COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO.: 3710-01
BILL NO.: SB 839
SUBJECT: Appropriations: Health, Public
TYPE: Original
DATE: March 15, 2000
FISCAL SUMMARY
| FUND AFFECTED | FY 2001 | FY 2002 | FY 2003 |
| General Revenue | ($319,464,439) | ($162,447,798) | ($164,044,888) |
| Tobacco Settlement | $319,464,439 | $0 | $0 |
| Missouri Permanent Trust | Unknown | Unknown | Unknown |
| Total Estimated
Net Effect on All State Funds |
Unknown | Unknown | Unknown |
| FUND AFFECTED | FY 2001 | FY 2002 | FY 2003 |
| 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 6 pages.
ASSUMPTION
Officials from the Department of Revenue, the Department of Health, the Department of Mental Health, the Department of Social Services, and the Office of the Governor stated the proposal would not directly affect their agencies administratively or that any additional duties could be carried out with existing resources.
Estimates of amounts Missouri will receive from the Master Settlement Agreement are ranged from estimates made by the Office of Administration - Division of Budget and Planning to estimates published by the National Governors Association (NGA).
Budget and Planning's estimates assume upward inflation adjustments of three percent (3%) to each years annual payment and downward volume adjustments of 10% in 2000, 12.7% in 2001, 14.9% in 2002, and 16.6% in 2003. These volume adjustment assumptions are those recommended by Federal Funds Information for States and are based on estimates developed by Standard and Poors.
The NGA figures do not include any offsets, reductions or adjustments; therefore, Oversight has included a 3% per year inflation adjustment.
For purposes of simplifying the fiscal note, Oversight has used the estimates of the Office of Budget and Planning. Please see the attachment for complete schedules of ranges of estimates.
Oversight assumes: 1) in the absence of this proposal moneys from the settlement would be credited to the state's General Revenue Fund; 2) moneys received from the settlement prior to setting a current valuation would be transferred to the Tobacco Settlement Fund; 3) the Commission would recommend and the General Assembly would approve a method of setting at current value the tobacco settlement moneys during the 2001 legislative session; 4) Tobacco Settlement Commission administrative costs would be paid from either the Tobacco Settlement Fund or the Permanent Trust Fund; and 5) tobacco settlement monies received before tobacco settlement moneys were set at current value and monies to be received after the settlement moneys were set at current value would be used to finance the setting at current value.
Oversight notes that, assuming 3% increases per year, the present value of the approximately $4,500,000,000 anticipated by the Office of Budget and Planning to be realized from the settlement would be about $2,150,000,000.
FISCAL IMPACT - State Government FY 2001 FY 2002 FY 2003
GENERAL REVENUE FUND
Loss - Tobacco Settlement ($135,420,621) ($162,447,798) ($164,044,888)
Cost - Transfers to Tobacco
Settlement Fund ($184,041,818) $0 $0
ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND ($319,462,439) ($162,447,798) ($164,044,888)
TOBACCO SETTLEMENT FUND
Income - Tobacco Settlement $135,420,621 $0 $0
Income - Transfer from General Revenue
Fund $184,041,818
Cost - Financing of Setting at Current
Value and Commission expenses ($319,462,439)
ESTIMATED NET EFFECT ON
TOBACCO SETTLEMENT FUND $0 $0 $0
MISSOURI PERMANENT TRUST FUND
Income - Current Value of Tobacco
Settlement Unknown $0 $0
Income - Earnings from investment of
Permanent Trust Fund Unknown Unknown Unknown
Cost - Appropriations of earnings from
investment of Permanent Trust Fund $0 (Unknown) (Unknown)
ESTIMATED NET EFFECT ON MISSOURI
PERMANENT TRUST FUND Unknown Unknown Unknown
FISCAL IMPACT - Local Government FY 2001 FY 2002 FY 2003
0 0 0
FISCAL IMPACT - Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
DESCRIPTION
This proposal would require that proceeds from the state's tobacco settlement be deposited into
the Tobacco Settlement Fund and would establish a nine member Tobacco Settlement
Commission, appointed by the Governor with advice and consent of the Senate.
The commission would, within six months of the effective date of the proposal, submit a proposal for use of the tobacco settlement proceeds, which could include methods of setting projected tobacco settlement proceeds at current valuation, to the General Assembly.
After approval of a plan by the General Assembly, the Commission would invest all moneys received as a result of the setting at current valuation.
The Missouri Permanent Trust Fund would receive moneys obtained from the setting at current valuation. Annual earnings from the Permanent Trust Fund could be appropriated only for health and education purposes, with a limit of $100 million for the first year appropriation.
The principal of the trust would not be subject to appropriation without a vote of the people.
The proposal would take effect upon passage of a constitutional amendment requiring any tobacco settlement moneys to be set at current value and deposited into a permanent trust fund to be used for health and education purposes only.
This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space. The proposal could affect Total State Revenue.
SOURCES OF INFORMATION
Department of Health
Department of Mental Health
Department of Revenue
Department of Social Services
Governor
Jeanne Jarrett, CPA
Director
March 15, 2000
| Year | OA - B&P | Governors | 3% CPI Increase | ||
| Association | |||||
| 1998 | $54,590,426 | $54,590,426 | $54,590,426 | ||
| 1999 | $0 | $0 | $0 | ||
| 2000 | $129,451,392 | $145,841,736 | $150,216,988 | ||
| 2001 | $135,420,621 | $157,485,647 | $167,076,523 | ||
| 2002 | $162,447,798 | $189,094,295 | $206,623,336 | ||
| 2003 | $164,044,888 | $190,883,868 | $214,820,705 | ||
| 2004 | $143,399,390 | $159,313,061 | $184,659,769 | ||
| 2005 | $144,834,156 | $159,313,061 | $190,203,864 | ||
| 2006 | $146,278,082 | $159,313,061 | $195,907,271 | ||
| 2007 | $147,740,792 | $159,313,061 | $201,785,923 | ||
| 2008 | $164,693,218 | $175,833,051 | $181,916,875 | ||
| 2009 | $166,353,707 | $175,833,051 | $236,266,871 | ||
| 2010 | $168,003,541 | $175,833,051 | $243,352,943 | ||
| 2011 | $169,675,393 | $175,833,051 | $250,667,598 | ||
| 2012 | $171,378,869 | $175,833,051 | $261,340,664 | ||
| 2013 | $173,100,158 | $175,833,051 | $265,929,906 | ||
| 2014 | $174,833,563 | $175,833,051 | $273,895,144 | ||
| 2015 | $176,602,091 | $175,833,051 | $282,124,130 | ||
| 2016 | $178,364,609 | $175,833,051 | $290,581,700 | ||
| 2017 | $180,168,255 | $175,833,051 | $299,303,019 | ||
| 2018 | $188,424,839 | $182,059,072 | $319,204,171 | ||
| 2019 | $190,339,585 | $182,059,072 | $328,780,478 | ||
| 2020 | $192,257,965 | $182,059,072 | $338,629,874 | ||
| 2021 | $194,207,025 | $182,059,072 | $348,788,770 | ||
| 2022 | $196,152,138 | $182,059,072 | $359,257,167 | ||
| 2023 | $198,156,125 | $182,059,072 | $370,035,064 | ||
| 2024 | $200,180,829 | $182,059,072 | $381,140,667 | ||
| 2025 | $202,222,663 | $182,059,072 | $392,573,977 | ||
| Total | $4,513,322,118 | $4,589,951,302 | $6,989,673,821 |