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 - SJR 007 - Exempts from taxation motor vehicles used primarily for non-business purposes, with a replacement tax
COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO. 0497-02
BILL NO. SJR 7
SUBJECT: Constitutional Amendments: Property Tax-Motor Vehicles
TYPE: Original
DATE: February 8, 1999
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS Net Effect on All
State Funds* *Losses to the Blind Pension Fund could be $2,200,000 beginning in FY 2003, depending
on actions of the legislature ESTIMATED NET EFFECT ON FEDERAL FUNDS Net Effect on All
Federal Funds
FUND AFFECTED
FY 2000
FY 2001
FY 2002 General Revenue
$0
($106,000)
$0
Total Estimated
$0
($106,000)
$0
FUND AFFECTED
FY 2000
FY 2001
FY 2002 None
Total Estimated
$0
$0
$0
|
ESTIMATED NET EFFECT ON LOCAL FUNDS | |||
| FUND AFFECTED | FY 2000 | FY 2001 | FY 2002 |
| Political Subdivisions** | $0 | $0 | $0 |
**The County Employees Retirement Fund could lose $3,600,00 per year beginning in FY 2003.
Numbers within parentheses: ( ) indicate costs or losses
This fiscal note contains 4 pages.
FISCAL ANALYSIS
ASSUMPTION
Officials of the State Tax Commission, the Department of Revenue, the Department of Transportation, and the Department of Elementary and Secondary Education (DES) stated that the proposal would not have meaningful administrative impact on their agencies.
Estimated possible revenue losses assume 93% of motor vehicles ($419 million in tax in 1997) are used for non-business purposes, an average local tax rate of $5.82, and tax collections increasing 3% per year. The Blind Pension Tax rate is $.03.
Oversight notes that the proposal only allows the general assembly to exempt motor vehicles from property tax and would require the general assembly to allow political subdivisions to recoup any monies lost through taxes on other taxable property.
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 motor vehicles from property tax would eliminate a source of the Fund's income. They estimate a long-term increase in the Fund's shortfall of $45,500,000.
Reducing assessed values could affect amounts needed to fully fund the Foundation Formula. DES officials note that reducing assessed values would start to lower the guaranteed tax base in three years. A reduced guaranteed tax base reduces the inflation adjustment in the Formula for districts to fund inflationary increases of educational and operational increases. Increased costs to fully fund the Formula may "zero out" after the third year the proposal would be in effect.
Oversight notes that if the legislature would pass a law in the 2001 session affecting tax years beginning after December 31, 2001, the impact would not be felt until FY 2003.
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 2000 | FY 2001 | FY 2002 |
| GENERAL REVENUE FUND | |||
| Cost to General Revenue Fund | |||
| Secretary of State | |||
| Newspaper Advertisements | ($106,000) | ||
| FISCAL IMPACT - State Government | FY 2000 | FY 2001 | FY 2002 |
| NET EFFECT ON GENERAL | |||
| REVENUE FUND | ($106,000) | ||
| FISCAL IMPACT - State Government | FY 2003 | FY 2004 | FY 2005 |
| BLIND PENSION FUND | |||
| Loss - Reduced Tax Collections | ($2,320,000) | ($2,390,000) | ($2,460,000) |
| NET EFFECT ON BLIND | |||
| PENSION FUND | ($2,320,000) | ($2,390,000) | ($2,460,000) |
| GENERAL REVENUE FUND | |||
| Cost - Foundation Formula | (Unknown) | (Unknown) | $0 |
| NET EFFECT ON GENERAL | |||
| REVENUE FUND | (Unknown) | (Unknown) | $0 |
| FISCAL IMPACT - Local Government | FY 2000 | FY 2001 | FY 2002 |
| $0 | $0 | $0 | |
| FISCAL IMPACT - Local Government | FY 2003 | FY 2004 | FY 2005 |
| POLITICAL SUBDIVISIONS | |||
| Income - Replacement Tax | $452,000,000 | $465,700,000 | $479,700,000 |
| Loss - Motor Vehicle Property Tax | ($452,000,000) | ($465,700,000) | ($479,700,000) |
| NET EFFECT ON POLITICAL | |||
| SUBDIVISIONS | $0 | $0 | $0 |
| COUNTY EMPLOYEES RETIREMENT | |||
| FUND | |||
| FISCAL IMPACT - Local Government | FY 2003 | FY 2004 | FY 2005 |
| (continued) | |||
| Loss - Penalty Income | ($3,600,000) | ($3,700,000) | ($3,800,000) |
| NET EFFECT ON COUNTY EMPLOYEES | |||
| RETIREMENT FUND | ($3,600,000) | ($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 allow the general assembly to exempt all motor vehicles used for non-business purposes from tangible personal property tax. Any statute allowing the exemption would allow political subdivisions to recoup any monies lost due to the exemption through a tax on remaining taxable property.
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
County Employees Retirement Fund
Department of Elementary and Secondary Education
Department of Transportation
Department of Revenue
State Tax Commission
Secretary of State
Jeanne Jarrett, CPA
Director
February 8, 1999