SB 0927 - Fiscal Note

Fiscal Note - SB 0927 - Authorizes enterprise zone designation for certain businesses in designated SIC code areas

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 3806-02

BILL NO. Perfected SB 927

SUBJECT: Enterprise Zones

TYPE: Original

DATE: March 25, 1998

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
General Revenue	($66,175)	($66,175)	($66,175)
Total Estimated Net Effect on All State Funds	($66,175)	($66,175)	($66,175)

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
None	$0	$0	$0
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
Local Government	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 3 pages.

FISCAL ANALYSIS

ASSUMPTION

The Department of Revenue (DOR) does not anticipate a large increase in the number of taxpayers filing for the enterprise zone credit and should be able to process this credit with existing staff and resources. However, if the Division of Taxation receives more that 3,680 additional credit filers for photo finishing activities and / or microfilm recording and development services, one Tax Processing Technician will be needed.

The Department of Economic Development (DED) assumes this proposal allows photo finishing or photo processing businesses to qualify for enterprise zone credits and income modifications. The DED assumes there are 144 facilities in the Standard Industry Code 7384, the code for Photofinishing Laboratories; There are 1,652 facilities in SIC 7389, the code for Business Services, Not Classified Elsewhere. Microfilm recording and developing is one of the 136 industries in that classification. The DED assumes it is unknown how many are in an enterprise zone or would relocate to one. The net economic gain to Missouri from these businesses locating in an enterprise zone is also indeterminable.

Oversight assumes, as amended this proposal would apply only enterprises employing a minimum of 100 employees at a single business facility. Oversight assumes approximately 20%, of facilities in industry code 7384 and 12 facilities in code 7389, would be located in enterprise zones. Oversight assumes of that number only 20% or 6 would employee a minimum of 100 people and thereby qualify for the tax credits and income modifications. According to the DED, the average enterprise zone credit is $10,588. Therefore, the estimated loss of state revenue due to the expanded tax credits and income adjustments would be $66,175 per year. However, the use of the credit could expand as more businesses become aware of the potential benefits.

FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
GENERAL REVENUE FUND
Loss - due to expanded enterprise zone
tax credits and income adjustments	($66,175)	($66,175)	($66,175)
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
	$0	$0	$0

FISCAL IMPACT - Small Business

This proposal is expected to impact small businesses engaged in the photo finishing laboratory activities and microfilm recording and developing services because it extends to them the enterprise zone incentive.

DESCRIPTION

This act extends enterprise zone incentives to photo finishing laboratory activities and microfilm recording and developing services, as classified according to Standard Industrial Classification (SIC) codes.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space. The expanded tax credits and income modifications taken would reduce total state revenues.

SOURCES OF INFORMATION

Department of Economic Development

Department of Revenue

Jeanne Jarrett, CPA

Director

March 25, 1998