SJR 029 - Fiscal Note

Fiscal Note - SJR 029 - Would exempt from taxation all personal property used for non-business purposes

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 3515-01

BILL NO. SJR 29

SUBJECT: Constitutional Amendments: Property Tax

TYPE: #Updated

DATE: February 10, 1998

#Change assumptions about non-business use of personal property

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
General Revenue	($100,400)	$0	$0
Blind Pension#	$0	#($2,065,000)	#($2,125,000)
Total Estimated Net Effect on All State Funds#	($100,400)	#($2,065,000)	#($2,125,000)

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 to $392,000,000)	#($0 to $404,000,000)
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 and the State Auditor stated that the proposal would not have meaningful administrative impact on their agencies.

#Estimated possible revenue losses assume 93% of motor vehicles ($401 million in tax in 1996) and 5% of other personal property ($389 million in tax in 1996) are used for non-business purposes, an average local tax rate of $5.87, and tax collections increasing 3% per year. The Blind Pension Tax rate is $.03.

Oversight notes that political subdivisions are required to adjust property tax rates to take into account changes in assessed valuation by section 137.073. Rates may be rolled back or "rolled up" to the tax rate ceiling. There will be three possible effects on political subdivisions:

1) Some subdivisions will have tax rates far enough below their tax rate ceilings that they will be able to "roll up" their rates enough to entirely offset losses due to changing assessments on certain property;

2) Some subdivisions will be able to "roll up" their rates enough to partially offset losses due to changing assessments on certain property; and

3) Some subdivisions will not be able to "roll up" tax rates because their rates are at their tax rate ceiling.

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) and some penalties on delinquent personal property tax are deposited in the Fund. Exempting tangible personal property from property tax would eliminate a source of the Fund's income.

Reducing assessed values could affect amounts needed to fully fund the Foundation Formula.

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	($100,400)
NET EFFECT ON GENERAL
REVENUE FUND	($100,400)
BLIND PENSION FUND
#Loss - Reduced Tax Collections	$0	($2,065,000)	($2,125,000)
#NET EFFECT ON BLIND
PENSION FUND	$0	($2,065,000)	($2,125,000)
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
POLITICAL SUBDIVISIONS
#Income - Higher Tax Rates	$0	$0	$0
		to	to
		$392,000,000	$404,000,000
#Loss - Reduced Personal Property Tax Collections	$0	($392,000,000)	($404,000,000)
#NET EFFECT ON
POLITICAL SUBDIVISIONS	$0	($0	($0
		TO	TO
		$392,000,000)	$404,000,000)
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 on other taxable property due to tax rate adjustments.

DESCRIPTION

The proposal would exempt all personal property used for non-business purposes from tangible 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

Auditor

County Employees Retirement Fund

State Tax Commission

St. Louis Assessor

Jeanne Jarrett, CPA

Director

February 10, 1998