvement projects.
    
    The proposed amendment gives the Legislature room to act which may not be otherwise within the Constitution: "the Legislature may by general law authorize county commissions to allocate taxes imposed pursuant to Article X, Section 1. . ." and "The Legislature may from time to time increase these thresholds and may impose restrictions and conditions on the use of property taxes allocated pursuant to this section.”
    
    The bill expands "county economic development entity" to include "an entity designated" by the county commission as the "lead entity for economic development."
    



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