FISCAL NOTE

Date Requested: January 18, 2018
Time Requested: 10:20 AM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1740 Introduced SB295
CBD Subject: Counties


FUND(S):

General Revenue Fund, local governments

Sources of Revenue:

General Fund local governments

Legislation creates:

Creates New Revenue, Creates New Fund: County Road and Insfrastructure Improvement Account



Fiscal Note Summary


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


    The stated purpose of this bill is to provide for the fair distribution of costs for county development by authorizing the assessment and collection of fees to offset the cost of development, including industrial development, within affected counties.
    
    The bill allows for the reallocation of property tax revenues otherwise dedicated to the State, school boards and county commissions to finance capital improvements to infrastructure for approved projects. The reallocation would begin in the year following the final year of salvage valuation for certified capital additions to manufacturing facilities. There are currently fourteen certified capital addition projects in eight counties. The first reallocation of funds would begin in Tax Year 2022, and the allocations would gradually increase to $10.0 million annually by Tax Year 2026, based on the current number of projects. The reallocation of $10.0 million would result in a loss in revenue of $5.3 million to the General Revenue Fund, $4.1 million to county commissions and $580,000 to county school boards. The distribution of estimated cost is based on information from taxes levied as reported in the FY2018 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 actual reallocations will probably be greater than this due to reallocations for future projects.
    
    The bill also provides that the term “growth county” applies to all fifty-five counties effective July 1, 2018. 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 and taxes 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
2018
Increase/Decrease
(use"-")
2019
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 otherwise dedicated to the State, school boards and county commissions to finance capital improvements to infrastructure for approved projects. The reallocation would begin in the year following the final year of salvage valuation for certified capital additions to manufacturing facilities. There are currently fourteen certified capital addition projects in eight counties. The first reallocation of funds would begin in Tax Year 2022, and the allocations would gradually increase to $10.0 million annually by Tax Year 2026, based on the current number of projects. The reallocation of $10.0 million would result in a loss in revenue of $5.3 million to the General Revenue Fund, $4.1 million to county commissions and $580,000 to county school boards. The distribution of estimated cost is based on information from taxes levied as reported in the FY2018 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 actual reallocations will probably be greater than this due to reallocations for future projects.
    
    The bill also provides that the term “growth county” applies to all fifty-five counties effective July 1, 2018. 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 and taxes 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 of this bill is to provide for the fair distribution of costs for county development by authorizing the assessment and collection of fees to offset the cost of development, including industrial development, within affected counties.
    
    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.
    



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