L.R. NO. 3398-06
BILL NO. SCS for SB 803
SUBJECT: Taxation and Revenue; Utilities
TYPE: Original
DATE: February 28, 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) General Revenue
($327,687)
($229,067)
($57,117) Total Estimated
($327,687) to
(Unknown)
($229,067) to
(Unknown)
($57,117) 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 6 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.
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 costs of this proposal would increase dramatically from the previous version due to the requirement that the SAU would "audit the data submitted by each county or other political subdivision, and certify no later than December first. . ." The estimated cost is a MINIMUM fiscal impact, assuming a ONE TIME certification and audit, and could increase significantly, depending upon the number of counties and other political subdivisions submitting data to the SAU. In addition, it may not be possible to audit all counties and other political subdivisions within the period October 1 to December 1, again depending upon the number of counties and other political subdivisions submitting data to the SAU. This time limit imposed upon the audit requirement could also significantly increase
ASSUMPTION (continued)
the costs of this proposal. Accordingly, the SAU's estimate is a range from the annual costs of approximately $173,000 to unknown in the second year and unknown in the other two years.
Officials from the Department of Economic Development - Public Service Commission (PSC), Department of Economic Development - Office of Public Counsel (OPC), State Tax Commission (TAX), Department of Social Services (DOS) and the Department of Elementary and Secondary Education (DES) assume this proposal would not fiscally impact their agencies.
In a similar previous proposal, officials from the City of Springfield assumed 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.
In a similar previous proposal, the Office of the Secretary of State (SOS) assumed the proposal would have no fiscal impact on its agency.
Officials from the City of St. Louis (STL) 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. 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.
Based on information received from various officials including the DOR and the State Tax Commission, Oversight has estimated the amount of replacement tax necessary to replace the current taxes that are collected. The estimate for the state sales tax would be $74 million and the estimate for the local sales tax would be $40 million; the estimate for the property tax would be $100 million; and the estimate for gross receipts tax on electricity and natural gas would be approximately $240 million, for a total replacement tax of $454 million.
FISCAL IMPACT - State Government FY 2001 FY 2002 FY 2003
(10 Mo.)
GENERAL REVENUE FUND
Costs - Department of Revenue (DOR)
Personal Service (5, 2, 2 FTE) ($ 84,050) ($ 41,352) ($ 42,386)
Fringe Benefits (25,845) (12,716) (13,034)
Expense and Equipment (217,792) (1,648) (1,697)
Total Costs - DOR ($327,687) ($55,716) ($57,117)
Costs - Office of the State Auditor (SAU)
Personal Service (3 FTE) (Unknown) ($105,567) (Unknown)
Fringe Benefits (Unknown) (32,462) (Unknown)
Expense and Equipment (Unknown) (35,322) (Unknown)
Total Costs - SAU (Unknown) ($173,351) (Unknown)
ESTIMATED NET EFFECT TO
GENERAL REVENUE FUND* ($327,687) ($229,067) ($57,117)
*Does not include possible costs to SAU in FY 01 and FY 03.
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 tax year beginning on the effective date of this proposal would continue to be assessed and the values distributed by the same method used in that year. However, assessments beginning after the effective date of this proposal would be revised annually based upon market value. The State Tax Commission would allocate such market value to each county based on the ratio which the line miles located in that county bear to the total line miles in that state.
DESCRIPTION (continued)
The proposal would become effective January first next following the date notice is received by the revisor of statutes from the Public Service Commission, or January 1, 2001, whichever later occurs, if by that date an amendment to article X of the Missouri Constitution which abolishes local taxes on electricity and natural gas upon implementation of a replacement tax has been adopted, and not otherwise.
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 of Revenue
Department of Natural Resources
Office of the State Auditor
Department of Economic Development
Public Service Commission
Office of Public Counsel
State Tax Commission
Department of Social Services
Department of Elementary and Secondary Education
City of Springfield
Office of the Secretary of State
NOT RESPONDING: City of St. Louis, Kansas City Manager
Jeanne Jarrett, CPA
Director
February 28, 2000