SB 0064 - Fiscal Note

Fiscal Note - SB 0064 - Changes two-year real property assessment cycle to four year cycle

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 0278-02

BILL NO. SB 64

SUBJECT: Counties; County Officials; State Tax Commission

TYPE: Original

DATE: January 28, 1999

---

FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
Blind Pension	$0	$0	>($100,000)
General Revenue	$0	$0	(Unknown)
Total Estimated Net Effect on All State Funds	$0	$0	(Unknown)

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	(Unknown)

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 3 pages.

FISCAL ANALYSIS

ASSUMPTION

Officials at the Department of Elementary and Secondary Education assume that changing the assessment cycle from two to four years would reduce assessed valuations for two years longer than current procedures and would, by reducing the local deduction, increase the cost to fully fund the Foundation Formula. They can not estimate the magnitude of the increase because they can not predict how much the local deduction would be decreased compared to current law.

(The effect would have to be estimated on a district-by-district basis. The Formula still contains provisions for pro-rating some payments if the Formula is not fully funded.)

Officials at the State Tax Commission assume the proposal would not directly affect their budget. They did note that changing the assessment period from two years to four years would cause local governments (and the Blind Pension Fund) to tax part of natural growth every four years instead of every two years. They also note that inequities in assessments would be allowed to exist for four years instead of two.

Oversight estimates decreased income to the Blind Pension Fund would exceed $100,000 per year beginning in FY 2002 since the tax rate for that Fund is not subject to tax rate ceiling rollbacks. (E.g. If the latest reassessment had not taken place, the Fund would have received approximately $750,000 less than it received.)

The Cole County Assessor stated that the administrative effects of the proposal on that office would be minimal.

FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
GENERAL REVENUE FUND
Cost - Increased Transfers to State School
Moneys Fund	$0	$0	(Unknown)
ESTIMATED NET EFFECT TO
GENERAL REVENUE FUND	$0	$0	(Unknown)
BLIND PENSION FUND
Loss - Decreased Collections	$0	$0	(More than
			$100,000)
FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
ESTIMATED NET EFFECT TO
BLIND PENSION FUND	$0	$0	(More than
			$100,000)
FISCAL IMPACT - Local Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
POLITICAL SUBDIVISIONS
Loss-Decreased Collections
Since tax collections are subject to revenue ceiling restraints and due to other factors which could vary from subdivision to subdivision, it is not possible to estimate the magnitude of losses to political subdivisions. Losses, compared to current law, would not occur until FY 2002.

DESCRIPTION

The proposal would replace the current two-year real property reassessment cycle with a four-year cycle.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space. It would affect Total State Revenues.

SOURCES OF INFORMATION

Department of Elementary and Secondary Education

State Tax Commission

Cole County Assessor

Jeanne Jarrett, CPA

Director

January 28, 1999