FISCAL NOTE
Date Requested: January 28, 2019
Time Requested: 01:04 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1543 |
Introduced |
x |
HJR21 |
|---|
| CBD Subject: |
|
|---|
|
FUND(S):
General Revenue Fund, local governments
Sources of Revenue:
General Fund local property tax revenue
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 resolution is to amend the State Constitution to eliminate the state personal property tax over a five-year period beginning in 2021.
As written, this resolution proposes an amendment to the Constitution of the State of West Virginia to be submitted to the voters of the State at the next general election to be held in the year 2020. The amendment would phase out Property Tax on personal property over a five-year period beginning with Tax Year 2021. According to our interpretation, this phased-in exemption would result in a loss of $2.1 million to the State and $522.9 million to county commissions, county boards of education and municipalities by the end of the five-year phase-in. The loss would be $105 million per year each year for five years. This estimate does not include taxes on public utility property which are not currently divided between real and personal property.
Additional administrative costs to the State and local governments will be significant.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2019
Increase/Decrease
(use"-") |
2020
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):
As written, this resolution proposes an amendment to the Constitution of the State of West Virginia to be submitted to the voters of the State at the next general election to be held in the year 2020. The amendment would phase out Property Tax on personal property over a five-year period beginning with Tax Year 2021. According to our interpretation, this phased-in exemption would result in a loss of $2.1 million to the State and $522.9 million to county commissions, county boards of education and municipalities by the end of the five-year phase-in. The loss would be $105 million per year each year for five years. This estimate does not include taxes on public utility property which are not currently divided between real and personal property.
Additional administrative costs to the State and local governments will be significant.
Memorandum
The stated purpose of this resolution is to amend the State Constitution to eliminate the state personal property tax over a five-year period beginning in 2021.
The proposed constitutional amendment would phase out the ad valorem property tax on personal property over a period of five years, beginning with tax year 2021. The proposed “rates” would be reduced in subsequent years, the tax on personal property being phased out totally beginning in tax year 2025.The language of the bill is ambiguous. It is unclear what is meant by the word “rate”. Read literally, the rate of tax for tax year 2021 would be 80 percent of the value of the personal property. However, “rate” could refer to the assessment rate, which are currently limited to 60 percent of their fair market value under Article X, Section 1b of the Constitution, which the proposed amendment does not change. If “rate” refers to the assessment rate, assessment would actually increase in the first year.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov