FISCAL NOTE
Date Requested: February 19, 2018
Time Requested: 01:27 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2709 |
Introduced |
SB609 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund, local governments
Sources of Revenue:
General Fund 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.
The stated purpose of this bill is to establish a yield capitalization process as an alternative method for the determination of the fair market value of oil, gas and natural gas liquids producing properties. The bill provides an alternate method of appeal concerning the valuation of natural resources property for ad valorem tax purposes. The bill grants jurisdiction to the West Virginia Office of Tax Appeals to hear an appeal. The bill defines a term.
Passage of this bill would result in a loss of roughly $200,000 in State revenue and loss to local governments of $39.9 million beginning in FY2020.
Additional administrative costs to the Tax Department would be significant. Local governments would have minimal additional costs.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2018
Increase/Decrease
(use"-") |
2019
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 |
-40,000,000 |
Explanation of above estimates (including long-range effect):
Passage of this bill would result in a loss of roughly $200,000 in State revenue and loss to local governments of $39.9 million beginning in FY2020.
Additional administrative costs to the Tax Department would be significant. Additional staff would be needed to verify the accuracy of actual expenses claimed by producers. Local governments would have minimal additional costs.
Memorandum
The stated purpose of this bill is to establish a yield capitalization process as an alternative method for the determination of the fair market value of oil, gas and natural gas liquids producing properties. The bill provides an alternate method of appeal concerning the valuation of natural resources property for ad valorem tax purposes. The bill grants jurisdiction to the West Virginia Office of Tax Appeals to hear an appeal. The bill defines a term.
Further, the bill deducts the “average annual industry operating expenses” from the net operating expenses rather than the gross. It appears that certain expenses are twice deducted from gross receipts.
The title states that the bill defines a term. There is no definition per se. The bill “defines” the fair market value of oil, gas liquids “and/or” natural gas producing property by way of directing the Tax Commissioner how to value the specified natural resources.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov