This Fiscal Note is not an official copy and should not be quoted or cited.
This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0042 - Makes numerous changes in laws affecting the City of St. Louis
COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO.: 0279-02
BILL NO.: SB 42
SUBJECT: Cities, Towns and Villages; Economic Development; Taxation and Revenue
TYPE: Original
DATE: January 18, 1999
FISCAL SUMMARY
|
ESTIMATED NET EFFECT ON STATE FUNDS | |||
| FUND AFFECTED | FY 2000 | FY 2001 | FY 2002 |
| General Revenue | ($4,371,308) to ($5,582,971) | ($4,154,183) to ($5,861,798) | ($4,154,183) to ($5,917,973) |
| Highway | $0 to ($1,124,288) | $0 to ($1,403,115) | $0 to ($1,459,290) |
| Parks Sales Tax | ($3,000,000) | ($3,090,000) | ($3,180,000) |
| Total Estimated
Net Effect on All State Funds |
($7,371,308) to ($8,495,596) | ($7,244,183) to ($8,647,298) | ($7,334,183) to ($8,793,473) |
|
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 |
Numbers within parentheses: ( ) indicate costs or losses
This fiscal note contains 9 pages.
|
ESTIMATED NET EFFECT ON LOCAL FUNDS | |||
| FUND AFFECTED | FY 2000 | FY 2001 | FY 2002 |
| Local Government | $1,596,413 to ($10,053,712) | ($1,895,385) to ($38,040,885) | ($30,106,210) to ($66,251,710) |
FISCAL ANALYSIS
ASSUMPTION
SECTION 67.1015-Revitalization of the St. Louis City Act
SECTION 67.1017-Hotel Tax
Officials of the City of St. Louis state this portion of the proposal is permissive. Voter approval is required before any tax can be imposed. If approved, this portion of the proposal would generate local revenue of approximately $4,500,000 annually less 1% collection fee if DOR collects this tax for the city. The increase in tax revenue assumes that the behavior of current purchases is not affected by the increase in the tax rate.
SECTION 67.1020-City Vehicle Rental Tax Trust Fund
According to City of St. Louis staff Article X, Section 3 of the Missouri constitution allows taxation "..within the territorial limits of the authority levying the tax." Lambert Airport is not within the territorial limits of the City of St. Louis. Officials of the City of St. Louis assume there would have to be a constitutional amendment allowing the City of St. Louis to impose a tax outside of its territorial limits before this portion of the proposal could be implemented. There are only a couple rental offices in the City. Taxes raised from them are not assumed to be significant.
SECTION 67.1022-Parking Space Tax
Officials of the City of St. Louis state this portion of the proposal is permissive. Voter approval is required before any tax can be imposed. If approved, this portion of the proposal would generate local revenue of approximately $6,000,000 annually. City staff assumes the parking tax would be levied on each spot once each day for approximately 200 days a year. City staff estimate that there are approximately 15,000 ground level spots and approximately 24,500 parking garage spots.
ASSUMPTION (continued)
SECTION 92.120-Earnings and Business Net Profits tax phase out
Officials of the City of St. Louis state this portion of the proposal would phase out the 1% Earnings and Business net profit taxes. City staff estimates the loss of local revenues for six months of FY2000 to be ($14,178,000), for FY2001 ($42,534,000) and for FY2002 ($70,891,000). This estimate is based on the FY 1999 budget.
SECTION 94.510-City Sales Tax Rate Increase from 1 1/8% up to 2 1/8%
Officials of the City of St. Louis state this portion of the proposal is permissive. Voter approval is required before any tax can be imposed. If approved, this portion of the proposal would generate local revenue of approximately $25,950,000 annually less 1% collection fee if DOR collects this tax for the city. This estimate is based on current receipts and growth trends.
SECTION 227.022-10% of City streets to be Maintained by DHT
Officials of the Missouri Department of Transportation (DHT) state this portion of the proposal designates 10% of the street mileage within any city not within a county to be considered part of the state highway system for maintenance and repair purposes only. The Highway and Transportation Commission shall designate the streets to be considered state highways. DHT contacted the St. Louis City Street Department to find out how many miles of streets the city has or how many lane miles the city has. Based on their response and the experience of the District 6 office, the City of St. Louis has around 1,050 centerline miles. Assuming DHT would take over the higher volume streets, DHT estimates the cost per mile of primary routes $12,849 for FY2000 using FY 1995 data and inflating it 4% for each fiscal year. These streets would have at least one lane in each direction plus curb lanes. DHT estimates the cost using 10% of the 1,050 miles to be:
FY2000-10% x 1,050 miles x $12,849 x 10/12 (months) = $1,124,288
FY2001-10% x 1,050 miles x $13,363 = $1,403,115
FY2002-10% x 1,050 miles x $13,898 = $1,459,290
However, a constitutional argument can be raised that DHT is under no requirement to maintain these additional St. Louis City streets as set forth in this proposal. In 1929, Section 227.020, was enacted which set out the routes in each county, and the City of St. Louis, which would be known as "the state highway system". Article IV, section 30(b) of the current Missouri Constitution, which was adopted in 1945, states the purposes for which the State Road Fund may be expended by the Missouri Highways and Transportation Commission. One of the requirements is to "complete and widen or otherwise improve and maintain the state system of highways heretofore
ASSUMPTION (continued)
designated and laid out under existing laws". These expenditures are to be made "under the supervision and direction of the Commission". The other purposes stated in 30(b) are expenditures of the State Road Fund which may be made "in the discretion of the Commission". One of the permitted discretionary expenditures is to construct and maintain "any highway in any city or town which is found necessary as a continuation of any state or federal highway, or any connection therewith, into and through such city or town".
Under this language, the Commission is only required to expend funds from the State Road Fund to improve and maintain the state highway system as set out in section 227.020 prior to 1945. Any other expenditures of moneys are discretionary, but must be for one of the purposes permitted by section 30(b) of the Missouri Constitution. As a result, the Commission would have no obligation to expend funds from the State Road Fund for the 10% of the St. Louis city streets unless the Commission decided it was necessary as a continuation of a state or federal highway. If the Commission decided it could not do so, the costs would have to be appropriated out of the General Revenue Fund. For this reason, DHT has shown a range of costs to the General Revenue Fund and the State Road Fund.
This assumes strictly maintenance of these roads which means DHT takes care of the surface of the road.
SECTION 253.135-DNR to maintain 2 parks in St. Louis City
Officials of the Department of Natural Resources (DNR) state this portion of the proposal designates two parks located in the City of St. Louis as state parks. DNR maintains 80 state parks and historic sites ranging from forests to prairies, caves to springs, creeks and rivers, gristmills to battlefields to birthplaces of the famous. The costs to maintain the state parks and historic sites maintained by the department cannot be compared to the costs to maintain a St. Louis City Park such as Forest Park primarily because of the difference in mission. Forest Park consists of approximately 1,300 acres and is one of the largest urban parks in the country. Forest Park provides urban recreational activities to more than 12 million visitors a year.
The proposed bill provides that the department of natural resources shall repair and maintain as state parks all lands donated by St. Louis City. Specifically, St. Louis City is to designate two parks within its boundaries as state parks. Maintenance is not defined in the bill. Maintenance could be interpreted to include only routine maintenance of the lands (grass cutting, trimming, hauling trash, etc) or maintenance could also include maintenance and repair of infrastructure (sewer lines, roads, buildings, etc) throughout the entire park.
ASSUMPTION (continued)
The actual costs to maintain two city parks would vary dependant upon the resources and the infrastructure in the parks to be maintained and the scope of activities to be provided. For example, a recent newspaper article reported the City of St. Louis now spends about $3 million a year maintaining its two largest parks, Forest and Tower Grove and information sources indicate Swope Park located in Kansas City has an operational budget of approximately $12 million.
If the proposed bill required the department to develop and maintain the infrastructure at the two city parks, the costs would be significantly higher. According to the Forest Park Forever web site, the City of St. Louis adopted a Forest Park Master Plan in 1995. A recent news article and in the City of St. Louis' Supplement Financial Report (June 30, 1997) the estimate for the master plan was reported at $86 million.
The department assumes the property transfer agreement would specify ownership of the lands, buildings and structures. Acquisition, development, maintenance and operation of state parks represent constitutional uses of park sales tax funds. Since the proposal provides that ownership of the lands rests with the department; the department assumes maintenance of the lands, would be a constitutional use of park sales tax funds. However, activities beyond the current state park conceptual plans for the existing state park system that impact long-term funding issues are a concern of the department and must be funded with General Revenue Funds. Accordingly, general revenue funds would be requested for the maintenance of these parks.
Without knowing what specific St. Louis City Parks and what respective facilities within the parks are proposed to be designated as state parks, the department can only generally estimate the costs to maintain and repair these facilities. Based on the information above, the costs could be significant. Additional costs for capital improvements are also unknown. Once the specific parks and facilities within the parks have been identified and the scope of activities defined, the department would be able to estimate the costs.
Officials of the City of St. Louis state this portion of the proposal would save the city approximately $3,000,000 annually. A 3% inflation factor was used.
Oversight, for purposes of this fiscal note, has elected to reflect the revenue estimate done by the City of St. Louis.
SECTION 253.550-Historic Tax Credit for City of St. Louis increased from 25% to 30%
Officials of the Department of Economic Development (DED) state this portion of the proposal would increase the Historic Preservation Tax Credit from 25% to 30% for the City of St. Louis.
ASSUMPTION (continued)
DED staff has identified $267,520,952 of historic rehabilitation projects in St. Louis that will occur from FY2000 through FY2002. This would result in a 25% tax credit of $66,880,238 over the three years. Assuming that the projects would occur evenly over that period, the 25% annual tax credit would annually total $22,293,413. A 30% tax credit, as proposed, would result in an average tax credit of $26,752,095 or an increase of $4,458,683 annually. This estimate does not include any calculation of unidentified projects that may occur in St. Louis.
SECTION 508.075-Circuit Courts
Officials of the Office of State Courts Administrator (CTS), Office of the State Public Defender (SPD) and Department of Revenue (DOR) assume this proposal would not fiscally impact their agencies.
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 | |||
| Income to General Revenue Fund | |||
| 1% Collection Fee-Hotel Tax | $0 | $0 | $0 |
| to | to | to | |
| $22,500 | $45,000 | $45,000 | |
| 1% Collection Fee-City Sales Tax rate | $0 | $0 | $0 |
| to | to | to | |
| $64,875 | $259,500 | $259,500 | |
| Cost to General Revenue Fund | |||
| Missouri Department of Transportation | |||
| 10% of City streets maintained | $0 | $0 | $0 |
| to | to | to | |
| ($1,124,288) | ($1,403,115) | ($1,459,290) | |
| Loss to General Revenue Fund | |||
| Increase Historic Preservation Tax Credit | |||
| from 25% to 30% for City of St. Louis | ($4,458,683) | ($4,458,683) | ($4,458,683) |
| FISCAL IMPACT - State Government | FY 2000 | FY 2001 | FY 2002 |
| (Continued) | (10 Mo.) | ||
|
ESTIMATED NET EFFECT ON |
|||
| GENERAL REVENUE FUND | ($4,371,308) | ($4,154,183) | ($4,154,183) |
| to | to | to | |
| ($5,582,971) | ($5,861,798) | ($5,917,973) | |
| HIGHWAY FUND | |||
| Cost to Highway Fund | |||
| Missouri Department of Transportation | |||
| 10% of City streets maintained | $0 | $0 | $0 |
| to | to | to | |
| ($1,124,288) | ($1,403,115) | ($1,459,290) | |
| PARKS SALES TAX FUND | |||
| Cost to Parks Sales Tax Fund | |||
| Department of Natural Resources | |||
| Maintain 2 parks in St. Louis City | ($3,000,000) | ($3,090,000) | ($3,180,000) |
| FISCAL IMPACT - Local Government | FY 2000 | FY 2001 | FY 2002 |
| (10 Mo.) | |||
| Income to Local Government | |||
| Increase in Hotel Tax(up to 3%) | $0 | $0 | $0 |
| to | to | to | |
| $2,227,500 | $4,455,000 | $4,455,000 | |
| Income to City Vehicle Rental Tax Trust Fund | |||
| Sales Tax on Auto Rentals(up to 3%) | minimal | minimal | minimal |
| Income to Local Government | |||
| Parking Space Tax | $0 | $0 | $0 |
| to | to | to | |
| $3,000,000 | $6,000,000 | $6,000,000 | |
| Income to Local Government | |||
| Increase in City Sales tax(up to 2 1/8%) | $0 | $0 | $0 |
| to | to | to | |
| $6,422,625 | $25,690,500 | $25,690,500 | |
| FISCAL IMPACT - Local Government | FY 2000 | FY 2001 | FY 2002 |
| (Continued) | (10 Mo.) | ||
| Loss to Local Government | |||
| Phase out of Earnings Tax | ($14,178,000) | ($42,534,000) | ($70,891,000) |
| Savings to Local Government | |||
| 10% of City streets maintained by DHT | $1,124,288 | $1,403,115 | $1,459,290 |
| Maintenance of 2 parks in St. Louis | |||
| By the Department of Natural Resources | $3,000,000 | $3,090,000 | $3,180,000 |
|
ESTIMATED NET EFFECT ON |
|||
| LOCAL GOVERNMENT | $1,596,413 | ($1,895,385) | ($30,106,210) |
| to | to | to | |
| ($10,053,712) | ($38,040,885) | ($66,251,710) | |
| FISCAL IMPACT - Small Business | |||
| Small businesses could be affected by this proposal. | |||
DESCRIPTION
This act authorizes the City of St. Louis to: 1)increase its hotel tax by 3% over the 3.75% maximum; 2) impose a sales tax up to three percent on auto rentals in the city; 3)impose a parking tax of up to $1.00 in commercial lots and $.50 in parking garages; 4)increase its general sales tax by 0.75%; 5) designate two parks as state parks for maintenance purposes; and 6) increase the historic tax credit to 30%. This act also designates 10% of the street mileage within St. Louis to be state highways for maintenance purposes and eliminates St. Louis courts as the trial location when other courts in the state are more convenient. The act also phases out the 1% earnings tax and the business profit tax.
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
City of St. Louis
Missouri Department of Transportation
Department of Natural Resources
Department of Economic Development
Office of State Courts Administrator
Office of the State Public Defender
Department of Revenue
Jeanne Jarrett, CPA
Director
January 18, 1999