This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SJR 014 - Eliminates personal property tax; imposes replacement tax on residential and commercial/utility property
SJR 14 - Fiscal Note

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 0667-02

BILL NO. SJR 14

SUBJECT: Constitutional Amendments: Property Tax

TYPE: Original

DATE: January 18, 1999

FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS

FUND AFFECTED FY 2000 FY 2001 FY 2002
General Revenue $0 ($113,900) $0
Blind Pension $0 $0 ($4,500,000)
Total Estimated

Net Effect on All State Funds

 $0 ($113,900) ($4,500,000)



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
Political Subdivisions $0 $0 $0
County Employees Retirement Fund $0 $0 ($3,900,000)

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 4 pages.

FISCAL ANALYSIS

ASSUMPTION

Officials of the State Tax Commission and the State Auditor (in responses to similar proposals) stated that the proposal would not have meaningful administrative impact on their agencies. Officials of the Department of Elementary and Secondary Education noted that school districts would continue to receive the same amount of local tax funds; therefore, the cost to fully fund the Foundation Formula would not change.

The assessed value of tangible personal property in 1998 was almost $14,000,000,000. Assuming an average local tax rate of $5.82, approximately $820,000,000 in taxes would be shifted through the two surtaxes. The loss to the state's Blind Pension Fund would be about $4,200,000 based on 1998 assessed values. Assuming tax collections would increase 3% per year, the Fund would lose about $4,600,000 in FY 2002.

Officials of the County Employees Retirement Fund (in responses to similar proposals) noted that penalties assessed on entities which return their personal property lists to County Assessors after the deadline (1 March) and some penalties on delinquent personal property tax are deposited in the Fund. Exempting tangible personal property from property tax would eliminate a source of the Fund's income.

Officials of the Department of Revenue noted that the Division of Motor Vehicles would revise the policy concerning showing proof of payment of personal property tax or proof of non-assessment when persons are registering or renewing registration of motor vehicles. They estimate costs of $7,235 in FY 2001 and $7,226 in FY 2002 for fliers to notify motor vehicle owners of the policy change. Changing the FASTR registration system would cost approximately $6,900 in FY 2001. Oversight assumes that since the proposal would be subject to popular vote there would not be a need for fliers.

Advertisement costs for the proposal would be $3,990 per newspaper column inch for three publications of the text of the proposal, the introduction, title, fiscal note summary, and affidavit. The proposal would be on the ballot for the November 2000 general election.

FISCAL IMPACT - State Government FY 2000 FY 2001 FY 2002
GENERAL REVENUE FUND
Cost to General Revenue Fund
Secretary of State
Newspaper Advertisements ($107,000)
FISCAL IMPACT - State Government FY 2000 FY 2001 FY 2002
Cost to General Revenue Fund (continued)
Department of Revenue
Expense and Equipment-System Modifications ($ 6,900)
NET EFFECT ON GENERAL
REVENUE FUND ($113,900)
BLIND PENSION FUND
Loss - Reduced Tax Collections $0 $0 ($4,600,000)
NET EFFECT ON BLIND
PENSION FUND $0 $0 ($4,600,000)
FISCAL IMPACT - Local Government FY 2000 FY 2001 FY 2002
POLITICAL SUBDIVISIONS
Income - Surtaxes $0 $0 $880,000,000
Loss - Reduced Personal Property Tax Collections $0 $0 ($880,000,000)
NET EFFECT ON
POLITICAL SUBDIVISIONS $0 $0 $0
COUNTY EMPLOYEES RETIREMENT
FUND
Loss - Penalty Income $0 $0 ($3,900,000)
NET EFFECT ON COUNTY EMPLOYEES
RETIREMENT FUND $0 $0 ($3,900,000)
FISCAL IMPACT - Small Business
This proposal would affect small businesses. They could benefit from personal property tax provisions. They could pay higher taxes on other taxable property due to the surtaxes.

DESCRIPTION

The proposal would eliminate personal property taxes and impose a replacement tax on residential and commercial property.

This legislation is not federally mandated, would not duplicate any other program, would not

require additional capital improvements or rental space. It would affect Total State Revenue.



SOURCES OF INFORMATION

County Employees Retirement Fund

Department of Elementary and Secondary Education

Department of Revenue

State Tax Commission









Jeanne Jarrett, CPA

Director

January 18, 1999