COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.: 0382-02
Bill No.: SB 8
Subject: Taxation and Revenue - Property; Elderly; Counties; Cities, Towns and Villages; County Officials; Property, Real and Personal
Type: Original
Date: January 23, 2003
FISCAL SUMMARY
| FUND AFFECTED | FY 2004 | FY 2005 | FY 2006 |
| Total Estimated
Net Effect on General Revenue Fund |
$0 | $0 | |
| FUND AFFECTED | FY 2004 | FY 2005 | FY 2006 |
| Senior Property Tax Deferral Revolving * | Unknown | Unknown | Unknown |
| Total Estimated
Net Effect on Other State Funds * |
Unknown | Unknown | Unknown |
* Expected to exceed $100,000 per year.
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 8 pages.
| FUND AFFECTED | FY 2004 | FY 2005 | FY 2006 |
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2004 | FY 2005 | FY 2006 |
| Local Government * | (Unknown) | (Unknown) | (Unknown) |
* Expected to exceed $100,000 per year.
ASSUMPTION
Officials from the State Tax Commission assume no fiscal impact to their agency from this proposal. They said there are no numbers or methodologies to use as they do not have the number of senior citizens that would be in that income bracket, and how many eligible senior citizens would opt to utilize this program. The State Tax Commission assumes the proposal would affect the assessor's offices as well as the collector's office in all political subdivisions because they would have to track all deferred monies. The said the impact on these offices would have to be figured on an individual basis. They said there would also be an impact on schools, but it is impossible to determine at this time how large that impact will be.
ASSUMPTION (continued)
Officials from the Cole County Assessor's Office assume one-time programming costs for changes to the Assessor's CAMA and mapping systems of $4,000 in 2004. Cost of maintenance of the program within the Assessor's office is estimated to require one additional part time employee at $6,000 per year starting in 2004. The Cole County Assessor's office said they are already understaffed, and any additional duties for existing staff would require that some other function in the office be sacrificed.
Officials from the Cole County Assessor's Office also assume the Cole County Collector would have one-time programming costs for changes to implement this program at $5,000 in 2004. Additionally, the Collector would need a half-time person to administer and maintain the program at the annual cost of $12,000 per year, starting in 2004. They said the Cole County Collector's office is also understaffed and any additional duties on the existing staff would require some other function of the office to be sacrificed.
Officials from the Cole County Assessor's Office also assume more costs will be incurred by the Cole County Clerk's Office, and by the Cole County Recorder's Office; especially personnel costs to maintain and administer the program.
Officials from the State Treasurer's Office assume the proposal would have no impact on their organization.
Officials from the Office of Administration did not respond; however, in response to a similar proposal in the prior session, deferred to the State Tax Commission's estimate of the impact of this proposal.
Officials from the Department of Revenue did not respond.
Oversight assumes that approximately 24.4 percent of owner-occupied residences are owned by persons over 61 years of age, and that 38.1 percent would have household income less than the upper limit of $32,000 per year. However, Oversight assumes it is not possible to estimate the number of persons who would actually apply for this tax deferral, the value of real estate they own, or the amount of taxes which would be subject to deferral under this proposal. Oversight also assumes the first applications for deferral would be prepared in October, 2003 for 2003 taxes. The resulting deferrals would be for 2003 taxes otherwise payable December 31, 2003. The first reimbursements to county collectors would be in January 2004 for those deferred taxes.
ASSUMPTION (continued)
Oversight assumes there would be significant unknown costs for the Department of Revenue, payable from the Senior Property Tax Deferral Revolving Account. Oversight assumes that transfers from the state General Revenue Fund to the Senior Property Tax Deferral Revolving Account would be required for the first few years of operation, but that there would be insufficient funds in the state General Revenue Fund to make the required transfers, and that a bond issue would instead be needed to fund Department of Revenue expenses and payments to county collectors. Oversight also assumes there would be significant unknown costs for county collectors, assessors, clerks, and recorders in implementing this proposal. Oversight assumes that the two percent withholding from payments to the collectors would result in an unknown reduction in revenues to the political subdivisions.
This proposal could affect total state revenue.
| FISCAL IMPACT - State Government | FY 2004
(10 Mo.) |
FY 2005 | FY 2006 |
| SENIOR PROPERTY TAX DEFERRAL REVOLVING ACCOUNT | |||
| Revenues - collections of deferred taxes | $0 | Unknown | Unknown |
| Transfers - proceeds from bond sales * | Unknown | Unknown | Unknown |
| Cost - Department of Revenue | |||
| Personal Service | (Unknown) | (Unknown) | (Unknown) |
| Fringe Benefits | (Unknown) | (Unknown) | (Unknown) |
| Expense and Equipment | (Unknown) | (Unknown) | (Unknown) |
| Reimbursements - to county collectors * | (Unknown) | (Unknown) | (Unknown) |
| NET EFFECT ON SENIOR PROPERTY TAX DEFERRAL REVOLVING ACCOUNT * |
Unknown |
Unknown |
Unknown |
| * expected to exceed $100,000 per year. |
| FISCAL IMPACT - Local Government | FY 2004
(10 Mo.) |
FY 2005 | FY 2006 |
| POLITICAL SUBDIVISIONS | |||
| Cost - County assessors | (Unknown) | (Unknown) | (Unknown) |
| Cost - County clerks | (Unknown) | (Unknown) | (Unknown) |
| Cost - County collectors | (Unknown) | (Unknown) | (Unknown) |
| Cost - County recorders | (Unknown) | (Unknown) | (Unknown) |
| Revenue reduction - withholding from taxes | (Unknown) | (Unknown) | (Unknown) |
| NET EFFECT ON POLITICAL SUBDIVISIONS * |
(Unknown) |
(Unknown) |
(Unknown) |
FISCAL IMPACT - Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
DESCRIPTION
This proposal would create a Senior Property Tax Deferral Program as follows:
A homestead is defined as an owner occupied principal dwelling and the land surrounding it, not to exceed five acres. If the homestead is located in a multi-unit building, the homestead is the portion of the building actually used as the principal dwelling and its percentage of the value of the common elements and of the property upon which it is built. If the homestead is located on a farm, the homestead consists of the dwelling, appurtenances, and land not to exceed five acres;
An individual, or two or more individuals jointly, may elect to defer the property taxes on their homestead by filing a claim for deferral with the county clerk if the individual, or the older individual, is sixty-two years of age or older. The individual, or all of the individuals together must have household income less than the upper limit of $32,000 per year. A guardian, conservator, or trustee may act for the individual.
DESCRIPTION - continued
The county clerk would forward each claim filed pursuant to this section to the director of revenue who shall determine if the property is eligible for deferral. The property must be the homestead of the individual or individuals, except for an individual required to be absent from the homestead by reason of health. The individual or individuals must own the fee simple estate or be purchasing the fee simple estate under a recorded instrument of sale. The equity interest in the homestead must be equal to or exceeding ten percent of the true value in money of the homestead. The individual or individuals must show proof of insurance in an amount equal to or exceeding market value, and insurance must be kept in place as long as the deferral is maintained.
There must be no prohibition to the deferral of property taxes contained in any provision of federal law, rule or regulation applicable to a mortgage, trust deed, land sale contract or conditional sale contract for which the homestead is security. After August 28, 2002, it shall be unlawful for any mortgage trust deed or land sale contract to contain a clause or statement which prohibits the owner from applying for the benefits of the deferral of homestead property taxes. Any such clause or statement in a mortgage trust deed or land sale contract executed after August 28, 2002, would be void.
The director of revenue would notify the county assessor or collector who would show on the current ad valorem assessment and tax roll the property is tax-deferred by an entry clearly designating such property as tax-deferred. Interest would accrue on the actual amount of taxes advanced to the county for the tax-deferred property at the rate of six percent per annum. The director of revenue would cause to be recorded in the mortgage records of the county, a list of tax-deferred properties in that county. The director would not be required to pay any filing, indexing or recording fees to the county.
The director would pay to the respective county tax collectors an amount equivalent to the deferred taxes less two percent thereof. Payment would be made from an account established by the proposal. The director would maintain records for each deferred property and would accrue interest only on the actual amount of taxes advanced to the county. The director of revenue would send a notice to each taxpayer who is qualified to claim deferral of property taxes for the current tax year.
DESCRIPTION - continued
The director of revenue would estimate the amount of property taxes that will be deferred for a period of five tax years, and the interest thereon. Thereafter, the director would have a lien in the amount of the estimate. The liens would have the same priority as other real property tax liens except that the liens of mortgages, trust deeds or security interests which are recorded or noted on a certificate of title prior in time to the attachment of the liens for deferred taxes shall be prior to the liens for deferred taxes. A lien may be foreclosed by the director pursuant to the law relating to foreclosure in civil suits or any other collection methods given the director of revenue.
There would be established in the state treasury the "Senior Property Tax Deferral Revolving Account". If there is not sufficient money in the revolving account to make the payments required by this section, an amount sufficient to make the required payments may be transferred by appropriations from the General Revenue Fund to the revolving account. When the department determines that moneys in sufficient amounts are available in the revolving account, the director would repay to the General Revenue Fund the amounts advanced or if no such transfer is made by the director, the general assembly may transfer excess funds from the revolving account to the General Revenue Fund. The moneys used to repay the General Revenue Fund pursuant to this section would not be considered as part of the calculation of total state revenue. If there are insufficient funds in the general revenue to provide the necessary funding to the revolving account established in this section, the commissioner of administration may issue revenue bonds. The commissioner may prescribe the form, details and incidents of the bonds, and make the covenants that in the commissioner's judgment are advisable or necessary properly to secure the payment thereof, but the form, details, incidents and covenants would not be inconsistent with any of the provisions of this act.
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
State Tax Commission
Office of the Cole County Assessor
State Treasurer's Office
NOT RESPONDING
Boone County
Greene County
Jackson County
Department of Revenue
Commissioner of Administration
Mickey Wilson, CPA
Director
January 23, 2003