L.R. NO. 3398-03
BILL NO. SB 803
SUBJECT: Taxation and Revenue; Utilities
TYPE: Original
DATE: January 24, 2000
Net Effect on All State Funds* *Expected to be minimal since the replacement taxes are designed to be revenue neutral Net Effect on All Federal Funds
FUND AFFECTED
FY 2001
FY 2002
FY 2003 All State Funds
Unknown to
(Unknown)
Unknown to
(Unknown)
Unknown to
(Unknown)
Total Estimated
Unknown to
(Unknown)
Unknown to
(Unknown)
Unknown to
(Unknown)
FUND AFFECTED
FY 2001
FY 2002
FY 2003 None
Total Estimated
$0
$0
$0
| FUND AFFECTED | FY 2001 | FY 2002 | FY 2003 |
| Local Government* | Unknown to (Unknown) | Unknown to (Unknown) | Unknown to (Unknown) |
*Expected to be minimal since the replacement taxes are designed to be revenue neutral
Numbers within parentheses: ( ) indicate costs or losses
This fiscal note contains 5 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 to create, test and implement and would cost $165,179. In addition, there would be State Data Center costs of $29,834 to test and implement the system. DOR also assumes they would need three additional Tax Processing Technicians (3 FTE, each at $20,172 per year) to start this system and two Tax Processing Technicians to help administer the property tax replacement tax.
Oversight assumes that: 1) the Tax Processing Technicians needed to start the kilowatt hour tax system would not be needed after the first year because personnel handling the sales tax on electrical energy could administer the new tax, 2) the one-year employees would use existing equipment, and 3) the two permanent employees would be domiciled in existing space.
Officials from the Department of Natural Resources (DNR) assume that during the time period addressed by this fiscal note that the DNR would handle any increased needs with existing FTEs. DNR further assumes that any increase in air emissions, wastewater emissions and additional ash generated for disposal will continue to require appropriate permits that must consider cumulative impacts. Increases in air emissions will require additional controls for water contaminants such as SO2, NOX and mercury. Use of alternate fuels, for example landfill gases, tire-derived fuel or any other solid waste should continue to be competitively available. Siting new facilities and additional transmission lines and decommissioning of retiring facilities will require appropriate permits.
Officials from the Office of the State Auditor (SAU) assume the proposal would result in the need for additional staff needs for two .25 Staff Auditor I positions to perform the one-time mathematical calculation of the information submitted by counties, cities, villages and the State Tax Commission without a review of the underlying numbers. However, Oversight assumes any increased duties as a result of this proposal could be handled with existing staff.
Officials from the Department of Economic Development - Public Service Commission (PSC), Department of Economic Development - Office of Public Counsel (OPC), Department of Social Services (DOS), Office of the Secretary of State (SOS), Department of Elementary and Secondary Education (DES) assume this proposal would not fiscally impact their agencies.
ASSUMPTION (continued)
Officials from the City of St. Louis (STL), State Tax Commission (TAX), the City of Springfield and the Kansas City Manager (KCM) did not respond to our fiscal impact request.
Oversight assumes there could be a fiscal impact as a result of this proposal, but it is unknown. It is assumed the intent is to insure that revenues are not lost as a result of out of state suppliers of energy, and that revenues collected will closely parallel tax revenue that is currently collected. However, it is likely it will not be an exact match and some fiscal impact could result.
FISCAL IMPACT - State Government FY 2001 FY 2002 FY 2003
(10 Mo.)
GENERAL REVENUE FUND
Costs - Department of Revenue (DOR)
Personal Service (5, 2, 2 FTE) $ 84,050 $ 41,352 $ 42,386
Fringe Benefits 25,845 12,716 13,034
Expense and Equipment 19,283 1,648 1,697
Total Costs - DOR ($129,178) ($55,716) ($57,117)
ESTIMATED NET EFFECT TO
GENERAL REVENUE FUND ($129,178) ($55,716) ($57,117)
ALL STATE FUNDS
Effects of Replacement Taxes Unknown Unknown Unknown
to to to
(Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT ON
ALL STATE FUNDS* Unknown Unknown Unknown
to to to
(Unknown) (Unknown) (Unknown)
*Expected to be minimal since the purpose of the replacement taxes is to be revenue neutral.
FISCAL IMPACT - Local Government FY 2001 FY 2002 FY 2003
(10 Mo.)
POLITICAL SUBDIVISIONS
Effects of Replacement Taxes Unknown Unknown Unknown
to to to
(Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT ON
POLITICAL SUBDIVISIONS* Unknown Unknown Unknown
to to to
(Unknown) (Unknown) (Unknown)
*Expected to be minimal since the purpose of the replacement taxes is to be revenue neutral.
FISCAL IMPACT - Small Business
This proposal could have a fiscal impact on small businesses to the extent they do not currently pay these taxes.
DESCRIPTION
This act is implementing legislation for SJR 46 which authorizes the General Assembly to enact utility replacement taxes. Upon approval of the constitutional amendment, the act would repeal existing gross receipts taxes and business license taxes on electricity and natural gas, franchise fee agreements, tax on utility distributable property and certain payments-in-lieu-of-taxes (PILOTs). Revenue lost by political subdivisions due to the repeal of these taxes are replaced by an electricity or natural gas usage tax or charge.
The act also contains backup provisions pertaining to gross receipts taxes and sales taxes on electricity and natural gas service which are similar to SB 612 from 2000 and backup provisions revising taxes on utility distributable property. Distributable property of electric companies in the 2001 tax year shall continue to be assessed and the values distributed by the same method
used in that year, even if the property is no longer owned by an electric company. Electric
cooperatives shall report the number of transmission and distribution line miles owned by the cooperative in each taxing jurisdiction to the State Tax Commission. New electric generation
property placed into service on or after January 1, 2001, and owned by an entity not providing
DESCRIPTION (continued)
electric distribution service shall be assessed and the value distributed as if it were owned by the electric company authorized to provide distribution service where the new property is located. If located in an area where no electric company is authorized to provide distribution service, the property shall be assessed and the value distributed to taxing jurisdictions based upon the
proportion of electric cooperative owned line miles in the jurisdiction.
The backup provisions will become effective August 28, 2000, and will terminate on January 1, 2002, if the constitutional amendment has been adopted.
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 could affect Total State Revenues.
SOURCES OF INFORMATION
Department o f Revenue
Department of Natural Resources
Office of the State Auditor
Department of Economic Development
Public Service Commission
Office of Public Counsel
Department of Social Services
Office of the Secretary of State
Department of Elementary and Secondary Education
NOT RESPONDING: City of St. Louis, State Tax Commission, City of Springfield, Kansas City Manager
Jeanne Jarrett, CPA
Director
January 24, 2000