SB 0068 - Fiscal Note

Fiscal Note - SB 0068 - Establishes a tax credit for dry fire hydrants

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO.: 0142-04

BILL NO.: SB 68

SUBJECT: Fire Protection; Water Resources and Water Districts; Taxation and Revenue - Income

TYPE: Original

DATE: January 18, 1999

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
General Revenue	($125,000)	($131,565)	($132,613)
Total Estimated Net Effect on All State Funds	($125,000)	($131,565)	($132,613)

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
None
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
Local Government	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 4 pages.

FISCAL ANALYSIS

ASSUMPTION

Department of Economic Development officials assume this proposal would not fiscally impact their agency.

Officials from the Department of Public Safety - Division of Fire Safety (DFS) estimate that 100 dry fire hydrant systems would be purchased per year. DFS states the approximate installation cost is $2,500 per dry hydrant (100 x $2,500 = $250,000). DFS also states that an individual, firm, or corporation would be entitled to a tax credit of 50% of the cost. DFS estimates this would amount to approximately $125,000 in tax credits in FY2000. DFS assumes a 3% inflationary factor annually for FY2001 and FY 2002 for purchase/installation costs.

Department of Revenue (DOR) officials state this proposal would provide a tax credit for the purchase of dry fire hydrants or for the providing of acceptable means of water storage for the dry hydrant.

ADMINISTRATIVE IMPACT:

The number of income tax returns impacted by this proposal is unknown. The Division of Taxation and Collections would need one Tax Processing Technician I for every 3,680 claims filed, one temporary tax season employee for every 20,000 individual income tax errors and one temporary tax season employee for every 12,000 corporate income tax errors generated by this proposal.

This proposal would require modifications to the income tax system. The Division of Taxation and Collections estimate these modifications, including programming changes, would require 433 hours of overtime at an estimated cost of $13,005. Modifications to the income tax return and schedules would be completed with existing resources. State Data Center charges would increase due to the additional storage and fields to be captured. Funding in the amount of $2,815 would be needed.

Oversight assumes for purposes of this fiscal note that DOR would handle the provisions of this proposal with existing staff.

This proposal would result in a decrease in Total State Revenues.

FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
GENERAL REVENUE FUND
Loss to General Revenue Fund
Tax credit for dry fire hydrants	($125,000)	($128,750)	($132,613)
Cost-Department of Revenue
State Data Center charges	$0	($2,815)	$0
ESTIMATED NET EFFECT TO
GENERAL REVENUE FUND	($125,000)	($131,565)	($132,613)
FISCAL IMPACT - Local Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
	$0	$0	$0
FISCAL IMPACT - Small Business
Small businesses would be expected to be fiscally impacted to the extent that small businesses purchase/install dry fire hydrants and may take the dry fire hydrant tax credit.

DESCRIPTION

This proposal would establish a tax credit for dry fire hydrants. It would grant a 50% tax credit for the cost of purchasing a dry fire hydrant, or providing a site for the water storage. The State Fire Marshal would establish by rule the requirements, and shall certify to the Department of Revenue when all requirements are met. The requirements are to based on the National Resources Conservation Service (NRCS) Missouri dry hydrant standard. The tax credit may be carried over for 7 years, and would be assignable. The credits would have a 5 year sunset, with a $10 million annual cap.

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 Revenue

Department of Economic Development

Department of Public Safety

Jeanne Jarrett, CPA

Director

January 18, 1999