FISCAL NOTE

Date Requested: January 10, 2020
Time Requested: 01:05 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1245 Introduced HB4082
CBD Subject: Taxation


FUND(S):

General Revenue Fund, local governments

Sources of Revenue:

General Fund local governments

Legislation creates:

Decreases Existing Revenue, Increases Existing Expenses



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    The stated purpose of this bill is to classify all single family real estate as Class II property for county tax purposes.
    
    According to our interpretation, passage of this bill would classify all single-family real estate as Class II property. The bill deletes the requirement that the owner must occupy the residential property. There would be a decrease of roughly $68.3 million in revenue beginning in FY2022. The estimated revenue loss would be $18.9 million to the State General Revenue Fund, $26.4 million to local county school boards, $18.3 million to county commissions, and $4.7 million to municipalities. The distribution of estimated cost is based on information from taxes levied as reported in the Classified Assessed Valuations Taxes Levied for 2019 Tax Year 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 would be minimal.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2020
Increase/Decrease
(use"-")
2021
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, passage of this bill would classify all single-family real estate as Class II property. The bill deletes the requirement that the owner must occupy the residential property. There would be a decrease of roughly $68.3 million in revenue beginning in FY2022. The estimated revenue loss would be $18.9 million to the State General Revenue Fund, $26.4 million to local county school boards, $18.3 million to county commissions, and $4.7 million to municipalities. The distribution of estimated cost is based on information from taxes levied as reported in the Classified Assessed Valuations Taxes Levied for 2019 Tax Year 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 would be minimal.
    



Memorandum


    The stated purpose of this bill is to classify all single family real estate as Class II property for county tax purposes.
    
    Article X, Section 1 of the W. Va. Constitution requires that “no one species of property which is taxed may be taxed higher than any other species of property of equal value; No one species of property from which a tax may be collected shall be taxed higher than any other species of property of equal value; except … upon all property owned, used and occupied by the owner thereof exclusively for residential purposes and upon farms occupied and cultivated by their owners or bona fide tenants”. The bill deletes the requirement that the owner must occupy the residential property for the property to qualify for the lower Class II Property Tax rate.
    
    
    



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