FISCAL NOTE
Date Requested: March 23, 2021
Time Requested: 11:37 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1635 |
Comm. Sub. |
HB2581 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund, local governments
Sources of Revenue:
General Fund local property tax revenue
Legislation creates:
Increases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The purpose of this bill is to change the valuation, assessment, review, and appellate rights of property owners regarding valuation, classification, and taxability of real estate and personal property taxation; provide revised methodology to value oil and natural gas properties by Tax Commissioner; allow for the publication, release, or other disclosure of nonproprietary financial information by the Joint Committee on Government and Finance; define a criminal penalty for the unauthorized disclosure of financial information; provide that residential property owners may not be required to furnish a formal appraisal to establish the value of their primary residence; provide that an assessor’s review is to be an informal process and define the standard of proof which a taxpayer must meet to be no greater than a preponderance of the evidence; expand the jurisdiction of the Office of Tax Appeals to include property tax valuation, classification, and taxability; provide that if an assessor rejects a petition, the petitioner may appeal to the county Board of Equalization and Review or the Office of Tax Appeals; allow for certain appeals from decisions of the Tax Commissioner and Board of Equalization and Review to the Office of Tax Appeals; repeal and eliminate the Board of Assessment Appeals; provide for an increase in the number of administrative law judges and staff attorneys within the Office of Tax Appeals; provide an effective dates; and make technical changes.
This bill would change the methodology for valuing producing oil and natural gas wells. The impact of allowing additional expenses would lower the appraised values of oil and gas wells and tax collections. This bill would separate oil, gas and NGL income and expenses for the processing. The initial revenue loss during the first full year of effect is estimated to be roughly $9.1 million with most of the loss being to county school boards and county commissions. Some of the loss to county school boards would be offset by a requirement of additional State General Revenue appropriations through the State School Aid Formula. According to the Department of Education, the estimated cost to the State under the Public School Support Plan (PSSP) from the proposed bill is $1.1 million for FY2023 due to the estimated decreased local share related to the decline in natural resource property values. In addition to the cost to the State under the PSSP, county boards of education will experience a loss of revenue of an estimated $5.2 million due lower tax collections that will not be made up through increased State Aid funding. These estimates were calculated using estimated tax collection loss data provided by the State Tax Department.
Actual revenue loss may vary dependent heavily upon the price of gas or expenses in any future fiscal year. Many local jurisdictions have some ability to adjust their tax rates on property to offset at least some of the revenue loss. The result would be some shift of tax liability to other types of property.
In addition, the bill expands the jurisdiction of the Office of Tax Appeals making that office the sole venue for appeal of issues involving Property Tax valuations, classifications, and taxability.
The Tax Department would incur one-time costs of $25,000 for programming changes and annual costs of $150,000 per year. Additional administrative costs to counties would be minimal. The additional costs to the Office of Tax Appeals are not reflected in this fiscal note. These costs should come from the Office of Tax Appeals.
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):
This bill would change the methodology for valuing producing oil and natural gas wells. The impact of allowing additional expenses would lower the appraised values of oil and gas wells and tax collections. This bill would separate oil, gas and NGL income and expenses for the processing. The initial revenue loss during the first full year of effect is estimated to be roughly $9.1 million with most of the loss being to county school boards and county commissions. Some of the loss to county school boards would be offset by a requirement of additional State General Revenue appropriations through the State School Aid Formula. According to the Department of Education, the estimated cost to the State under the Public School Support Plan (PSSP) from the proposed bill is $1.1 million for FY2023 due to the estimated decreased local share related to the decline in natural resource property values. In addition to the cost to the State under the PSSP, county boards of education will experience a loss of revenue of an estimated $5.2 million due lower tax collections that will not be made up through increased State Aid funding. These estimates were calculated using estimated tax collection loss data provided by the State Tax Department.
Actual revenue loss may vary dependent heavily upon the price of gas or expenses in any future fiscal year. Many local jurisdictions have some ability to adjust their tax rates on property to offset at least some of the revenue loss. The result would be some shift of tax liability to other types of property.
In addition, the bill expands the jurisdiction of the Office of Tax Appeals making that office the sole venue for appeal of issues involving Property Tax valuations, classifications, and taxability.
The Tax Department would incur one-time costs of $25,000 for programming changes and annual costs of $150,000 per year. Additional administrative costs to counties would be minimal. The additional costs to the Office of Tax Appeals are not reflected in this fiscal note. These costs should come from the Office of Tax Appeals.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov