FISCAL NOTE
Date Requested: February 25, 2021
Time Requested: 11:21 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2691 |
Introduced |
SB448 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
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 provide an option for certain governmental entities to extend the term of a tax increment financing district to December 31, 2050 if tax increment financing obligations were issued for that district prior to or during the COVID-19 worldwide pandemic which has caused an economic recession in the United States. The bill also provides clarifications regarding treatment upon the combination of one or more previously created tax increment financing districts and the treatment of tax increment financing obligations upon the termination of a district.
The Tax Department cannot quantify the local or state tax revenue impact of this proposal. For tax increment financing districts that are extended, the local government entities in that county would be denied property taxes on the increment until after December 31, 2050.
There would be no administrative costs to the Tax Department and costs to 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 Tax Department cannot quantify the local or state tax revenue impact of this proposal. For tax increment financing districts that are extended, the local government entities in that county would be denied property taxes on the increment until after December 31, 2050.
There are currently 42 separate property tax increment financing districts in West Virginia that would potentially qualify for extended lifespans up through 2050. Some of these districts began operating as far back as 2003. The proposed statutory extension language would permit some of the older districts to exist for a period well beyond the normal 30-year bond time limits. The provisions of the bill would also add a provision proclaiming that any unpaid bond debts or other obligations at the time of district expiration “shall be deemed to be discharged and satisfied, and no longer due and payable following such termination date..” Such a provision could have a chilling effect on the future ability to attract new debt capital for tax increment finance districts.
There would be no administrative costs to the Tax Department and costs to local governments would be minimal.
Memorandum
The stated purpose of this bill is to provide an option for certain governmental entities to extend the term of a tax increment financing district to December 31, 2050 if tax increment financing obligations were issued for that district prior to or during the COVID-19 worldwide pandemic which has caused an economic recession in the United States. The bill also provides clarifications regarding treatment upon the combination of one or more previously created tax increment financing districts and the treatment of tax increment financing obligations upon the termination of a district.
W. Va. Code §7-11B-10(a) limits the existence of a development or redevelopment district to thirty years. The tax increment financing obligations may not exceed the district existence. The bill allows an extension until December 31, 2050 for those districts which have tax increment financing obligations issued prior to December 31, 2020. (§10(a)). The municipality or county commission must extend the time by amended ordinance or by entry of an order amending under §7 of the bill. This may create a constitutional problem, as Article X Section 8a of The Constitution of W. Va. limits the term for any bonds or other obligations to thirty years:
. . . The term for any bonds or other obligations issued may not exceed thirty tax years…
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov