SB 0016 - Fiscal Note

Fiscal Note - SB 0016 - Authorizes income tax credit of 50% of eligible expenditures requirements of Americans with Disabilities Act

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO.: 0532-01

BILL NO.: SB 16 w/ SCA 1

SUBJECT: Taxation and Revenue - Income - Disabilities

TYPE: Original

DATE: April 14, 1999

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
General Revenue	$0	($150,000)	($150,000)
Total Estimated Net Effect on All State Funds	$0	($150,000)	($150,000)

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

Officials from the Department of Revenue (DOR) state this proposal would authorize an income tax credit equal to 50% of all qualified expenditures that exceed the monetary cap of the federal tax credit. DOR states the tax credit may be carried forward, but is not refundable.

ADMINISTRATIVE IMPACT:

DOR assumes the number of taxpayers eligible for this tax credit is unknown at this time. The Division of Taxation would need one Tax Processing Technician for every 3,680 credits claimed, 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 from this proposal.

DOR states the proposal would require modifications to the income tax system. The Division of Taxation and Collection estimates these modifications, including programming changes, would require 519 hours of overtime at a cost of $15,606. 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 $3,378 is requested.

Officials from the Office of Administration (COA) - Division of Budget and Planning (B&P) state the total federal tax credit taken nationwide is approximately $7,167,000. B&P assumes that Missouri is 1.9% of the nation total or $136,173. Using an upper limit of a $5,000 tax credit, Missouri would have approximately 30 businesses using the federal tax credit. COA-Division of Facilities Management estimates the average cost for ADA compliance to a small business to be $15,000 to $20,000 per business. COA-Division of Facilities Management states this estimate was obtained from contacting private contractors. Assuming that 30 Missouri businesses annually would incur ADA expenditures, B&P estimates a range of tax credits claimed of $75,000 to $150,000 annually. B&P states there are approximately 127,000 small businesses (Census Bureau - County Business Patterns) that meet the criteria of a small business as defined in the proposal. B&P assumes no growth in small businesses in Missouri and no increase in the average cost of ADA compliance expenditures. COA assumes that if participation would increase the amount of tax credits claimed would increase dramatically. For example, if one percent per year of the small businesses in Missouri would incur ADA compliance expenditures, COA estimates a range of tax credit claimed of $3,175,000 to $6,350,000 annually.

Oversight assumes Small Business ADA Compliance Expenditures Tax Credits would result in a $150,000 annual reduction to state revenues. However, the combined effect of available federal tax credits and state tax credits could result in a greater utilization than data suggests.

ASSUMPTION (continued)

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
Small business ADA compliance
expenditures tax credit	$0	($150,000)	($150,000)
ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND	$0	($150,000)	$150,000)
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 they would incur ADA compliance expenditures and may take the tax credit.

DESCRIPTION

This proposal would authorize a state income tax credit equal to fifty percent of all eligible access expenditures incurred by a small business to comply with the provisions of the Americans with Disabilities Act of 1990. The credit could not be refunded or transferred. The proposal has an effective date of January 1, 2000, and applies to all taxable years beginning after December 31, 1999. The proposal also caps the tax credit at $5,000 per taxpayer, disallows tax credit for construction begun after the effective date of the act which is not in compliance with the Americans with Disabilities Act, and sunsets the tax credit in 2005.

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

Office of Administration

Division of Budget and Planning

Jeanne Jarrett, CPA

Director

January 26, 1999