FISCAL NOTE
Date Requested: March 10, 2025
Time Requested: 10:03 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3358 |
Introduced |
SB701 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund, Local Governments
Sources of Revenue:
Other Fund General Fund and Local Governments
Legislation creates:
Decreases Existing Revenue, Increases 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 reclassify forestry equipment as Class I property to provide tax benefits to forestry businesses by acknowledging forestry as a part of agriculture.
According to our interpretation, passage of this bill would result in forestry equipment being classified as Class I property and therefore exempt from Property Tax. As a result of this legislation, there would be a decrease of roughly $1.1 million in revenue annually. The estimated revenue loss would be roughly $330,000 to the State General Revenue Fund, $460,000 to local county school boards, and $310,000 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 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.
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 |
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 |
-1,100,000 |
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.
According to our interpretation, passage of this bill would result in forestry equipment being classified as Class I property and therefore exempt from Property Tax. As a result of this legislation, there would be a decrease of roughly $1.1 million in revenue annually. The estimated revenue loss would be roughly $330,000 to the State General Revenue Fund, $460,000 to local county school boards, and $310,000 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 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.
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
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 reclassify forestry equipment as Class I property to provide tax benefits to forestry businesses by acknowledging forestry as a part of agriculture.
The bill states that “forestry equipment used in the harvesting, processing, or transportation of forest products shall be classified as Class I property, consistent with the classification of agricultural equipment.” However, W. Va. Code §11-8-5 requires that agricultural equipment be used exclusively for agricultural purposes to receive Class 1 status while §11-8-5a(c)(2) of this bill only requires trailers and machinery to be used primarily in forestry operations to qualify as forestry equipment. Therefore, under this bill, certain forestry equipment is held to a lower standard than agricultural equipment to be classified as Class 1 property.
Person submitting Fiscal Note: Mark Muchow
Email Address: radfiscal@wv.gov