SB 0497 - Fiscal Note

Fiscal Note - SB 0497 - Creates state income tax credit for donations to scholarship charitable organizations

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO.: 2132-01

BILL NO.: SB 497

SUBJECT: Economic Development Department; Education, Elementary and Secondary; Taxation and Revenue - General; Taxation and Revenue - Income; Charities

TYPE: Original

DATE: March 9, 1999

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
General Revenue	$0	($27,391 to $5,027,391)	$0 to ($5,000,000)
Total Estimated Net Effect on All State Funds	$0	($27,391 to $5,027,391)	($5,000,000)

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

Department of Revenue (DOR) officials state the number of taxpayers eligible for this credit is unknown at this time. The Division of Taxation and Collection would need one (1) Tax Processing Technician I for every 3,680 credits claimed per year. One (1) Tax Processing Technician I would be needed for every 20,000 additional income tax errors and one (1) Tax Processing Technician I for every 12,000 additional corporate tax errors generated from this proposal.

DOR state the proposal would require modifications to the income tax system and credit application system. The Division of Taxation and Collections estimates the modifications, including programming changes, would require 692 hours of overtime at a cost of $20,808. 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 $4,503 would be requested for implementation costs.

Officials from the Office of Administration (COA) state there is no data available that would indicate how much would be donated under this proposal. COA assumes the amount of credits is capped at $5 million per fiscal year. COA ranges the fiscal impact from $0 to ($5,000,000) annually.

Officials from the Department of Economic Development and the Department of Elementary and Secondary Education did not respond to our fiscal impact request.

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
Income tax credits for scholarships	$0	$0 to	$0 to
		($5,000,000)	($5,000,000)
Cost - Department of Revenue
Reprogramming costs	$0	($27,391)	$0
FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
(continued)	(10 Mo.)
ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND	$0	($27,391 to	$0 to
		$5,027,391)	($5,000,000)
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 they would incur cost for making the voluntary cash contributions and receive benefit from the tax credit for making the contribution.

DESCRIPTION

This proposal would authorize a state income tax credit for donations to scholarship charities, as determined by this proposal. A scholarship charity is a tax-exempt charitable organization which would allocate at least 90% of its annual revenue for scholarships to children to allow them to attend a public or non-discriminatory private elementary or secondary school. The credit would not be refundable, but may be carried forward and applied to future tax liabilities for up to four years. The total annual amount of credits would be limited to $5 million. The Director of the Department of Economic Development would determine which organizations qualify as scholarship charities. Credits would be allocated equally at the beginning of each year to all scholarship charities and those not used by a date determined under rules of the Director may be reallocated by the Director to ensure the maximum amount of credits are used each year.

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

NOT RESPONDING: Department of Economic Development and Department of Elementary and Secondary Education

Jeanne Jarrett, CPA

Director

March 9, 1999