SB 0640 - Fiscal Note

Fiscal Note - SB 0640 - Extends Sales Tax Exemption on Aviation Jet Fuel

L.R. NO.  2500-02
BILL NO.  Truly Agreed and Finally Passed SCS for SB 640
SUBJECT:  Sales tax
TYPE:     Original
DATE:     May 8, 1996



                              FISCAL SUMMARY
                    ESTIMATED NET EFFECT ON STATE FUNDS


FUND AFFECTED              FY 1997             FY 1998           FY 1999

General Revenue       ($1,643,401)        ($3,238,228)      ($3,236,810)

School District
Trust                   ($539,232)        ($1,078,464)      ($1,078,464)

Conservation             ($67,404)          ($134,808)        ($134,808)

Parks and Soils          ($53,923)          ($107,846)        ($107,846)

Total Estimated
Net Effect on All
State Funds           ($2,303,960)        ($4,559,346)      ($4,557,928)


                   ESTIMATED NET EFFECT ON FEDERAL FUNDS


FUND AFFECTED              FY 1997             FY 1998           FY 1999

None

Total Estimated
Net Effect on All
Federal Funds                   $0                  $0                $0


                   *ESTIMATED NET EFFECT ON LOCAL FUNDS


FUND AFFECTED              FY 1997             FY 1998           FY 1999

Local Government        ($808,848)        ($1,617,696)      ($1,617,696)

*Estimates do not include the loss generated by section 144.809 of this
proposal.


                              FISCAL ANALYSIS

ASSUMPTION

Officials of the Department of Revenue state this proposal would extend the
expiration date of the cap on sales and use taxes on aviation jet fuel of
$1.5 million from December 31, 1996 to December 31, 2001. Also, state and
local sales and use tax rates on aviation jet fuel sold, stored, used or
consumed at airports which are recipients of federal grant funds, or have
applied for or been approved for federal grant funds, are frozen at the rates
that were in effect December 30, 1987.


The Information Systems Division would request one Programmer Analyst II for
six months in FY 97, and State Data Center costs.

Oversight has allowed the State Data Center costs.

In estimating the impact of this proposal officials of the Office of
Administration (OA) assume only one carrier uses enough jet fuel to qualify
for the exemption in section 144.805. Jet fuel costs 60 cents per gallon and
370,202,669 gallons of jet fuel are sold in Missouri each year. These factors
are assumed to remain constant. The jet fuel consumption data is from TWA and
the FAA. The annual cost to the state is estimated at:
                         3% GR Sales Tax            $3,235,392
                         1% School District Trust   $1,078,464
                         .1% Parks & Soil             $107,846
                         .125% Conservation           $134,808
                         Total                      $4,556,511

The annual local sales tax loss is estimated at:

                         1% City Sales Tax          $1,078,464
                         .5% County Sales Tax         $539,232
                         Total                      $1,617,696

OA staff assumes this proposal would continue to exempt jet fuel from state
sales and use tax and local sales tax after the first $1.5 million in state
sales and use tax is paid.

Oversight cannot estimate the loss to political subdivisions for exempting
aviation jet fuel used or consumed at airports which are recipients of
federal grant funds, or have applied for or been approved for federal grant
funds, from local sales and use tax, at the rates that were in effect
December 30, 1987.

FISCAL IMPACT - State Government     FY 1997       FY 1998      FY 1999
                                     (6 Mo.)
Loss to General Revenue Fund
   Jet fuel Sales Tax Exemption ($1,617,696)  ($3,235,392) ($3,235,392)

Cost to General Revenue Fund
   Department of Revenue
   Equipment and Expense           ($25,705)      ($2,836)     ($1,418)

ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND            ($1,643,401)  ($3,238,228) ($3,236,810)

Loss to School District Trust Fund
   Jet Fuel Sales Tax Exemption   ($539,232)  ($1,078,464) ($1,078,464)

Loss to Conservation Fund
   Jet Fuel Sales Tax Exemption    ($67,404)    ($134,808)   ($134,808)

Loss to Parks & Soil Fund
   Jet Fuel Sales Tax Exemption    ($53,923)    ($107,846)   ($107,846)


FISCAL IMPACT  - Local Government    FY 1997       FY 1998      FY 1999
                                     (6 Mo.)

Loss to Cities
   Jet Fuel Sales Tax Exemption   ($539,232)  ($1,078,464) ($1,078,464)

Loss to Counties
   Jet Fuel Sales Tax Exemption   ($269,616)    ($539,232)   ($539,232)


Loss to Political Subdivisions     (unknown)     (unknown)    (unknown)

Aviation jet fuel for federal grant recipients, airports that have been
approved for federal grant funds or which are otherwise eligible to apply for
federal grant funds, would be exempt from local sales and use tax, at the
rates that were in effect December 30, 1987.

PARTIAL ESTIMATED NET EFFECT
TO LOCAL FUND*                    ($808,848)  ($1,617,696) ($1,617,696)

* Estimate does not include the loss generated by section 144.809 of this
proposal.


DESCRIPTION

The expiration of the state and local sales tax exemption (section 144.805
RSMo) on aviation jet fuel will expire on December 31, 1996. This proposal
would extend the date to December 31, 2001. This proposal also specifically
exempts aviation jet fuel for airports which are recipients of federal grant
funds, or have applied for or been approved for federal grant funds, from
state or local use tax at the rates that were in effect December 30, 1987.

This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.


SOURCES OF INFORMATION

Department of Revenue
Office of Administration