FISCAL NOTE
Date Requested: January 14, 2022
Time Requested: 10:32 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1542 |
Introduced |
HB4091 |
|
|---|
| 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 establish the Family Supporting Jobs Tax Relief Act. The bill provides for a short title and spells out definitions that are applicable to the Act. The bill provides for a special valuation of tangible industrial personal property after July 1, 2022. The bill provides for an initial determination, process, and appeal. Finally, the bill creates an effective date for the Act.
According to our interpretation, this bill provides for salvage valuation of tangible industrial personal property after July 1, 2022. If “manufacturing” is defined using the North American Industry Classification System (NAICS) code series ranging between 31 and 33, then assessment of all manufacturing equipment and manufacturing inventory at salvage value would result in an initial revenue loss of $84.4 million during the first full year of effect. Assessing all industrial equipment and inventory for the coal mining industry would result in a loss of $30.3 million. The total loss of $114.7 million for salvage valuation of manufacturing and coal mining industrial personal property would be distributed as follows: roughly $31.5 million to the State General Revenue Fund, $44.7 million to local county school boards, and $38.5 million to other local governments. The distribution of estimated cost is based on information from taxes levied as reported in the Classified Assessed Valuations Taxes Levied for 2021 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.
This estimate does not include inventory and machinery related to the production of oil and gas. Once a well is producing, the value of the equipment, up to the point of sale, is assumed to be included in the value of the working interest (producer interest) of the well. Excluding such property from oil and gas valuations would require a change to the Legislative Rule governing such valuations. Additionally, the estimate does not include any tax impact on public utility personal property. The addition of industrial tangible personal property of the oil and gas producers and public utility tangible personal property would significantly increase the estimated loss.
Additional one-time administrative costs for the State Tax Department would be $100,000. Other additional costs to the State or local governments cannot be determined.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2022
Increase/Decrease
(use"-") |
2023
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 |
-114,700,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, this bill provides for salvage valuation of tangible industrial personal property after July 1, 2022. If “manufacturing” is defined using the North American Industry Classification System (NAICS) code series ranging between 31 and 33, then assessment of all manufacturing equipment and manufacturing inventory at salvage value would result in an initial revenue loss of $84.4 million during the first full year of effect. Assessing all industrial equipment and inventory for the coal mining industry would result in a loss of $30.3 million. The total loss of $114.7 million for salvage valuation of manufacturing and coal mining industrial personal property would be distributed as follows: roughly $31.5 million to the State General Revenue Fund, $44.7 million to local county school boards, and $38.5 million to other local governments. The distribution of estimated cost is based on information from taxes levied as reported in the Classified Assessed Valuations Taxes Levied for 2021 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.
This estimate does not include inventory and machinery related to the production of oil and gas. Once a well is producing, the value of the equipment, up to the point of sale, is assumed to be included in the value of the working interest (producer interest) of the well. Excluding such property from oil and gas valuations would require a change to the Legislative Rule governing such valuations. Additionally, the estimate does not include any tax impact on public utility personal property. The addition of industrial tangible personal property of the oil and gas producers and public utility tangible personal property would significantly increase the estimated loss.
Additional one-time administrative costs for the State Tax Department would be $100,000. Other additional costs to the State or local governments cannot be determined.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov