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 0254 - Authorizes pilot project to establish tax free zone in Kansas City
COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO.: 0725-01
BILL NO.: SB 254
SUBJECT: Economic Development: Kansas City
TYPE: Original
DATE: February 8, 1999
FISCAL SUMMARY
|
ESTIMATED NET EFFECT ON STATE FUNDS | |||
| FUND AFFECTED | FY 2000 | FY 2001 | FY 2002 |
| General Revenue | ($6,887 to Unknown) | ($26,250 to Unknown) | ($27,563 to Unknown) |
| Total Estimated
Net Effect on All State Funds |
($6,887 to UNKNOWN) | ($26,250 to UNKNOWN) | ($27,563 to UNKNOWN) |
|
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 | (UNKNOWN) | (UNKNOWN) | (UNKNOWN) |
Numbers within parentheses: ( ) indicate costs or losses
This fiscal note contains 4 pages.
FISCAL ANALYSIS
ASSUMPTION
Officials from the Missouri Senate and the Missouri House of Representatives assume this proposal would not fiscally impact their agencies.
City of Kansas City (KC) officials state no precise fiscal analysis can be made on the impact of this proposal since there are no established boundaries of the area to be covered. KC states that without knowing the boundaries of the area and therefore the number and types of businesses in the area, no determination can be made of the impact of foregoing the sales tax. KC also states that attempting to define the area through use of ZIP Codes could be done, thought it would be preferable to use census tracts. Census data contains a wide variety of demographic and socio-economic information that could be used to define an economically depressed area. KC further states that regardless whether ZIP Codes or census tracts are used to define an area, adding the criteria that the area in one that has been "red-lined" by financial institutions calls for a subjective judgment that cannot be quantified.
Officials from the Department of Revenue (DOR) state this proposal would establish a sales tax free zone in economically depressed areas for a specified period of time.
ADMINISTRATIVE IMPACT:
DOR states this proposal would require the department to create a program within its computer system to classify certain identified businesses as owing no sales or use tax on transactions for a certain period of time. After the period of time has expired DOR would need to change this program to again expect sales/use tax from such businesses. Program changes would cost $4,524 for 363 hours of overtime. State Data Center charges would be $2,363 for implementation and testing time.
Officials from the Department of Economic Development (DED) did not respond to our fiscal impact request. However, in responding to a similar proposal last year, DED stated that only the administrative fiscal impact can be projected. DED stated the administrative cost is for a consultant to assess the impact of the change in the law. The consultant would be used once per year to prepart the report for the governor and general assembly. DED estimated the administrative cost at $26,250 annually.
Office of Administration, Jackson County and Clay County did not respond to our fiscal impact request.
Oversight assumes there would be an unknown loss of sales tax revenue to the General Revenue Fund
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 - General Revenue Fund | |||
| Creation of tax-free pilot project | (Unknown) | (Unknown) | (Unknown) |
| Cost - Department of Revenue | |||
| Reprogramming costs | ($6,887) | $0 | $0 |
| Cost - Department of Economic Development | |||
| Consultant costs | $0 | ($26,250) | ($27,563) |
|
ESTIMATED NET EFFECT ON |
|||
| GENERAL REVENUE FUND | ($6,887 to | ($26,250 to | ($27,563 to |
| UNKNOWN) | UNKNOWN) | UNKNOWN) | |
| FISCAL IMPACT - Local Government | FY 2000 | FY 2001 | FY 2002 |
| (10 Mo.) | |||
| LOCAL GOVERNMENTS | |||
| Loss - Local Governments | |||
| Creation of tax-free pilot project | (Unknown) | (Unknown) | (Unknown) |
|
ESTIMATED NET EFFECT ON |
|||
| LOCAL GOVERNMENTS | (UNKNOWN) | (UNKNOWN) | (UNKNOWN) |
| FISCAL IMPACT - Small Business | |||
| Small businesses would be expected to be fiscally impacted to the extent there would be less administrative reporting of sales and sales/use tax. | |||
DESCRIPTION
This proposal would create a pilot project which would require the Director of the Department of Economic Development to designate, on or before January 1, 2000, an economically depressed tax-free zone within Kansas City. All retail purchases made during the years 2000 and 2001 at any commercial establishment location within the economically depressed tax-free zone would be exempt from all state and local sales 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
Department of Economic Development
Department of Revenue
Office of Governor
House of Representatives
Missouri Senate
City of Kansas City
NOT RESPONDING: Office of Administration - Division of Budget and Planning, Jackson County and Clay County
Jeanne Jarrett, CPA
Director
February 8, 1999