SB 0502 - Fiscal Note

Fiscal Note - SB 0502 - Encourages the development of rural agricultural value-added businesses

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO.: 2186-01

BILL NO.: SB 502

SUBJECT: Economic Incentives of Agricultural Businesses

TYPE: Original

DATE: March 10, 1999

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
General Revenue	($209,150) to (Unknown)	($184,428) to (Unknown)	($189,433) to (Unknown)
Agricultural Product Utilization Grant Fund	$0 to $30,000	$0 to $30,000	$0 to $30,000
Total Estimated Net Effect on All State Funds*	($209,150) to ($1,709,150)	($184,428) to ($1,684,428)	($189,433) to ($1,689,433)

*Totals do not include DNR expenses.

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
None	$0	$0	$0
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 5 pages.

FISCAL ANALYSIS

ASSUMPTION

The Department of Agriculture (AGR) assumes for the Agricultural and Small Business Development Authority, they would request a Program Coordinator to plan, coordinate and evaluate a program designed to assist in the creation, development, and operation of rural agricultural businesses through grants and other technical assistance. The AGR would also request a Program Specialist to organize and conduct statewide meetings and workshops to inform participants of the opportunities for value-added agricultural businesses; work with individuals and groups to identify financial and operational resources. The AGR also assumed they would require an automobile for the Small Business Development Authority.

The AGR also assumes that an Accountant would be needed to track and process fund disbursements and receipts.

The AGR assumes there would be income of approximately 1% of the amount appropriated per year from fees charged to businesses and applicants.

The Department of Economic Development (DED) assumes the assistance required in the proposal would not entail any additional work other than what is conducted now and therefore, no additional funding is requested.

The Department of Natural Resources (DNR) assumes Section 348.407.12 requires the Departments of Agriculture, Natural Resources, and Economic Development and the University of Missouri to provide assistance to rural agricultural businesses whose projects add value to agricultural products and aid the economy of a rural community.

The DNR provides technical assistance to owners and operators of farms, animal feeding operations, agricultural related businesses, and to persons who are impacted by the agricultural industry. The DNR coordinates with various Missouri agricultural organizations to provide educational opportunities. In addition, DNR produces and distributes guidance documents for agricultural management activities, analyzes proposed rural or agricultural activities for regulatory compliance, environmental impacts and pollution prevention opportunities, finds cost savings opportunities for the rural community and guide them in environmental compliance, and assists the University Extension with pesticide applicator training and certification.

The DNR currently administers a non-point source low-interest loan program. This program is a cooperative effort of the DNR and the Missouri Agriculture and Small Business Development Authority to offer small producers loans for wastewater treatment appurtenances and facilities.

ASSUMPTION (continued)

Thus far approximately $1.2 million has been loaned to these producers with $10 million earmarked to be loaned in the next two years.

Since the scope of the services required is not defined in the bill, the department assumes this could potentially result in substantial costs for the department.

In the past loans were given for animal waste treatment facilities including pipes, pumps, agitation equipment, irrigation systems, manure spreaders, tank wagons, fencing around lagoons, vegetative filters. The department has expanded the scope of eligible activities and structures to include contour buffer strips; fencing and cross fencing along with any associated watering facilities, and other similar structures, equipment or water pollution abatement activities as found in an approved non-point source management plan; sediment control basins; inclusion of non-permitted collector and processors as eligible recipients; and composters

FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
GENERAL REVENUE FUND
Transfer Out -	$0	$0	$0
to Agricultural Product Utilization	to	to	to
Grant Fund	($1,500,000)	(1,500,000)	($1,500,000)
Cost - AGR
Personal Service - (3 FTE)	($90,297)	($111,110)	($113,88)
Fringe Benefits	(35,957)	(42,626)	(43,927)
Expense and Equipment	(82,896)	(30,692)	(31,618)
	($209,150)	($184,428)	($189,433)
Cost - DNR
staff and expenses to provide
technical assistance	(Unknown)	(Unknown)	(Unknown)
Estimated Net Effect on	($209,150)	($184,428)	($189,433)
GENERAL REVENUE FUND*	to	to	to
	($1,709,150)	($1,684,428)	($1,689,433)
*Totals do not include DNR expenses.
FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
(continued)	(10 Mo.)
AGRICULTURAL PRODUCT
UTILIZATION GRANT FUND
Income - AGR
Transfer from General Revenue Fund	$0 to	$0 to	$0 to
	$1,500,000	$1,500,000	$1,500,000
Application fees	$0 to	$0 to	$0 to
	$30,000	$30,000	$30,000
Cost - AGR
Grants	$0 to	$0 to	$0 to
	($1,500,000)	($1,500,000)	($1,500,000)
Estimated Net Effect on
AGRICULTURAL PRODUCT		$0 to	$0 to$0 to
UTILIZATION GRANT FUND	$30,000	$30,000	$30,000
FISCAL IMPACT - Local Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
	$0	$0	$0
FISCAL IMPACT - Small Business
Small businesses would be fiscally impacted by this proposal as there are tax credits and technical assistance offered to rural agricultural businesses.

DESCRIPTION

This act allows the Missouri Agricultural and Small Business Development Authority to determine the feasibility of an agricultural business concept, to provide a marketing study, to provide legal services and consulting services for a new agricultural business. Under current law, the General assembly is authorized to appropriate up to $1.5 million to the Agricultural Product Utilization Grant Fund. This act increases the authorized amount to $3 million.

DESCRIPTION (continued)

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 Natural Resources

Department of Economic Development

Department of Agriculture

Department of Revenue

Jeanne Jarrett, CPA

Director

March 10, 1999