FISCAL NOTE

Date Requested: February 15, 2017
Time Requested: 01:48 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1733 Introduced HB2473
CBD Subject: Natural Resources


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

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 produced, during the first year and after the third year of production. According to our interpretation, there would be a decrease of roughly $6.0 million per year in revenue from Property Taxes on oil and gas mineral interests beginning in FY2019. Additional administrative costs to the State Tax Department would be minimal. There would be no additional costs to local governments.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2017
Increase/Decrease
(use"-")
2018
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 -6,000,000


Explanation of above estimates (including long-range effect):


According to our interpretation, there would be a decrease of roughly $6.0 million per year in revenue from Property Taxes on oil and gas mineral interests beginning in FY2019. Additional administrative costs to the State Tax Department would be minimal. 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 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 produced, not on the value of the real property.



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