SB 0349 - Fiscal Note

Fiscal Note - SB 0349 - Allows a survivor of a member to receive creditable service for the member under certain circumstances

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO.: 1178-04

BILL NO.: SCS for HCS for HB 349

SUBJECT: Economic Development Department; Housing; Taxation and Revenue - General; Taxation and Revenue - Income

TYPE: Original

DATE: April 19, 1999

---

FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
General Revenue	($33,000)	($33,000)	($33,000)
Total Estimated Net Effect on All State Funds	($33,000)	($33,000)	($33,000)

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

The Department of Social Services (DSS) assumes this proposal will have no impact on their agency as there is no provision for excluding this type of resource in public assistance eligibility determinations.

The Department of Revenue does not anticipate any fiscal impact in the first several years.

The Department of Insurance (INS) assumes this proposal provides a tax credit for insurance companies against premium tax payments for contributions to a Family Development Account. The INS assumes there are approximately 300 domiciled insurance companies in Missouri which pay premium tax. The INS assumes any tax credits taken would reduce revenue to the County Insurance Fund. The funds in the County Insurance Fund are allocated annually to local school districts. The INS assumes the credits claimed would range from $0 to $4,000,000 depending upon how many insurers participate in the program and to what degree.

The Department of Economic Development (DED) assumes the proposal requires the DED to implement the Family Development Accounts Program (FDAP). DED assumes this would include, soliciting and reviewing proposals from community development groups; overseeing community development groups to assure compliance of contributors, account holders and financial institutions; promulgating rules and regulations; approving financial institutions to establish FDA's; and certifying tax credits to Department of Revenue.

The DED assumes they would request three FTE to implement this proposal. DED assumes they would request a Community Development Program Coordinator, an Accountant and a Clerk Typist along with related expenses and equipment including costs for rent expense and a vehicle.

The Community Development Program Coordinator would administer the program, by developing rules, regulations, policies, and processes; soliciting, reviewing and approving proposals from community development organization; reviewing and approving proposals from financial institutions to establish FDA's. They would also promote the program to community development groups and individual contributors; educate prospective clients about the availability and use of the FDAP.

The Accountant would be responsible for establishing program accountability through the establishment and maintenance of regularly scheduled reports and audits of all program participants such as the community development groups, contributors, financial institutions, and

account holders. This person would ensure proper documentation is forwarded to the Department of Revenue. DED assumes the certification of tax credits will be similar to the process used by the Neighborhood Assistance Program Tax Credit.

ASSUMPTION (continued)

DED assumes one Clerk Typist would be required to provide support in implementing and administering all functions of the program.

DED assumes taxpayers are allowed credits for contributing money to the FDA's on behalf of account holders. The maximum tax credit allowed in this proposal is $4,000,000.

DED assumes the proposal provides for up to $100,000 annually, subject to appropriation, for an outside evaluation of the program.

Oversight assumes this proposal will reduce corporate and individual income tax revenue, thereby reducing Total State Revenues. There is no data available to estimate the number of people who will take advantage of the Family Development Account Program (FDAP).

Based on the March 23, 1998 vote of the Oversight Subcommittee, the fiscal impact of this proposal is shown as $33,000 for each fiscal year.

FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
GENERAL REVENUE FUND
Loss - General Revenue Fund
Reduced tax revenue due
to new tax credits	($33,000)	($33,000)	($33,000)
ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND	($33,000)	($33,000)	($33,000)
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 that the proposal provides tax credits to small businesses who elect to make contributions to the Family Development Account Program.

DESCRIPTION

This proposal would establish the "Family Development Account Program" (FDA) which would provide eligible families and individuals with an opportunity to establish special savings accounts for funds which may be used for specified purposes only. Community-based organizations may submit proposals to administer these accounts on a not-for-profit basis. The proposals would contain a requirement that the family account holder match the contributions made to the account and a process for including account holders in investment decisions, among other requirements. Families or individuals with a household income of less than or equal to 200 percent of the federal poverty level may open an account. The funds may be used for education, job training, home ownership, home improvement, or small business capitalization. Financial institutions would be permitted to establish the accounts upon approval by the Department of

Economic Development. The total deposits to a family development account in any calendar year could not exceed $2,000 and the total balance in an accountcould not exceed $50,000. If money is withdrawn from an account for any purpose other than those specified, the funds would be subject to tax. Any moneys the account holder deposited in the account would be returned to the account holder, but all contributions from other sources would be forfeited. Administrative costs would be limited to no more than 20% of reserve funds for each of the first two years of the program and no more than 15% for subsequent years. No funds deposited by account holders could be used for administrative costs. Moneys deposited in and interest earned by family development accounts would be tax exempt, except for withholding taxes. Tax credits would be given to contributors, up to $50,000. Account funds would also be disregarded when determining eligibility to receive public assistance.

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 Economic Development

Department of Revenue

Department of Insurance

Department of Social Services

Jeanne Jarrett, CPA

Director

April 19, 1999