FISCAL NOTE
Date Requested: January 13, 2023
Time Requested: 11:04 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1888 |
Introduced |
SB201 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
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 bill is to increase the Homestead Exemption for homeowners from $20,000 to $40,000.
Under the provisions of this bill, the value of the Homestead Exemption would be increased from $20,000 to $40,000. This increase in the Homestead Exemption would initially result in a revenue loss of $43.7 million annually. The estimated revenue loss would be roughly $12.0 million to the State General Revenue Fund, $16.9 million to local county school boards, $11.7 million to county commissions and $3.0 million to municipalities. The distribution of estimated cost is based on information from taxes levied as reported in the Classified Assessed Valuations Taxes Levied for 2022 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.
Additional one-time administrative costs for the State Tax Department would be $50,000. Other additional costs to the State or local governments would be minimal.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2023
Increase/Decrease
(use"-") |
2024
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 |
-43,700,000 |
Explanation of above estimates (including long-range effect):
Under the provisions of this bill, the value of the Homestead Exemption would be increased from $20,000 to $40,000. This increase in the Homestead Exemption would initially result in a revenue loss of $43.7 million annually. The estimated revenue loss would be roughly $12.0 million to the State General Revenue Fund, $16.9 million to local county school boards, $11.7 million to county commissions and $3.0 million to municipalities. The distribution of estimated cost is based on information from taxes levied as reported in the Classified Assessed Valuations Taxes Levied for 2022 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. The number of senior citizens is expected to rise over the next decade, and Home Exemption costs will rise in similar fashion over that time period.
In most counties, decreased tax revenue due to an increase in the Homestead Exemption would likely be at least partially offset by higher tax rates and tax burdens on other types of property, including both real property taxes and personal property taxes on vehicles, business inventory, machinery and equipment.
Additional one-time administrative costs for the State Tax Department would be $50,000. Other additional costs to the State or local governments would be minimal.
Memorandum
The stated purpose of this bill is to increase the Homestead Exemption for homeowners from $20,000 to $40,000.
The Homestead Exemption is allowed because of W. Va. Constitution Article X, Section 1b, Subsection C specifies the exemption as being the first $20,000. The amendment authorizes the legislature to provide general law about the exemption but sets the limit of the exemption to the first $20,000. Increasing the exemption to $40,000 is contrary to the Constitution of West Virginia.
This property tax exemption is separate from the refundable personal income tax credit under W. Va. Code §11-21-21. However, the “Senior Citizens’ Tax Credit’ is available to a low-income person who is allowed a $20,000 homestead exemption under W. Va. Code §11-6b-3. The bill does not address the income tax refundable credit.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov