SB 0817 - Fiscal Note

Fiscal Note - SB 0817 - Lowers assessed value percentage on motor vehicles to one- half of one percent

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 3516-01

BILL NO. SB 817

SUBJECT: Taxation and Revenue-Property: Motor Vehicles

TYPE: Original

DATE: February 9, 1998

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Blind Pension	$0	($2,000,000)	($2,060,000)
General Revenue	$0	$0	(unknown)
Partial Estimated Net Effect on All State Funds*	$0	($2,000,000)	($2,060,000)

*Does not include possible effect on school funding formula

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 $395,000,000)	($0 to $406,000,000)
County Employees Retirement Fund	$0	($2,500,000)	($2,700,000)

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 4 pages.

FISCAL ANALYSIS

ASSUMPTION

Officials of the State Auditor stated the proposal would not affect their agency administratively.

State Tax Commission officials estimated possible loss of income. Assuming an average tax rate of $5.87 per $100 assessed valuation, the possible loss computes to about $395,000,000 for FY 2000 . The loss to the Blind Pension Fund, which is $.03 per $100 assessed valuation, would compute to $2,000,000.

In addition, lowering certain assessments could result in an increase in the cost to fully fund the Foundation Formula.

Officials of the County Employees Retirement Fund noted that their fund derives part of its income from penalties for late declarations of personal property and from delinquent personal property tax payment fees. their actuary estimates losses of $2,500,000 in FY 2000 and $2,700,000 in FY 2001 due to this proposal.

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.

FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
BLIND PENSION FUND
Loss - Reduced Collections	$0	($2,000,000)	($2,060,000)
NET EFFECT ON BLIND PENSION FUND	$0	($2,000,000)	($2,060,000)
GENERAL REVENUE FUND
Cost - Increase to fund Foundation Formula	$0	$0	(Unknown)
NET EFFECT ON GENERAL
REVENUE FUND	$0	$0	(UNKNOWN)
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
POLITICAL SUBDIVISIONS
Income - Increased Tax Rates	$0	$0	$0
		to	to
		$395,000,000	$406,000,000
Loss - Decreased Assessments	$0	($395,000,000)	($406,000,000)
NET EFFECT ON POLITICAL
SUBDIVISIONS	$0	($0	($0
		TO	TO
		($395,000,000)	($406,000,000)
COUNTY EMPLOYEES RETIREMENT
FUND
Loss - Reduced Penalties	$0	($2,500,000)	($2,700,000)
NET EFFECT ON COUNTY
EMPLOYEES RETIREMENT FUND	$0	($2,500,000)	($2,700,000)
FISCAL IMPACT - Small Business

Small businesses which own motor vehicles could be affected by this proposal.

DESCRIPTION

This proposal would require that motor vehicles be assessed at one-half or one percent of true value for property tax purposes.

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

SOURCES OF INFORMATION

Auditor

County Employees Retirement Fund

State Tax Commission

Jeanne Jarrett, CPA

Director

February 9, 1998