COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.: 1102-02
Bill No.: SB 286
Subject: MoDOT; Roads & Highways; Taxation & Revenue-Sales & Use; Motor Fuel
Type: Original
Date: January 22, 2001
FISCAL SUMMARY
| FUND AFFECTED | FY 2002 | FY 2003 | FY 2004 |
| General Revenue | $0 | ($37,373,600) | ($66,600,000) |
| State Road Fund | $0 | $96,262,500 | $187,560,000 |
| State Sales Tax Transportation Fund | $0 | $306,350,000 | $640,400,000 |
| Total Estimated
Net Effect on All State Funds |
$0 | $365,238,900 | $761,360,000 |
| FUND AFFECTED | FY 2002 | FY 2003 | FY 2004 |
| None | |||
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2002 | FY 2003 | FY 2004 |
| Local Government | $0 | $22,487,500* | $45,840,000* |
*Does not include unknown potential costs due to increased contribution requirements on
cooperative projects between local governments and MoDOT.
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 6 pages.
ASSUMPTION
Officials at the Office of Administration-Division of Budget and Planning (BAP) assume that the proposal will result in new revenues due to the increased sales and motor fuel taxes. BAP assumes an effective date of January 1, 2003 for the new tax rates, following voter approval in November, 2002. The revenue increases break down as follows: $41,000,000 in FY 2003 and $82,800,000 in FY 2004 from the two cent increase in the motor fuel tax; $40,750,000 in FY 2003 and $84,000,000 in FY 2004 from the 1% increase in the sales tax on motor vehicles; $306,350,000 in FY 2003 and $640,400,000 from the 1% increase in the sales tax on the remainder of non-food items.
Officials with the Department of Transportation assume savings for the Highway Fund of $37,000,000 in FY 2003 and $74,000,000 in FY 2004 due to the yearly 20% reduction in appropriations to other state agencies from the Highway Fund. The Office of Administration-Division of Budget and Planning assumes the reduction cannot occur until FY 2004, since voter approval would not occur until November of 2002. MoDOT and BAP place the current amount of appropriations to other state agencies at approximately $185,000,000.
Oversight notes that the wording of the bill is such that in FY 2003 funding to other state agencies will be reduced 20% from the level of FY 2001. The bill further stipulates that "For each subsequent fiscal year thereafter, the total amount of appropriations from said fund for such offices and departments shall be reduced an additional twenty percent until all state offices and departments do not receive any appropriations from the fund." Oversight interprets this language to indicate that funding "each subsequent fiscal year" will be 20% less than the previous year. MoDOT agrees with this interpretation and filed a comment memo to that effect. Oversight also must base the fiscal impact upon the language contained in the bill, not upon the practicalities of the calender and budget process. Therefore, Oversight has adjusted savings to the Highway Fund to reflect funding to other state agencies at 80% of the FY 2001 level in FY 2003, and 64% of the FY 2001 level in FY 2004. Oversight further assumes that the programs affected by the loss of these appropriations will typically be funded from General Revenue, as the state will not allow agencies such as the Missouri State Highway Patrol and the Division of Motor Vehicle to reduce services by 20% yearly. Savings to the Highway Fund resulting from reduced funding to other state agencies are, therefore, shown as a cost to General Revenue.
MoDOT indicates that the department will require four program managers to plan the funding of various "multi-modal" transportation projects specified in the proposal to receive 5% of the increased sales tax revenues, and notes that these positions will be filled at a cost of $181,981 in FY 2003, and $305,968 in FY 2004. Additionally, MoDOT notes that the department "may require additional new employees, with associated expense and equipment costs, to complete the
ASSUMPTION (continued)
additional workload created through the increased funding for highway, bridge, and toll projects." Oversight contends that the purpose of the proposal is to generate new revenues, with the understanding that these monies will be spent. As such, concluding that the proposal does not place additional duties upon MoDOT, for fiscal note purposes, costs realized as a result new workloads due to the increased funding will not be shown.
Officials from the Department of Revenue (DOR) assume that the tax rate changes will require the mailing of 150,000 letters to businesses regarding the sales tax increase, and 800 letters regarding the motor fuel tax increase, as well as programming changes to implement the rate adjustments and to generate the letters needed. Postage costs are expected to be approximately $30,500, while programming costs are estimated at $14,600.
Officials from the Office of the State Auditor, the Office of the State Treasurer, the Department of Revenue, the Department of Natural Resources, the Department of Public Safety-Missouri State Highway Patrol and the Department of Economic Development assume that the proposal would reduce funding to their agencies by 20% each year, beginning in FY 2003. As discussed above, Oversight will show this effect of the proposal as savings to the Highway Fund and a cost to General Revenue.
Oversight assumes this proposal will have a long-term effect on the counties and municipalities of the state, by requiring a contribution of 50% of the costs from the local government entity for any construction, improvement, or repair that is needed due to new development. The amount of this impact on local government is unknown.
Advertisement costs for the proposal would be $4,380 per newspaper column inch for three printings of the text of the proposal, the introduction, title, fiscal note summary, and affidavit. The proposal would be on the ballot for the November 2002 general election.
| FISCAL IMPACT - State Government | FY 2002
(10 Mo.) |
FY 2003 | FY 2004 |
| GENERAL REVENUE FUND | |||
| Costs-Department of Revenue
Tax Rate Changes |
$0 |
($45,100) |
$0 |
| Costs-Secretary of State
Election-Newspaper Advertisements |
$0 |
($328,500) |
$0 |
| Loss-Various State Agencies
Funding to State Agencies Receiving Appropriations from Highway Fund |
$0 |
($37,000,000) |
($66,600,000) |
| Estimated Net Effect on
GENERAL REVENUE FUND |
$0 |
($37,373,600) |
($66,600,000) |
| STATE HIGHWAY & ROAD FUND | |||
| Savings
Discontinued Funding to State Agencies Receiving Appropriations from Highway Fund |
$0 |
$37,000,000 |
$66,600,000 |
| Income
Two Cent Increase in Fuel Tax (70%) |
$0 |
$28,700,000 |
$57,960,000 |
| Income
Increase in Sales and Use Tax on Motor Vehicles (75%) (One Percent) |
$0 |
$30,562,500 |
$63,000,000 |
| Estimated Net Effect on
STATE HIGHWAY & ROAD FUND |
$0 |
$96,262,500 |
$187,560,000 |
| SALES TAX TRANSPORTATION FUND | |||
| Income
Increase in General Sales Tax (One Percent) |
$0 |
$306,350,000 |
$640,400,000 |
| FISCAL IMPACT - Local Government | FY 2002
(10 Mo.) |
FY 2003 | FY 2004 |
| Income to Cities
Two cent Motor Fuel Tax Increase (15%) |
$0 |
$6,150,000 |
$12,420,000 |
| Income to Counties
Two cent Motor Fuel Tax Increase (14.75%) |
$0 |
$6,047,500 |
$12,213,000 |
| Income to City of St. Louis
Two cent Motor Fuel Tax Increase (.25%) |
$0 |
$102,500 |
$207,000 |
| Income to Cities
Increase in Sales/Use Tax on Motor Vehicles (15%) (One Percent) |
$0 |
$6,112,500 |
$12,600,000 |
| Income to Counties
Increase in Sales/Use Tax on Motor Vehicles (10%) (One Percent) |
$0 |
$4,075,000 |
$8,400,000 |
| Estimated Net Effect on
LOCAL GOVERNMENT |
$0 |
$22,487,500* |
$45,840,000* |
*Does not include unknown potential costs due to increased contribution requirements on
cooperative projects between local governments and MoDOT.
FISCAL IMPACT - Small Business
Small businesses will be directly fiscally impacted by this proposal, paying higher sales, use, and motor fuel taxes.
DESCRIPTION
This act increase the general sales tax by 1% and dedicates that money for transportation purposes. The revenue from this tax will be placed in a newly created fund known as the State Sales Tax Transportation Fund. The revenue from this fund shall be used by the Transportation Commission in the following manner:
1) 15% for public transit (75% urban and 25% rural); 2) 5% for multi modal transportation projects; 3) 30% for interstate highway needs (with 2% of these allocated funds to be used for toll roads); and 4) 50% for the remaining state highway system (with 2% of these allocated funds to be used for toll roads).
DESCRIPTION (continued)
This act eliminates the sunset on the motor fuel tax (currently expires in 2008) and increases the fuel tax by two cents (17 to 19 cents). This act requires the Director of the Department of Transportation to be elected for two year terms rather than being appointed by the Commission. This act reduces the amount of appropriations other state agencies receive from the highways
and transportation fund by 20% each year, beginning in fiscal year 2003. Finally, this act requires counties and cities to match state funds when making road improvements due to new development. The act contains a referendum clause.
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 NOT RESPONDING
Department of Transportation Secretary of State
Department of Revenue City of Saint Louis
Department of Natural Resources City of Kansas City
Department of Economic Development City of Springfield
Department of Public Safety City of Joplin
Missouri State Highway Patrol City of Columbia
Office of the State Treasurer City of Saint Joseph
Office of the State Auditor City of Saint Charles
Office of Administration City of Jefferson
Division of Budget & Planning City of Fulton
City of Branson
County of Saint Louis
County of Jackson
County of Saint Charles
County of Cole
County of Callaway
County of Stone
County of Taney
County of Christian
County of Greene
Jeanne Jarrett, CPA
Director
January 22, 2001