FISCAL NOTE
Date Requested: January 12, 2024
Time Requested: 01:51 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1263 |
Introduced |
SB231 |
|
|---|
| CBD Subject: |
Actions, Suits and Liens |
|---|
|
FUND(S):
General Revenue Fund, local governments
Sources of Revenue:
General Fund local property tax revenue
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 clarify that a wind power project is not a pollution control facility for purposes of §11-6A-1 et seq. of this code and is taxed as real property.
According to our interpretation, passage of this bill would remove the current salvage valuation tax policy for wind power plants. As a result, taxable property valuations for such facilities would increase along with property tax assessments. There would be an increase of roughly $6.1 million in revenue annually. The estimated revenue gain would be roughly $1.8 million to the State General Revenue Fund, $2.5 million to local county school boards, and $1.8 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 2023 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 administrative costs would be minimal.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2024
Increase/Decrease
(use"-") |
2025
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 |
6,100,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, passage of this bill would remove the current salvage valuation tax policy for wind power plants. As a result, taxable property valuations for such facilities would increase along with property tax assessments. There would be an increase of roughly $6.1 million in revenue annually. The estimated revenue gain would be roughly $1.8 million to the State General Revenue Fund, $2.5 million to local county school boards, and $1.8 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 2023 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 administrative costs would be minimal.
Memorandum
The stated purpose of this bill is to clarify that a wind power project is not a pollution control facility for purposes of §11-6A-1 et seq. of this code and is taxed as real property.
The bill title and the bill note both state that this bill clarifies that a wind power project is not a pollution control facility. This is not a clarification of the law, but rather a change in the law. Therefore, this would be a title defect.
The bill deletes the current definitions for wind turbine and tower, which may create confusion as to what is considered part of the wind turbine or tower.
Under current law, if a wind turbine or tower is placed on leased land, then the owner of the wind power project pays the property tax on their personal property. This bill would potentially shift the property tax burden to the owner of the land where the wind turbine and tower is placed. These towers being considered as part of the real property could potentially affect the classification of the real property, especially if the real property was considered managed timberland or had a farmland classification.
Furthermore, the bill appears to shift the duty to assess this property from the Tax Commissioner to the county assessors. However, valuation of industrial property and natural resource property is made by the Tax Commissioner. A wind power project that generates electricity may arguably be considered industrial property.
The bill does not provide a date certain as to when this change is to occur. As of July 1 each year, the ownership, use, and value of property are determined for the next calendar tax year. The absence of an effective date could potentially cause confusion.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov