PARKERSBURG, W.Va. — Legislation proposing to raise the Homestead Exemption tax break in West Virginia to seniors and those with disabilities from $20,000 to $40,000 while good news for some, could mean what officials are saying could be a substantial revenue loss to levying bodies.
The board of education, cities, county, state, library and bus system all receive a portion of the funds collected from taxes, with the school board receiving the largest share, about 71 cents of every dollar collected.
Wood County Clerk Mark Rhodes said he and the assessor’s office are in the process of calculating the projected revenue loss the levying bodies could anticipate if the measure is approved by the Legislature and voters.
“While I personally have always favored an increase in the homestead exemption, if they move forward with this, I think it would be better to phase it in to give the entities time to adjust to the revenue loss,” said Wood County Assessor Rich Shaffer.
“If approved by the Legislature and the governor, this would be a constitutional amendment so it would have to go to the ballot at the next election which would be 2016. If approved by voters it would then go into effect in fiscal year 2017. But it’s still all in flux now, it has to get through the Legislature first then the governor would have to sign off on it then it would go to the voters,” Shaffer said.
Those 65 and older or permanently disabled are eligible to apply for the homestead exemption. The homestead currently exempts the first $20,000 of assessed value on the applicant’s single-residence, owner-occupied property and translates to a $250-$280 tax break a year, depending on the magisterial district where the property is located.
Currently there are about 11,058 on the homestead exemption rolls in the assessor’s office. The current total loss of revenue as a result of the homestead is about $2.06 million across the board for all entities, according to county records.
The loss to the county coffers is about $529,000 for the current homesteads, Shaffer said.
Legislation to increase the homestead has been introduced nearly every year since the last raise in 1982, but has not passed. The exemption was first introduced in 1973 at $5,000. It was raised to $10,000 in 1980, to $20,000 in 1982 and has not been increased since that time.
Shaffer said concerns over the lost revenue have been expressed in other parts of the state and that may be the reason for the failure of the proposal previously. Statewide, the county commission and assessor’s associations have expressed their opposition to any measures that would result in loss of revenue.
Shaffer said he was aware of several different versions of legislation that had been proposed, one would have the counties make up the lost revenue to the board of education, another would have the state make up the funding loss to the board, and another does not address any make-up options.
“The school board portion, with the excess, bond and regular levies is estimated at about $1.3 million of the tax collections. While I have always favored seeing a revision on the homestead, to increase it, I would hope they might consider a phase-in to give everyone several years to adjust rather than just a one-time hit,” Shaffer said. “It has a big impact on them.”
The joint resolution has passed the House of Delegates and was forwarded to the State Senate where it is now in committee. The current legislative session ends on Saturday.
Shaffer said he does plan to contact local senators about the pending legislation.
“It would affect my office budget pretty dramatically as well which is another reason I’d like to see it phased in instead of all at one time,” Shaffer said, noting he felt the $20,000 increase was a fair amount. “I’m just a little concerned over the impact on the budget it might have if it were done all at one time. But I am personally in favor of it, I know the problems some senior citizens have in paying taxes,” he said.
Commissioner Blair Couch said the county officials have seen emails going back and forth on the legislation with the state association.
“We are looking at a lot of different counties facing a loss of between 2-9 percent of revenue. I’m not sure what the schools would lose, but they get the greatest amount of the funding. If we lost that amount of revenue, we would have to find a way to raise revenue, and that’s a concern. It’s like when you push on a balloon, you push it over here, and it bulges over there,” Couch said. “The school board will suffer more than the county would. It’s a difficult proposition.”
Couch noted generally property values increase, but when there is a flat economy that additional revenue is not there.
“A lot of counties will be faced with increasing their levy rates to make up for the funding loss,” he said, if the legislation goes through and is approved.
“We are lean here, we don’t have a lot of fat in the budget. We’ve maintained a flat budget for the last few years with the hope that values would increase, we at the county commission have not raised the levy rate. While we’ve had a bad economy, we tightened our belts and not forced taxpayers to pay more,” Couch said. “Perhaps they could more narrowly focus with the homestead and change the parameters.”
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