FISCAL NOTE

Date Requested: February 13, 2018
Time Requested: 02:48 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1339 Introduced HB4517
CBD Subject: Taxation


FUND(S):

General Revenue Fund, local governments

Sources of Revenue:

General Fund local property tax

Legislation creates:

Increases Revenue From Existing Sources, 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 permit counties to assess wind turbines in wind power projects at values ranging from salvage value to true and actual value. According to our interpretation, passage of this bill would allow counties to assess wind turbines installed at wind power projects located within their boundaries at values ranging from salvage value to actual value. If all wind turbines were valued at true and actual value, there would be an increase of roughly $8.5 million in revenue beginning in FY2020. The estimated revenue gain would be more than $3.8 million to the State General Revenue Fund, $1.6 million to local county school boards, and $3.1 million to county commissions. The distribution of estimated cost is based on information from taxes levied as reported in the Classified Assessed Valuations Taxes Levied for 2017 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. However, since the assessors may opt to continue to value the turbines at savage value, it is possible that there would no revenue impact. Additional administrative costs would be minimal.



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):


According to our interpretation, passage of this bill would allow counties to assess wind turbines installed at wind power projects located within their boundaries at values ranging from salvage value to actual value. If all wind turbines were valued at true and actual value, there would be an increase of roughly $8.5 million in revenue beginning in FY2020. The estimated revenue gain would be more than $3.8 million to the State General Revenue Fund, $1.6 million to local county school boards, and $3.1 million to county commissions. The distribution of estimated cost is based on information from taxes levied as reported in the Classified Assessed Valuations Taxes Levied for 2017 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. However, since the assessors may opt to continue to value the turbines at savage value, it is possible that there would no revenue impact. Additional administrative costs would be minimal.



Memorandum


The stated purpose of this bill is to permit counties to assess wind turbines in wind power projects at values ranging from salvage value to true and actual value. The Article X, Section 1 of the West Virginia Constitution requires taxation to “be equal and uniform throughout the state, and all property, both real and personal, shall be taxed in proportion to its value to be ascertained as directed by law.” Giving the counties discretion to assess property of equal value at different rates would violate the Constitutional mandate that taxation be equal and uniform. The bill also appears to allow counties to assess these properties at actual value. This is another Constitutional concern. Further, it contradicts W. Va. Code §11-3-1(a), which provides that “[a]ll property, except public service businesses assessed pursuant to article six of this chapter, shall be assessed annually as of July 1 at sixty percent of its true and actual value; that is to say, at the price for which the property would sell if voluntarily offered for sale by the owner thereof, upon the terms as the property, the value of which is sought to be ascertained, is usually sold, and not the price which might be realized if the property were sold at a forced sale.” The bill title does not indicate that there is an internal effective date or that there is a change in a definition. These are title defects.



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