FISCAL NOTE

Date Requested: March 17, 2025
Time Requested: 04:49 PM

3606	Introduced	HB3450
Agency:	Tax & Revenue Department, WV State
CBD Number:	Version:	Bill Number:	Resolution Number:
CBD Subject:	Motor Vehicles; Taxation

FUND(S):

General Revenue Fund, Local Governments

Sources of Revenue:

Other Fund General Fund and Local Property Tax Revenue

Legislation creates:

Decreases Existing Revenue, Decreases Existing Expenses

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

Summarize in a clear and concise manner what impact this measure will have on costs and revenues of state government. The stated purpose of this bill is to reduce all titled vehicle personal property taxation values, except for mobile homes, from a class iv assessment valuation to a class ii. Under the provisions of this bill, all titled motor vehicles would be classified as Class II property instead of Class III or Class IV property and taxed at the lower Class II rate. This change in classification of motor vehicles would result in a revenue loss of $86.0 million annually. The estimated revenue loss would be roughly $24.6 million to the State General Revenue Fund, $34.0 million to local county school boards, $22.6 million to county commissions and $4.8 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 2024 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 Property Tax loss from motor vehicles owned by public utilities is not included in this estimate. Public utility property is assessed on a unitary basis. Motor vehicles owned by public utilities are not assessed separately. Under current law, Property Taxes that are timely paid can be taken as a refundable Personal Income Tax credit. The State would see an increase in Personal Income Tax revenue, but the increase would not be as high as the $86.0 million Property Tax decrease because not all Property Taxes are timely paid. The gain in revenue to the General Revenue Fund from the Personal Income Tax increase would be partially offset by the $24.6 million loss in Property Taxes. Additional administrative costs would be minimal.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2025 Increase/Decrease (use"-")	2026 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):

Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years. Under the provisions of this bill, all titled motor vehicles would be classified as Class II property instead of Class III or Class IV property and taxed at the lower Class II rate. This change in classification of motor vehicles would result in a revenue loss of $86.0 million annually. The estimated revenue loss would be roughly $24.6 million to the State General Revenue Fund, $34.0 million to local county school boards, $22.6 million to county commissions and $4.8 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 2024 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 Property Tax loss from motor vehicles owned by public utilities is not included in this estimate. Public utility property is assessed on a unitary basis. Motor vehicles owned by public utilities are not assessed separately. In most counties, decreased tax revenue due to the elimination of Property Tax revenue on motor vehicles 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 business inventory, machinery and equipment. Under current law, Property Taxes that are timely paid can be taken as a refundable Personal Income Tax credit. The State would see an increase in Personal Income Tax revenue, but the increase would not be as high as the $86.0 million Property Tax decrease because not all Property Taxes are timely paid. The gain in revenue to the General Revenue Fund from the Personal Income Tax increase would be partially offset by the $24.6 million loss in Property Taxes. Additional administrative costs would be minimal.

Memorandum

Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form. The stated purpose of this bill is to reduce all titled vehicle personal property taxation values, except for mobile homes, from a class iv assessment valuation to a class ii. The bill changes to the description of Class II to “Class II. All property owned, used, and occupied by the owner exclusively for residential purposes, including all titled vehicle personal property except mobile homes.” The wording of the bill could be interpreted to mean that titled vehicle personal property would have Class II classification only if is used exclusively for residential purposes.

Person submitting Fiscal Note: Mark Muchow
Email Address: radfiscal@wv.gov