L.R. NO. 3361-06
BILL NO. SCS for SJR 46
SUBJECT: Taxation and Revenue; Utilities
TYPE: Original
DATE: February 23, 2000
Net Effect on All State Funds
FUND AFFECTED
FY 2001
FY 2002
FY 2003 General Revenue
($52,560)
$0
$0
Total Estimated
($52,560)
$0
$0
| FUND AFFECTED | FY 2001 | FY 2002 | FY 2003 |
| None | |||
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2001 | FY 2002 | FY 2003 |
| Local Government | $0 | $0 | $0 |
Numbers within parentheses: ( ) indicate costs or losses
This fiscal note contains 4 pages.
ASSUMPTION
Officials from the Department of Revenue (DOR) assume the proposed legislation would result in the need for a new system to administer this tax. The DOR assumes this would create a new tax on kilowatt hours to replace the old local sales tax on electrical energy. There would be start up costs in the DOR and several new systems required. It is assumed this system would require 6,747 overtime hours, at $25 per hour, to create, test and implement, for a cost of $168,675. In addition, there would be State Data Center costs of $29,834 to test and implement the system. DOR also assumes they would need five additional Tax Processing Technicians (5 FTE, each at $20,172 per year). Three Tax Processing Technicians would be needed to start this system that replaces the local sales tax and two Tax Processing Technicians would be needed to help administer the property tax replacement tax.
Officials from the City of Springfield assume the proposed legislation could result in a loss of revenue. The proposal does not include a provision for replacement taxes for payments in lieu of taxes for municipalities with municipally owned utilities, such as City Utilities of Springfield. Unless the bill is changed, the City of Springfield could lose as much as $485,000 per year in the initial year of retail customer choice, with possible increases in the amount each year thereafter.
Officials from the Department of Natural Resources (DNR) assume that by exempting generation utilities from property taxes, and collecting the same amount from Missouri consumers, it creates a tax free opportunity for the construction and operation of electrical generation in Missouri. This would be a boost to their ability to sell power to other states, and unless the state they are selling into has a surcharge per kilowatt hour on electrical use in lieu of property taxes, the generation utility would be exempt from property taxes, or an equivalent tax on consumption, and thus be at a competitive advantage when selling outside of Missouri.
The fiscal impact associated with the implementation of this amendment is outside the period examined in the state fiscal note process. However, over the long run, it could be necessary to have expanded staffing for environmental permitting, inspection, technical assistance and compliance efforts in response to the increase in electrical generation facilities based in Missouri.
Oversight assumes the proposed legislation would provide constitutional authority for future legislative enactment to repeal existing utility tax and require a replacement tax based on consumption. The actual fiscal effects will be included at such time as passage of the law.
Officials from the Office of the Secretary of State (SOS) assume advertising costs associated with the proposal would be $52,560 in FY 01. Advertisement costs for the proposal would be
ASSUMPTION (continued)
$1,455 per newspaper column inch for the text of the proposal, the introduction, title, fiscal note summary, and affidavit.
Officials from the State Tax Commission (TAX), Department of Economic Development - Public Service Commission (PSC) and the Department of Economic Development - Office of Public Counsel (OPC) assume this proposal would not fiscally impact their agencies.
Officials from the Kansas City Manager (KCM) assume the utility restructuring measures do not have a direct financial impact on the City because it is contingent on the establishment of a consumption tax that will reach to all users of utilities, from whatever source the commodity is obtained.
Officials from the City of St. Louis (STL) did not respond to our fiscal impact request.
FISCAL IMPACT - State Government FY 2001 FY 2002 FY 2003
(10 Mo.)
GENERAL REVENUE FUND
Costs - Office of the Secretary of State (SOS)
Newspaper Advertisements ($52,560) $0 $0
ESTIMATED NET EFFECT TO
GENERAL REVENUE FUND ($52,560) $0 $0
FISCAL IMPACT - Local Government FY 2001 FY 2002 FY 2003
(10 Mo.)
$0 $0 $0
FISCAL IMPACT - Small Business
This proposal would not be expected to have a direct fiscal impact to small businesses. Subsequent legislation, if passed, may affect small businesses.
DESCRIPTION
The proposed legislation would propose a constitutional amendment to repeal the existing utility tax and require a replacement tax to be levied on electricity and natural gas providers based on consumption.
This legislation is not federally mandated, would not duplicate any other program and would require additional capital improvements or rental space.
This proposal would not affect Total State Revenues.
SOURCES OF INFORMATION
Department of Revenue
City of Springfield
Department of Natural Resources
Office of the Secretary of State
State Tax Commission
Department of Economic Development
Public Service Commission
Office of Public Counsel
NOT RESPONDING:
City of St. Louis
Jeanne Jarrett, CPA
Director
February 23, 2000