SJR 026 - Fiscal Note

Fiscal Note - SJR 026 - Exempts tangible personal property from tax and authorizes a replacement tax

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 3145-01

BILL NO. SJR 26

SUBJECT: Constitutional Amendments: Property Tax

TYPE: Original

DATE: February 2, 1998

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
General Revenue	($105,000)	$0	$0
Blind Pension	$0	($1,700,000)	($1,750,000)
Total Estimated Net Effect on All State Funds	($105,000)	($1,700,000)	($1,750,000)

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
None
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Political Subdivisions	$0	$0	$0
County Employees Retirement Fund	$0	($3,700,000)	$3,800,000)

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 4 pages.

FISCAL ANALYSIS

ASSUMPTION

Officials of the State Tax Commission computed losses of revenue by subtracting estimated value of vehicles which would remain taxable from the total value of motor vehicles and assumed an average local tax rate of $5.87. The Blind Pension Tax rate is $.03. Tax Commission officials estimate that, in order to recover the entire amount of personal property tax which would be lost, the tax rate on commercial property would have to average $3.90 per $100 assessed valuation.

The St. Louis City Assessor estimate that the personal property tax yields about $75,000,000 per year for the City.

Oversight assumes that those political subdivisions which have tax rates lower than their tax rate ceilings would "roll up" tax rates on real property as much as possible to offset the loss of personal property tax. Those counties with subdivisions which could not entirely recover the losses through tax rate "roll ups" would impose an additional tax on subclass 3 (utility, commercial, industrial and railroad) property.

Officials of the Department of Transportation stated the proposal would not affect their agency fiscally or administratively.

Officials of the County Employees Retirement Fund note that penalties assessed on entities which return their personal property lists to County Assessors after the deadline (1 March of every year) are deposited in the Fund. Exempting tangible personal property from property tax would eliminate a source of the Fund's income.

Advertisement costs for the proposal would be $3,990 per newspaper column inch for three publications of the text of the proposal, the introduction, title, fiscal note summary, and affidavit. The proposal would be on the ballot for the November 1998 general election.

FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
GENERAL REVENUE FUND
Cost to General Revenue Fund
Secretary of State
Newspaper Advertisements	($105,000)
NET EFFECT ON GENERAL
REVENUE FUND	($105,000)
FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
BLIND PENSION FUND
Loss - Reduced Tax Collections	$0	($1,700,000)	($1,750,000)
NET EFFECT ON BLIND
PENSION FUND	$0	($1,700,000)	($1,750,000)
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
POLITICAL SUBDIVISIONS
Income - Increase Real Property Tax Collections
from "roll ups"	$0	Unknown	Unknown
Income - Collections of tax on subclass 3
property	$0	Unknown	Unknown
Loss - Reduced Personal Property Tax Collections	$0	($350,000,000)	($360,000,000)
NET EFFECT ON
POLITICAL SUBDIVISIONS	$0	$0	$0
COUNTY EMPLOYEES RETIREMENT
FUND
Loss - Penalty Income	$0	($3,700,000)	($3,800,000)
NET EFFECT ON COUNTY EMPLOYEES
RETIREMENT FUND	$0	($3,700,000)	($3,800,000)
FISCAL IMPACT - Small Business

This proposal would affect small businesses. They could benefit from personal property tax provisions. They could pay higher taxes due to tax rate "roll ups" on real property and due to the new tax on commercial property.

DESCRIPTION

The proposal would eliminate tangible personal property tax as of January 1, 1999. the proposal would impose a tax, on the same basis as the merchant's and manufacturer's replacement tax, to make up for any revenue lost to political subdivisions due to the elimination of personal property tax.

This legislation is not federally mandated, would not duplicate any other program, would not

require additional capital improvements or rental space. It would affect Total State Revenue.

SOURCES OF INFORMATION

County Employees Retirement Fund

Department of Transportation

State Tax Commission

St. Louis Assessor

Jeanne Jarrett, CPA

Director

February 2, 1998