FISCAL NOTE

Date Requested: March 11, 2021
Time Requested: 11:55 AM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
3103 Introduced HB3067
CBD Subject: Constitutional Amendments


FUND(S):

General Revenue Fund, local governments

Sources of Revenue:

General Fund local property tax revenue

Legislation creates:

Decreases Existing Revenue



Fiscal Note Summary


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


The stated purpose of this bill is to increase the amount of the homestead exemption from $20,000 to $30,000. The increase in the Homestead Exemption from $20,000 to $30,000 would initially result in a revenue loss of $21.8 million annually for local levying bodies and an increase of $170,000 in General Revenue Fund collections. The number of senior citizens is expected to grow by nearly 37 percent over the next decade. Homestead Exemption costs will rise in similar fashion over the next decade. In most counties, decreased tax revenue due to an increase in the Homestead Exemption would likely be at least partially offset by higher tax rates and tax burdens on other types of property, including both real property taxes and personal property taxes on vehicles, business inventory, machinery and equipment. Additional administrative costs to the State Tax Department and local governments would be minimal.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2021
Increase/Decrease
(use"-")
2022
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 increase in the Homestead Exemption from $20,000 to $30,000 would initially result in a revenue loss of $21.8 million annually for local levying bodies and an increase of $170,000 in General Revenue Fund collections. The number of senior citizens is expected to grow by nearly 37 percent over the next decade. Homestead Exemption costs will rise in similar fashion over the next decade. In most counties, decreased tax revenue due to an increase in the Homestead Exemption would likely be at least partially offset by higher tax rates and tax burdens on other types of property, including both real property taxes and personal property taxes on vehicles, business inventory, machinery and equipment. Additional administrative costs to the State Tax Department and local governments would be minimal.



Memorandum


The stated purpose of this bill is to increase the amount of the homestead exemption from $20,000 to $30,000. The bill increases the Homestead Property Tax Exemption from $20,000 to $30,000. However, in line 2 of §11-6B-3, the amount is stated as $25,000. The Homestead Exemption is allowed because of W. Va. Constitution Article X, Section 1b, Subsection C specifies the exemption as being the first $20,000. The amendment authorizes the legislature to provide general law about the exemption but sets the limit of the exemption to the first $20,000. Increasing the exemption to $30,000 is contrary to the Constitution of West Virginia. The bill does not preserve the prior exemption of $20,000 which makes administration difficult. This property tax exemption is separate from the refundable personal income tax credit under W. Va. Code §11-21-21. However, the “Senior Citizens’ Tax Credit’ is available to a low-income person who is allowed a $20,000 homestead exemption under W. Va. Code §11-6b-3. The bill does not address the income tax refundable credit.



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