FISCAL NOTE
Date Requested: January 14, 2019
Time Requested: 03:21 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1723 |
Introduced |
|
HJR12 |
|---|
| CBD Subject: |
Finance and Administration, 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 resolution is to propose an amendment to the West Virginia Constitution that would exempt personal property in the form of manufacturing inventory and manufacturing equipment from ad valorem taxation.
As written, this resolution proposes an amendment to the Constitution of the State of West Virginia to be submitted to the voters of the State at the next general election to be held in the year 2020. The amendment would exempt tangible personal property in the form of manufacturing inventory and manufacturing equipment from Property Tax. There is no definition of manufacturing within the resolution. If “manufacturing” is defined using the North American Industry Classification System (NAICS) code series ranging between 31 and 33, then the exemption of all manufacturing equipment and manufacturing inventory would result in a loss of $380,000 in State revenue and $94.6 million to county commissions, county boards of education and municipalities.
This estimate does not include inventory and machinery related to the coal mining industry or any equipment associated with producing 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 equipment 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 mining sector and public utility tangible personal property would significantly increase the estimated loss.
Additional administrative costs for the State Tax Department would be $50,000. There would be no additional costs to local governments.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2019
Increase/Decrease
(use"-") |
2020
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 |
-95,000,000 |
Explanation of above estimates (including long-range effect):
As written, this resolution proposes an amendment to the Constitution of the State of West Virginia to be submitted to the voters of the State at the next general election to be held in the year 2020. The amendment would exempt tangible personal property in the form of manufacturing inventory and manufacturing equipment from Property Tax. There is no definition of manufacturing within the resolution. If “manufacturing” is defined using the North American Industry Classification System (NAICS) code series ranging between 31 and 33, then the exemption of all manufacturing equipment and manufacturing inventory would result in a loss of $380,000 in State revenue and $94.6 million to county commissions, county boards of education and municipalities.
This estimate does not include inventory and machinery related to the coal mining industry or any equipment associated with producing 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 equipment 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 mining sector and public utility tangible personal property would significantly increase the estimated loss.
Additional administrative costs for the State Tax Department would be $50,000. There would be no additional costs to local governments.
Memorandum
The stated purpose of this resolution is to propose an amendment to the West Virginia Constitution that would exempt personal property in the form of manufacturing inventory and manufacturing equipment from ad valorem taxation.
The terms “manufacturing”, “manufacturing equipment” and “manufacturing inventory” are not defined in the bill.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov