Fiscal Note - SB 0441 - Allows Certain Counties to Vote For a Tourism Sales
L.R. NO. 0073-03
BILL NO. SB 441
SUBJECT: Taxation and Revenue: Sales Tax
TYPE: Original
DATE: March 18, 1997
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
General Revenue ($104,616) ($53,417) ($54,664)
Total Estimated
Partial Net Effect
on All State Funds ($104,616)* ($53,417)* ($54,664)*
*Partial effect to GR does not include income from 1% collection fee.
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Local Government $0 $0 $0
FISCAL ANALYSIS
ASSUMPTION
Officials of the Department of Economic Development (DED) - Division of
Tourism (DOT) assume no fiscal impact to their department.
Officials of the Department of Revenue (DOR) assume that this proposal would
have fiscal impact to the State's General Revenue Fund. Officials stated
that the number of counties that would impose the Advertising and Tourism
sales tax and the rate at which such taxes would be imposed are unknown;
therefore, the amount of revenue that would be collected on behalf of the
counties and the corresponding collection fee that would be deposited to the
General Revenue Fund is unknown.
Costs will be incurred every year this legislation remains in effect. It is
unclear whether the 1% collection fee that would be deposited to the General
Fund would be sufficient to offset administrative costs.
DOR officials assume that an Advertising and Tourism sales tax could be
established in one small area of a city (perhaps as little as several city
blocks). The Department of Revenue's computerized sales tax collection
system is designed to collect local taxes based only on municipal or county
boundaries. The Division assumed the following when estimating
administrative costs that would be requested:
1. Each district would be required to furnish a list of taxpayers
within their boundaries and a map clearly showing the district boundaries;
and,
2. Each district would be responsible for maintaining and furnishing to
DOR a current list of businesses within their boundaries as new retail
outlets begin business.
ADMINISTRATIVE IMPACT:
Division of Taxation & Collection
The Division would be responsible for collecting these local sales taxes.
The Division would request 1 Tax Processing Technician I for registration of
accounts within the districts and file maintenance (adding new locations and
deleting closed locations, correcting errors on the computer system, etc.).
Also, 1 Tax Processing Technician I per 1,000 affected accounts would be
required to maintain the distribution system (to properly disburse the
correct amounts to the correct counties) and to assist taxpayers with
questions and problems.
Division of Motor Vehicles & Drivers Licensing:
The Division assumes that 5% of taxable motor vehicle transactions will
involve customers that do not calculate the correct amount of tax since they
may not even be aware they are subject to the Advertising and Tourism sales
tax, resulting in rejected title applications. Assuming this reject rate,
approximately 729 rejected title applications are expected annually,
requiring approximately $420 in annual overtime costs. In addition, policies
would need to be revised, a notice to motor vehicle dealers about the new
districts would need to be mailed and costs would be incurred to process the
aforementioned rejected title applications.
Information Systems Division:
The Information Systems Division would be required to develop and maintain
the computer programs necessary to collect these special taxes. As noted,
the current system does not recognize boundaries other than city and county
boundaries. The effective date of the first of such taxes could be as early
as January 1, 1998, which may not allow sufficient time to thoroughly design,
test and implement the new computer system. Overtime costs of approximately
$39,575 would be requested. In addition to utilizing 7 existing programmers,
the Division would request 1 additional Programmer Analyst II to assist in
the programming effort and would utilize 1/4 FTE on an ongoing basis to
maintain the system.
State Date Center costs of $28,805 are anticipated for initial implementation
of the new system and ongoing costs of $3,449 annually are anticipated.
DOR officials estimated the total administrative impact for salaries, fringe
benefits, equipment, and expense for 6 months in FY98 $130,642; FY99 $65,709;
and $67,273 in FY2000.
Oversight assumes that staffing requirements would depend on the number of
new districts formed and has allowed 2 FTE in the Division of Taxation.
However, if the number of districts which impose the tax is minimal, less
staff would be required. Oversight assumes that existing Information Systems
Division programmers could make the modifications with an allotment for
overtime costs. It is likely that income from collection fees will offset
costs, although the amount of revenue is unknown.
LOCAL GOVERNMENT:
Oversight assumes local governments that establish an Advertising and Sales
Tax Trust Fund would have income from the sales tax which could not exceed
2%, and would realize costs of an election, and advertising and promoting
tourism. The number of counties that would impose an Advertising and Tourism
sales tax and the rate at which the tax would be imposed is unknown,
therefore, annual income and expense cannot be estimated and are unknown.
Oversight assumes that costs would not exceed income and would have a total
net effect of zero or a positive fund balance.
FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
(6 Mo.)
GENERAL REVENUE FUND
Income to Department of Revenue
From 1% Collection Fee Unknown Unknown Unknown
Cost to Department of Revenue
Personal Service (2 FTE) ($16,900) ($34,645) ($35,512)
Fringe Benefits ($4,822) ($9,884) ($10,132)
Equipment ($6,194) $0 $0
Expense ($36,705) ($8,049) ($8,181)
Overtime ($39,995) ($839) ($839)
ESTIMATED NET EFFECT TO
GENERAL REVENUE FUND ($104,616)* ($53,417)* ($54,664)*
*Partial effect to GR Fund does not include income from the 1% collection
fee.
FISCAL IMPACT - Local Government FY 1998 FY 1999 FY 2000
Advertising & Tourism Sales (6 Mo)
Tax Trust Fund
Income to Certain Counties
From tourism sales tax
not to exceed 2% less 1%
collection fee Unknown Unknown Unknown
Cost to Certain Counties
For election costs,
advertising and tourism
promotion (Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT TO
CERTAIN COUNTIES TOURISM
TRUST FUND $0* $0* $0*
*Oversight assumes that cost would not exceed income resulting in either a
zero or a positive fund balance.
FISCAL IMPACT - Small Business
Fiscal impact to small businesses would be to the extent that they would be
required to collect and remit the Advertising and Tourism sales taxes in
addition to all other state and local sales taxes, and the tax provided for
in this proposal could affect competition between similarly situated
businesses located in the same city since some businesses would be required
to collect a higher sales tax rate than their competitors.
DESCRIPTION
This act authorizes the governing body of any county with less than 50,000
residents to propose a vote on the imposition of a tourism sales tax.
Revenue generated by the tax is to be used for advertising and tourism
promotion. The sales tax could not exceed 2%.
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 Economic Development-Division of Tourism
Department of Revenue
This Fiscal Note is not an official copy and should not be quoted or cited.