COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.: 2187-12
Bill No.: HS for HCS for SCS for SB 617 with HA1, HA2, HA3, HA4, HA5, HA6, HA8, HA10, HA11, HA12, HA13 & HA15
Subject: Economic Development; Enterprise Zones; Business and Commerce.
Type: Corrected
Date: May 31, 2001
# Corrected bill title on pages 2 through 24.
FISCAL SUMMARY
| FUND AFFECTED | FY 2002 | FY 2003 | FY 2004 |
| General Revenue* | ($180,002 to Unknown) | ($114,403 to Unknown) | ($166,432 to Unknown) |
| Total Estimated
Net Effect on All State Funds* |
($180,002 to UNKNOWN) | ($114,403 to UNKNOWN) | ($166,432 to UNKNOWN) |
* Unknown loss could be sizeable.
| 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 to Unknown | $0 to Unknown | $0 to Unknown |
* Subject to voter approval
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 24 pages.
ASSUMPTION
Section 67.1360 - Allows transient guest tax in Newton County;
In response to similar legislation from this year, officials from Newton County stated that currently, two communities (Joplin and Neosho) within their county already have sales taxes on transient guests. They could not provide Oversight with a fiscal estimate.
In response to similar legislation, officials from the DOR assumed this tax will be collected by the local government and will not have an administrative impact.
The Department of Economic Development (DED) assumes this part of the proposal allows Newton County to impose a local sales tax on sleeping rooms for tourism and would have no fiscal impact on their agency.
Oversight assumes this part of the proposal, subject to voter approval, would have an unknown positive fiscal impact to Newton County.
Section 67.1442 - Community Improvement Districts
In response to similar legislation from this year, City of Springfield officials assume this proposal is discretionary and would have no fiscal impact to Community Improvement Districts unless, the District Board of Directors would consent to the relocation or removal of property from one zone to another zone within the same district.
Oversight assumes this part of the proposal is permissive and would have no fiscal impact. To remove property or relocate property from a Community Improvement District would require a hearing by the City, and approval by the District Board before any action to remove or relocate property. The district would have to meet any financial obligation excluding the revenues generated by the property being removed.
Officials from the DED assume no fiscal impact to their agency.
Section 67.1545 - Community Improvement District- Kansas City
Oversight assumes that this proposal adds some additional duties for Community Improvement Districts in Kansas City, whenever an election is held seeking approval of a sales tax. Current
ASSUMPTION (continued)
law already requires an election by mail-in ballot so there would be no new costs of having an election, other than publication requirements, along with other duties which would not have significant impact to the election authority, or to the district. Any new costs would be costs for the Community Improvement District, and Oversight assumes would not be significant. Costs would only occur on questions of sales tax approval. Oversight assumes no fiscal impact.
Section 135.100 - 135.150 - Credit for New or Expanded Business Facility Credit (BFC);
DED assumes this part of the proposal changes BFC to allow public utilities and communications businesses to qualify for BFC. DED assumes the changes would cost $0 as BFC would be capped. In section 135.150, DED states changes the New/Expanding Business Facility Tax Credit Program from an uncapped entitlement program to an annual cap of $4 million. The DED anticipates a savings of $4 million annually for the Business Facility Credit
Section 135.200 - Expansion of "Revenue-producing enterprise" for enterprise zones;
DED states this part of the proposal adds classifications (hotels and motels) that qualify for Enterprise Zone benefits in Salem, MO, but only for local abatement. No fiscal impact on DED.
DED also states this part of the proposal allows public utilities to qualify for EZ credits and have estimated the cost to be $0 to Unknown.
In a previous response to this proposal, DED assumed this change could result in sizeable costs!
In response to similar legislation from this year, officials from the City of Salem stated with passage of this legislation, a new 65 room hotel facility will probably be built in their community. The City of Salem estimates the annual revenues from this facility for the city, including sales tax and increased property taxes would be roughly $11,521. The City of Salem also estimates that gross water and electric revenues for this new facility would be roughly $60,000 to the City.
Oversight assumes the state will not be fiscally impacted from this part of the legislation. Oversight also assumes the local taxing and governing authorities may grant an exemption (in whole or in part) of property taxes to this new hotel after holding the required public hearings on the matter, therefore, has estimated the local impact as zero.
ASSUMPTION (continued)
Section 135.208 - Authorizes enterprise zone in Sugar Creek
The DED assumes this part of the proposal adds one new enterprise zone. The DED assumes that one new satellite enterprise zone will be established and the estimated cost is $60,000 per year based on the average cost of existing satellite zones.
In response to similar legislation from this year, officials from the Office of Administration assume this proposal should not result in additional costs or savings to their agency, but would have an impact on total state revenue.
In response to similar legislation from this year, officials from the City of Sugar Creek stated they anticipate the proposed legislation will generate additional revenue within a fiscal year. This amount is anticipated due to improvements which correspond to increased assessed
evaluation for residential property and real improvements within the designated area. The specific amount for each fiscal year is not known at this time.
The City of Sugar Creek does not anticipate the proposed legislation will cause additional costs to citizens of the community within any fiscal year. The City does anticipate to expend some minor amount of staff resources, after passage, when working with the Missouri Department of Economic Development to define the actual designated area.
Section 135.209 - Authorizes satellite zone in Sugar Creek
Officials from DED assume this part of the proposal authorizes another satellite zone and has estimated the cost for a satellite zone at $60,000 costs per year
Section 135.230 - Harley Davidson plant in Kansas City;
DED states this part of the proposal changes the residency requirements for Enterprise Zone credits. This part of the bill is the same as FN 1886-01. However, DED has re-evaluated this original response. DED originally predicted a $0 to $200,000 impact. DED now projects the impact to be $0. This change in response from 1886-01 is based on additional input from the cycle manufacturer impacted by the NAICS code.
Oversight also assumes the expansion of the employees who count toward the residency requirement at the Harley Davidson plant in Kansas City may have a fiscal impact on the state and have used DED's original response.
ASSUMPTION (continued)
Section 135.400 -135.423 - Tax Credit for Investments in Missouri Small Businesses;
DED states Section 135.400 changes principal ownership designation from 50% to 35% for Capital Tax Credit, which would not fiscally impact their agency. DED also states Section 135.403 would cost $4 million per year for 10 years as well as reduces carry forward to 5 years and changes transfers. DED also states Sections 135.408, 135.411, 135.423 make other changes to the Capital Tax Credit, but creates no new fiscal or administrative costs.
Section 135.460 - Youth Opportunities and Violence Protection Act;
DED states this part of the proposal expands activities for Youth Opportunities program in distressed communities only; credits becomes transferable. DED states this program is capped at $6 million per year, so there would be no fiscal impact to their agency.
Section 135.478 & 135.481 - Expands the definitions of "eligible residence", "new residence" and "project" as well as adds a definition for "central business district". Also increases the allowable percentage of costs from fifteen to twenty;
Oversight assumes this part of the proposal simply adds projects that qualify for the tax credit, but does not change the $16 million cap for the program, therefore have assumed no fiscal impact from this part of the proposal.
Section 135.484 - Allows the reallocation of any unused tax credits for rehabilitation and construction of residences in distressed communities and census blocks;
DED states this part of the proposal allows reallocation of Neighborhood Preservation Tax Credits and would not fiscally impact their agency.
In response to similar legislation from this year, DED stated that in calendar year 2000, the entire $8,000,000 in "qualifying residence" program credits were utilized, while $5,000,000 (out of $8,000,000) in "eligible residence" program credits were utilized, leaving $3,000,000 in tax credits not utilized.
Oversight assumes 70% of the unused tax credits, $2,100,000 (70% x $3,000,000) could be shifted to be utilized by the other program. Since 2000 was the first year of the program, there is not enough historical data to determine if only $5,000,000 of the $8,000,000 in "eligible
ASSUMPTION (continued)
residence" program credits would be utilized consistently, therefore, Oversight has ranged the impact of this proposal to $0 (reflecting all $8,000,000 in each program would be utilized before
a reallocation) to a negative $2,100,000 impact to state revenues.
Section 135.487 - Allows projects involving the construction or rehabilitation of more than one residence to apply for and receive the credit piecemeal;
Oversight assumes this part of the proposal would not have a fiscal impact on the state.
Section 135.500 to 135.527 - CAPCO program;
DED states this part of the proposal adds authority for an allocation of tax credits for investments in CAPCOs totaling $40 million. The credits are taken over a period of ten years ($4 million per year). A revision of the current rules and regulations for the CAPCO program would need to be
undertaken by DED. DED approves the CAPCOs and authorizes the tax credits to the investors. This requires DED to set up a standard set of guidelines for the CAPCOs to follow during the process. There is then daily monitoring of the program, including approving investments in the qualified small businesses, collecting quarterly reports, and making sure the necessary reporting is completed. The DED would be required to administer and oversee the additional credits.
DED assumes the need for an Economic Development Incentive Specialist II (at $37,488 annually) and a Clerk Typist II (at $20,472 annually) to administer changes to the CAPCO program. These people will conduct the additional work created by the additional credits. DED estimates the total costs for these two FTE would be roughly $120,000 per year.
Oversight assumes the Department of Economic Development could use resources saved from the reduction of the Family Development Account as well as the Individual Training Account Program to help administer the additional $40,000,000 in CAPCO tax credits and therefore, will not require the additional FTE requested for that program. This additional amount will be the fourth round of CAPCO tax credits administered, bringing the total credits authorized to $180,000,000. Since many of the same investors participate in each round of tax credits, DED's efforts to collect reports, monitor investments, etc. is aided by having fewer contacts with similar investments.
In response to similar legislation from this year, officials from the Department of Agriculture state this part of the proposal would not fiscally impact their agency.
ASSUMPTION (continued)
Officials from the Department of Insurance state this part of the proposal makes various changes to the CAPCO tax credits, including caps and reallocations, which would result in an unknown cost.
Section 135.530 - Expands definition of "distressed communities";
DED states this part of the proposal changes the definition of distressed community and the impact is $0. In response to similar legislation from this year, DED stated that most programs with credits for activities in distressed communities are capped so this change will have no fiscal impact on those programs, but the new or expanding business facility tax credit, an uncapped entitlement program, awards enhanced credits for businesses in distressed communities. DED is unable to ascertain the fiscal impact the addition of new areas to the distressed communities definition would have on the program.
DED states that with another part of this legislation, the new or expanding business facility tax credit is actually capped, this change in definition would have no fiscal impact.
Section 135.535 - Tax Credits for Investment in, or Relocating a Business to, a Distressed Community;
DED states this part of the proposal lowers the cap on Rebuilding Communities from $10 million to $7.5 million, saving $2.5 million annually. DED assumes the other changes to the section have no fiscal impact.
Section 135.545 - Tax Credits for Investment in the Transportation Development of a Distressed Community;
DED states this part of the proposal lowers the cap on Transportation Development Tax Credit from $10 million to $7.5 million, saving $2.5 million per year.
Section 348.302 - Tax Credit for Contributions to Innovation Centers;
In response to similar legislation from this year, DED stated this credit (not to be confused with New Enterprise Creation Act passed in 1999) changes the $9 million cumulative cap to an annual cap of $4 million (for distressed communities). The DED stated that of the $9 million cap,
ASSUMPTION (continued)
$171,580 has not been allocated, therefore, DED assumed an annual cost of $4 million per year.
Section 178.892, 620.470, 620.474 - Job Training Development;
In response from similar legislation from this year, officials from the Department of Economic Development, Department of Higher Education, Department of Elementary and Secondary Education, and the Department of Labor and Industrial Relations each assumed this proposal would not fiscally impact their respective agencies.
Oversight assumes the revision of the Community College training program (RSMo 178) would expand the companies available to apply for assistance through the program. Currently certificates are sold by community colleges and are in effect paid off through a dedication of part of withholding tax on new employees' salaries. The DED stated that currently there is a cap on the total outstanding certificates of $55 million (which is set by the Missouri Job Training Joint Legislative Oversight Committee), of which $22 million is not issued. Part of the $22 million is committed to companies as incentive to relocate to Missouri, leaving roughly $10 million in available certificates. This cap is on outstanding certificates, therefore, it is a constantly changing number with older certificates being paid off as well as new certificates being issued. Oversight assumes the expansion of this program will allow additional companies to qualify for the program. Oversight has ranged the amount of cost from $0 to (unknown). Oversight acknowledges the creation of new jobs could result in additional tax revenue to the state. However, it would be difficult to assess whether the creation of the jobs would be a direct result of this program. For purposes of this fiscal note, unknown costs have been stated for the retirement of additional certificates.
Oversight also assumes the proposal would expand the Missouri Job Development program (RSMo 620) by allowing companies that are not in the manufacturing industry to apply for the grants from the Department of Economic Development. According to DED, last year $15 million was appropriated for this program. $50 million in requests were received from 539 projects. Only 396 projects were approved. The total amount appropriated for this program currently is $20 million. It is assumed this proposal would result in more projects competing for funds which are already insufficient to fulfill requests.
Section 620.1450 - Individual Training Account;
DED states, with this part of the proposal, the Individual Training Account (ITA) Program is reduced from $6 million per year to $0 million per year resulting in a $6 million savings.
ASSUMPTION (continued)
House Amendment 5 - Authorizes three satellite zones in Springfield;
In response to similar legislation from this year, officials from DED stated this part of the proposal authorizes three new satellite enterprise zones in Springfield. DED dids not feel this part of the proposal has enough immediate impact on DED to warrant additional personnel or expenditures. At some point in the future, enough additional enterprise zone credits could be issued that would require an additional person. At that time, DED would request additional funding.
DED states the average cost for each satellite enterprise zone is $60,000 per year as opposed to $352,000 per regular enterprise zone. This bill authorizes three new satellite enterprise zones, or an estimated cost of $180,000 (3 x $60,000).
In response to similar legislation from this year, officials from the City of Springfield assumed this proposal would be revenue neutral as the purpose of the bill is to attract new businesses and this increases economic development which is not a loss, but may be a net gain to cities.
House Amendment 6 - Abandoned Property, Redevelopment Projects;
In response to similar legislation from this year, officials from the Department of Natural Resources (DNR) stated this part of the proposal would expand the definition of allowable costs to include the demolition of any building or structure which is located on the site of an abandoned or underutilized property to be included in the cost of an eligible project. DNR assumes the proposed changes apply to uncontaminated structures. DNR would not have to provide oversight of the demolition of the structure; however, the program would do a preliminary review of the site to verify the site is not contaminated.
DNR assumes there would not be a significant number sites expanding their projects to include buildings or structures located on abandoned or underutilized properties. At this time, DNR does not anticipate the need to request additional resources as a result of this proposal. If the number of brownfield sites expanding their projects exceeds our expectations, there may be a need to request additional resources.
DNR assumes the participant will have to demonstrate that hazardous substances are not contained within or beneath the structure. This demonstration could be made in the documents DNR reviews during their preliminary review, if the documents are comprehensive enough. However, if the initially reviewed documents are not comprehensive and leave some doubt as to whether hazardous substances are within or beneath the structure, then DNR would ask that
ASSUMPTION (continued)
additional investigations be conducted.
DNR also estimates the review time to approve the project, as illustrated above, is apt to vary depending on the adequacy of the data submitted. If only a preliminary review is necessary, the review time would be approximately 6 hours for each review. If review beyond the preliminary review is needed, the review time could increase to approximately 16 hours. DNR does not anticipate being significantly impacted by these provisions. However, if the number of sites exceeds DNR's expectations, they need to request additional resources.
DNR has the authority to cost recover any cost associated with reviewing the demolition tax credit. The associated cost for a six hour review is approximately $400 (ES III salary $3308 x 12 months/2080 annual hours=$19.08 x 3.5 multiplier=$66.78 hrly rate x 6 hours). The associated cost for a 16 hour review is approximately $1,068 (ES III salary $3308 x 12 months /2080 annual hours=$19.08 x 3.5 multiplier=$66.78 hrly rate x 16 hours). The amount of increased revenues depends on the number of demolition tax credits DNR reviews and the amount of time to review each. Since DNR does not know the number of applications that would be submitted or the amount of time it would take to review, the amount of increased revenues would be unknown.
DED states this part of the proposal changes the brownfield program to specifically include demolition as an allowable cost for projects in the City of Washington at a one-time cost of $125,000.
Oversight has ranged the fiscal impact from this part of the proposal from $0 to (Unknown) to account for the possible additional allowable costs related to demolition of any building or structure which is located on the site of an abandoned or underutilized property in Franklin County.
House Amendment 8 (part 1)- Sexual violence crisis service centers & Unplanned pregnancy rescource centers;
Sexual Violence Crisis Service Centers
Department of Revenue (DOR) officials state this legislation creates a tax credit for contributions made to a sexual violence crisis center, as long as the total amount of contributions for the taxable year exceeds $100. The tax credit is equal to 50% of the contributions made, not to exceed $50,000. The tax credit is nonrefundable, but may be carried over to the next four succeeding tax years. The cumulative amount of tax credits claimed in any one fiscal year shall not exceed $2 million.
ASSUMPTION (continued)
DOR assumes the Director of Public Safety will determine annually which facilities in this state may be classified as sexual violence crisis service centers. The Director of Public Safety must also apportion the tax credits equally among all sexual violence crisis service centers. Any unused tax credits must be reapportioned by Public Safety to ensure that all the tax credits are available for that fiscal year.
The number of taxpayers who will make donations and become eligible for this credit is unknown at this time. Assuming Public Safety will be the certifying agency and will monitor the account, the Division of Taxation will need one temporary tax season employee (a cost of $6,067) for every 75,000 returns filed with this credit for key entry. In order to process the credits, the Business Tax Bureau will need one Tax Processing Tech I for every 3,680 credits filed. One Tax Processing Tech I will be needed for every 3,000 pieces of correspondence received regarding the credit and one Tax Processing Tech I will be needed for every 30,000 errors generated.
This legislation will require modifications to the individual income tax system. The Division of Taxation estimates these modifications, including programming changes, will require 1,384 hours of contract labor at a cost of $46,170. Modifications to the income tax returns and schedules will be completed with existing resources. State Data Center charges will increase due to the additional storage and fields to be captured. Funding in the amount of $9,007 is requested for implementation costs.
Oversight assumes the Department of Revenue could request additional FTE to process the additional tax credits if the need arises, but for purposes of this fiscal note, DOR is assumed only to have programming costs and state data center costs totaling $55,177 in FY02 as a result of this proposal.
Officials from the Department of Public Safety (DPS) state this proposal creates a tax credit for donations made to sexual violence crisis service centers. The DPS assumes implementation of this proposal will require three FTE in their department. Required would be one (1) Program Specialist II (at $40,716 annually) to supervise and work with the centers to determine who
qualifies, review tax credit documents and answer citizen questions; one (1) Accountant I (at $30,204 annually) to review, monitor, and process tax credits as they are sent to the DPS; and one (1) Clerk IV (at $26,460 annually) to provide clerical support for the program.
Oversight assumes the DPS can utilize existing resources to perform many of the duties involved with implementing this proposal and will only require an additional Program Representative.
ASSUMPTION (continued)
Officials from the Department of Insurance (INS) state this proposal grants tax credits against an insurer's premium tax payments (Chapter 148, RSMo) for donations to sexual violence crisis centers. Maximum annual credit per taxpayer is $50,000. Total credits are capped at $2 million annually. The INS assumes a range of $0 to $2,000,000 as the potential decrease in premium tax collected as a result of proposed legislation. Since the premium tax is split 50/50 between the General Revenue Fund and the County Foreign Insurance Funds, the INS estimated the fiscal impact to the County Foreign Insurance Funds as a range of $0 to $1,000,000 decrease.
Tax credits for this legislation would not begin until the 2002 tax year which would be paid 3/2003. Legislation could potentially be taken by 1,638 insurance companies. INS estimates the maximum tax credits of $2 million will be taken, resulting in a decrease in premium tax revenue. Premium tax revenue is split 50/50 between GR and County Foreign Insurance Funds. County Foreign Insurance Funds are later distributed to school districts after they have been collected by the state.
Officials from the Office of Administration, Division of Budget and Planning (BAP) assume this tax credit is capped at $2 million annually. There is no empirical basis to estimate the fiscal impact of this proposal. Therefore, BAP estimates the impact to be between $0 and $2 million annually.
Unplanned Pregnancy Resource Centers
Department of Revenue (DOR) officials state this legislation authorizes a tax credit equal to 50% of a taxpayer's contribution to a sexual violence crisis service center, not to exceed $25,000 per taxable year. The tax credit is non-refundable, but can be carried over to the next three succeeding years. In order to receive the credit, the taxpayer's contributions must have a value of $100 or more. The Director of Public Safety will determine annually which facilities in this state qualify as a sexual violence crisis service center. Each sexual violence crisis center is to provide Public Safety with the identity of each taxpayer making a contribution and the amount of the contribution. The credit shall apply to all tax years beginning on or after January 1, 2002, and will expire on January 1, 2007.
DOR states this legislation authorizes a tax credit equal to 50% of a taxpayer's contribution to an unplanned pregnancy resource center, not to exceed $25,000 per taxable year. The tax credit is non-refundable, but can be carried over to the next four succeeding years. In order to receive the credit, the taxpayer's contributions must have a value of $100 or more. The Director of the Department of Social Services will determine annually which facilities in this state qualify as an unplanned pregnancy resource center. Each unplanned pregnancy resource center is to provide Social Services with the identity of each taxpayer making a contribution and the amount of the contribution. Social Services will provide that information to DOR. The credit shall apply to all
ASSUMPTION (continued)
tax years beginning on or after January 1, 2002, and will expire on January 1, 2007.
The DOR is unable to determine the number of taxpayers who will contribute to a sexual violence crisis service center or an unplanned pregnancy resource center. Therefore, the Department is unable to determine the number of FTE needed to administer the tax credits. Any FTE needed will be requested through the normal budget process based upon the following:
The Division of Taxation, Personal Tax Bureau will need one Tax Processing Technician I for every 10,000 new credits claimed per year (processing) and one Tax Season Temporary for every 75,000 credits claimed per year (key entry). Also, one Tax Processing Technician I will be needed for six months for every 30,000 additional individual income tax errors generated from this legislation and one Tax Processing Tech I for every 3,000 pieces of correspondence generated from this legislation. The Business Tax Bureau will need one Tax Processing Tech I for every 3,680 credit claims received on corporate tax.
This legislation will require modifications to the income and corporate tax systems and credit application system. The Division of Taxation estimates these modifications, including programming changes, will require 1,384 hours of contract labor, at a cost of $46,170. Modifications to the income tax return and schedules will be completed with existing resources.
State Data Center charges will increase due to the additional storage and fields to be captured. Funding in the amount of $9,007 is requested for implementation costs.
***NOTE: As long as the two credits are similar with the same effective dates the programmers will be able to make the system modifications at the same time. However, if the legislation is changed and the credits are not similar or have different effective dates, the programming costs listed above will double.
Officials of the Department of Social Services, Division of Budget and Finance (DBF) assumes DBF staff would be responsible for determining which facilities meet the criteria of subsection 1 and DBF would also establish procedures and perform the task of "equitable allocating credits to qualified resource centers."
The cumulative amount of tax credits allowable in any fiscal year is $2,000,000 for each credit. DBF staff would do an initial allocation of the credits at the beginning of each fiscal year then reevaluate the apportionment of unused credits to ensure maximum use of the credits.
The number of staff required in a function of the number of participating facilities. In phone
ASSUMPTION (continued)
calls with Missouri Right to Life staff, DBF believes there are between 50 and 100 such facilities that would meet the criteria of subsection 1. Based on an estimated number of 85 facilities, DBF could perform the requirements of the legislation with one new Accounting Analyst I.
The Accounting Analyst I would be responsible for reviewing documents provided by the facilities to determine if they meet the criteria of subsection 1. The analyst would establish procedures to equally allocate credits to eligible unplanned pregnancy resource centers. To reapportion unused credits, the analyst would collect interim tax credit utilization information during the fiscal year and make the calculations necessary to reallocate unused credits. The analyst would collect and compile annual tax credit information and prepare a report for the director to send to DOR. Existing staff would provide supervision of the Accounting Analyst.
In a similar proposal, officials from the Office of Administration, Division of Budget and Planning (BAP) assumed the two tax credits each are capped at $2 million annually. There is no empirical basis to estimate the fiscal impact of this proposal. Therefore, BAP estimated the impact to be between $0 and $2 million annually for each credit.
In a similar proposal, officials from the Office of the Secretary of State (SOS) assumed this bill establishes a tax credit for money given to unplanned pregnancy resource centers. Although the bill does not specifically address rule making, this bill may lead to DOR or DOS promulgating rules. These rules will be published in both the Missouri Register and the Code of State
Regulations. Based on experience with other divisions, the rules, regulations and forms issued by DOR or DOS could require as many as 8 pages in the Code of State Regulations. For any given rule, roughly half again as many pages are published in the Missouri Register in the Code because cost statements, fiscal notes and the like are not repeated in the Code. These costs are estimated. The estimated cost of a page in the Missouri Register is $23. The estimated cost of a page in the Code of State Regulations is $27. The actual cost could be more or less than the numbers given. The impact of this legislation in future years is unknown and depends upon the frequency and length of rules filed, amended, rescinded or withdrawn.
Oversight assumes the SOS could absorb the costs of printing and distributing regulations related to this proposal. If multiple bills pass which require the printing and distribution of regulations at substantial costs, the SOS could request funding through the appropriations process. Any decisions to raise fees to defray costs would likely be made in subsequent fiscal years.
Officials of the Department of Insurance (INS) state this proposal would grant tax credits against an insurer's premium tax payments (chapter 148 RSMo) for contributions to Unplanned Pregnancy Resource Centers Sexual Violence Crisis Centers. Maximum annual credit per
ASSUMPTION (continued)
taxpayer is $25,000. Total credits are capped at $2 million annually for each credit.
Tax credits for this legislation would not begin until 2002 tax year which would be paid 3/2003. Legislation could potentially be taken by 1,638 insurance companies. INS estimates the maximum tax credits of $2 million for each tax credit will be taken, resulting in a decrease in premium tax revenue. Premium tax revenue is split 50/50 between GR and County Foreign Insurance Funds. County Foreign Insurance Funds are later distributed to school districts after they have been collected by the state.
Reducing the Research and Development Tax Credit Program
DED states reducing the Research Tax Credit from $9.7 million to $5.7 million will result in a savings of $4 million per year, but this is offset for two new programs - Unplanned Pregnancy Resource Center tax credit program in DSS at $2 million annually and the Sexual Violence Crisis Center tax credit program in DPS at $2 million annually.
House Amendment 10 - Recreational Facility Tax Credit;
The DOR states because this is a new tax credit, modifications to the systems will be needed in order to process the tax credit. Although DOR anticipates the number of taxpayers eligible for the credit will be minimal, the changes to the system are the same as a highly utilized credit. Therefore, DOR estimates it will take 1,384 hours of contract labor at a cost of $46,170 in order to make those changes.
The DED assumes this part of the proposal adds a recreational facility tax credit program for Vernon County, and assumes the cost to be $10,000 for FY 2002 only.
Oversight assumes this tax credit is not limited to FY 2002, and has estimated a fiscal impact of $0 to ($10,000) for each year in the fiscal note.
House Amendment 11 - Increase in allowable population in enterprise zones not within a metropolitan statistical area from 20,000 to 25,000;
Officials from the Department of Economic Development (DED) state this would increase the allowable size of the population in enterprise zones in non-metropolitan statistical areas from 20,000 to 25,000. The DED assumed this increase in population allowable will increase the number of credits and income modifications for enterprise zones. The number of enterprise
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zones is capped by law, so additional zones would not be generated from this legislation, however, the DED estimates that one zone per year would expand beyond 20,000 inhabitants and this proposal would generate additional credits being taken by businesses within those zones.
The DED estimates the fiscal impact of this legislation as $47,952 for each year on a cumulative basis. Therefore, the proposed legislation is estimated to cost $47,952 in FY 2002, $95,904 in FY 2003, and $143,856 in FY 2004. The DED assumes they will not need additional resources to implement this proposed legislation.
The DED states there is an average of 8.41 businesses per zone (530 businesses / 63 zones) receiving benefits. The DED assumes that 20% of these, or 1.68 new businesses per zone will now qualify for the credit and that only one zone per year would expand when that one zone per year would increase beyond 20,000 inhabitants. Multiplying the new 1.68 businesses per year by
the average of $28,500 of benefits received by each business, the proposal is estimated to result
in an additional $47,952 in tax credits per year.
Oversight assumes the proposed legislation will not result in additional enterprise zones since the number is capped at 63. However, the proposal will result in additional businesses qualifying for the tax credits in non-metropolitan areas in areas that are expanded beyond 20,000 inhabitants.
House Amendment 12 - Conveyance of land Recreational Facility Tax Credit;
Officials from the Office of the Attorney General (AGO) assume they could absorb these costs with existing resources.
Officials from the Office of Administration state the impact is based on the assumption that the property owned by the state and would be sold using an average per acre value as provided by the St. Francois County Assessors Office (.58 acres x $8,000 per acre = $4,640 rounded to $5,000).
House Amendment 13 - DED Professional Registration;
Officials from DED assumed this part of the proposal would not fiscally impact their agency.
ASSUMPTION (continued)
Overall, officials from the Office of Secretary of State (SOS) assume there would be costs due to additional publishing duties related to the Department of Economic Development's authority to promulgate rules, regulations, and forms as well as transfer existing rules to implement this bill. SOS estimates the division could require approximately 10 new pages of regulations in the Code of State Regulations at a cost of $27.00 per page, and 15 new pages in the Missouri Register at a cost of $23.00 per page. Costs due to this proposal would be $615, however, the actual fiscal impact would be dependent upon the actual rule-making authority and may be more or less. Financial impact in subsequent fiscal years would depend entirely on the number, length, and frequency of the rules filed, amended, rescinded, or withdrawn. SOS does not anticipate the need for additional staff as a result of this proposal; however, the enactment of more than one similar proposal may, in the aggregate, necessitate additional staff.
Oversight assumes the SOS could absorb the costs of printing and distributing regulations related to this proposal. If multiple bills pass which require the printing and distribution of regulations at substantial costs, the SOS could request funding through the appropriation process. Any decisions to raise fees to defray costs would likely be made in subsequent fiscal years.
Overall, officials from the Department of Revenue (DOR) did not anticipate a significant increase in the number of new tax credits filed. Therefore, the DOR will not request additional FTE at this time. However, if DOR is incorrect in this assumption, they will need one Temporary Tax Season Employee for every 75,000 additional credits, one Tax Processing Tech I for every 30,000 additional errors generated and one Tax Processing Tech I for every 3,000 additional pieces of correspondence received regarding this credit. Any FTE needed will be requested during the normal budget process.
| FISCAL IMPACT - State Government | FY 2002
(10 Mo.) |
FY 2003 | FY 2004 |
| GENERAL REVENUE | |||
| Savings - Credit for New or Expanded Business Facility (Section 135.150) | $4,000,000 | $4,000,000 | $4,000,000 |
| Costs - Expands (Section 135.200)
Could be sizeable* |
$0 to (Unknown) | $0 to (Unknown) | $0 to (Unknown) |
| Costs - Enterprise Zone Tax Credits in Sugar Creek (Section 135.208) |
($352,000) |
($352,000) |
($352,000) |
| Costs - Satellite Zone Tax Credits in Sugar Creek (Section 135.209) |
($60,000) |
($60,000) |
($60,000) |
| Costs - Business Facility Tax Credits for Harley Davidson plant (Section 135.230) |
$0 to ($200,000) |
$0 to ($200,000) |
$0 to ($200,000) |
| Costs - Tax Credit for Investments in Missouri Small Businesses (Section 135.400 - 135.423) |
($4,000,000) |
($4,000,000) |
($4,000,000) |
| Costs - Reallocation of Neighborhood Assistance Tax credits. (Section 135.484) | $0 to
($2,100,000) |
$0 to
($2,100,000) |
$0 to
($2,100,000) |
| Costs - Certified Capital Company Program (Section 135.503) |
($4,000,000) |
($4,000,000) |
($4,000,000) |
| Costs - Expansion of definition of "distressed community" (Section 135.530) |
$0 to (Unknown) |
$0 to (Unknown) |
$0 to (Unknown) |
| Savings - Tax Credit for Investment in, or Relocating a Business to, a Distressed Community (Section 135.535) |
$2,500,000 |
$2,500,000 |
$2,500,000 |
| Savings - Tax Credit for Transportation Development of a Distressed Community (Section 135.545) |
$2,500,000 |
$2,500,000 |
$2,500,000 |
| Costs - Tax Credit for Contributions to Innovation Centers (Section 348.302) |
($4,000,000) |
($4,000,000) |
($4,000,000) |
| Savings - Individual Training Account Program (Section 620.1450) |
$6,000,000 |
$6,000,000 |
$6,000,000 |
| Costs - Satellite Zone Tax Credits in Springfield (HA5) |
($180,000) |
($180,000) |
($180,000) |
| Costs - Demolition Tax Credits (HA6) | $0 to (Unknown) | $0 to (Unknown) | $0 to (Unknown) |
| Cost - Dept. of Revenue | |||
| Reprogramming costs (HA 8, pt1) | ($55,177) | $0 | $0 |
| Cost - Dept. of Public Safety | |||
| Personal Service (1 FTE) | ($20,358) | ($42,752) | ($44,890) |
| Fringe Benefits | ($6,785) | ($14,249) | ($14,962) |
| Expense and Equipment | ($14,817) | ($10,637) | ($10,637) |
| Total costs to DPS (HA 8, pt. 1) | ($41,960) | ($67,638) | ($70,489) |
| Costs - Tax Credit for Sexual Violence Crisis Service Centers (HA8, pt 1) |
($2,000,000) |
($2,000,000) |
($2,000,000) |
| Cost - Dept. of Revenue | |||
| Reprogramming costs (HA8, pt1) | ($56,561) | $0 | $0 |
| Cost - Dept. of Social Services | |||
| Personal Service (1 FTE) | ($17,533) | ($35,957) | ($36,856) |
| Fringe Benefits | ($5,844) | ($11,984) | ($12,284) |
| Expense and Equipment | ($6,805) | ($920) | ($947) |
| Total costs to DOS (HA8, pt1) | ($30,182) | ($48,861) | ($50,087) |
| Costs - Tax Credit for Unplanned Pregnancy Resource Centers (HA8, pt 1) |
($2,000,000) |
($2,000,000) |
($2,000,000) |
| Savings - Reduction of Research Tax Credit (HA8, pt 2) |
$4,000,000 |
$4,000,000 |
$4,000,000 |
| Costs - DOR programming charges for recreational facility tax credit (HA 10) |
($46,170) |
$0 |
$0 |
| Costs - Recreational Facility Tax Credit (HA 10) |
($10,000) |
($10,000) |
($10,000) |
| Costs - Tax credits for new businesses within an enterprise zone, expanded from 20,000 to 25,000 (HA11) |
($47,952) |
($95,904) |
($143,856) |
| ESTIMATED NET EFFECT TO GENERAL REVENUE FUND* | ($180,002 to Unknown) | ($114,403 to Unknown) | ($166,432 to Unknown) |
| * Unknown loss could be substantial. | |||
| FISCAL IMPACT - Local Government | FY 2002
(10 Mo.) |
FY 2003 | FY 2004 |
| NEWTON COUNTY | |||
| Revenue - sales tax on transient guests* | $0 to Unknown | $0 to Unknown | $0 to Unknown |
| (Section 67.1360) | |||
| * Subject to voter approval |
FISCAL IMPACT - Small Business
This proposal would fiscally impact small businesses in numerous ways.
DESCRIPTION
This substitute does the following:
(1) Allows the residents of Newton County to impose a hotel/motel sales tax in addition to any transient guest tax currently in effect of between 2% and 5% (Section 67.1360);
(2) Authorizes the removal of property from the Springfield Community Improvement District (CID), or relocation of property from a certain zone of designation in the CID to a different zone. A public hearing must be conducted and have approval of the board. The district must be able to meet its financial obligations without the revenues from the proposed portion to be removed. (Section 67.1442);
DESCRIPTION (continued)
(3) The act describes additional notice requirements for Community Improvement Districts that submit a sales tax to the voters of the district including; publishing notice of the election, providing mail-in ballots, mailing notice of election to all registered voters and real property owners. (Section 67.1545)
(4) Changes participation requirements regarding the Credit for New or Expanded Business Facility for participants commencing operations on or after January 1, 2001 (Section 135.100);
(5) Expands the definition of a "revenue-producing enterprise," as it relates to enterprise zones, to include electric power generation, transmission, or distribution activities; airports, flying fields and terminal services as well as hotel and motel activities in the City of Salem, but limits the tax credits or abatements available to only local taxes (Section 135.200);
(6) Designates the City of Sugar Creek located in Jackson County as an enterprise zone (Section 135.208);
(7) Designates that the City of Sugar Creek located in Jackson County could also designate a satellite zone (Section 135.209);
(8) Allows any employee of a new business facility with the North American Industry Classification System Number 336991 to be considered a resident of an enterprise zone, even if the employee ceases to live in an enterprise zone, as long as the following conditions are met:
1. The individual was a resident of an enterprise zone for one calendar month prior to and three months after his employment with the new NAICS 336991 business facility;
2. The individual remains employed with the new NAICS 336991 business facility, and;
3. The individual continues to reside in Missouri.
An NAICS 336991 business relates to motorcycles, bicycles, and parts (Section 135.230);
(9) Makes several changes to the Tax Credit for Investments in Missouri Small Businesses, including changing the definitions for "Community development corporation", "principal owners" and "target area", as well as changing the tax credit cap from a $13 million cumulative cap (with $4 million of that going to businesses in distressed communities) to an annual cap of $4 million (with $2 million of that going to businesses in distressed communities). Other changes include raising the percentage of the business that an investor must own after the
investment from fifty percent to sixty-five percent, reducing the number of years that a qualified investment must remain in the Missouri small business from five years to three years, and stating that any revocation of this tax credit by the Department of Economic Development shall only apply to the original applicant for the tax credit and not a good faith subsequent purchaser thereof. (Section 135.400 - 135.423);
DESCRIPTION (continued)
(10) Expands eligible activities and programs for the Youth Opportunities and Violence Protection Act (Section 135.460);
(11) Expands the definitions of "eligible residence", "new residence" and "project" as well as adds a definition for "central business district" used in the tax credit for rehabilitation and construction of residences in distressed communities and census block. The proposal also increases the eligible tax credit from 15 to 20 percent of costs incurred for a new residence (Section 135.478 & 135.481).
(12) Revises two tax credit programs. Under current law, of the $16 million in community improvement tax credits allowed, $8 million are to be allocated for "eligible residence" programs and $8 million for "qualifying residence" programs. The substitute states that if, by October 1 of
the calendar year, the Director of the Department of Economic Development has issued all $8 million of the credits allowed for one of these programs and not the entire $8 million allowance for the other program, the director is required to reallocate 70% of any unused tax credits from the program which has not reached its $8 million cap to the one which has. The reallocated credits will be given to taxpayers who have applied for, but have not received, tax credits in that same year and who are engaged in projects in the area where the tax credit cap has been met for that same year. The maximum reallocated tax credit for any project cannot exceed $500,000 (Section 135.484);
(13) Adds that projects involving the new construction, rehabilitation or substantial rehabilitation of more than one residence qualifying for the tax credit for rehabilitation and construction of residences in distressed communities may be submitted with one application. Also tax certificates may be approved upon completion for each individual residence rather than delaying until substantial completion of the entire project (Section 135.487).
(14) Adds the definition of "Certified capital investment", "Qualified debt instrument", "Qualified Missouri agriculture business" and updates the definitions of "Affiliate of a Certified Company", "Qualified Distribution", "Qualified Investment" and "Qualified Missouri Business" within the CAPCO program. The proposal also adds new restrictions regarding participants in the CAPCO program, the securities they may invest in, keeping the business within Missouri and reporting annually to the Department of Economic Development (Section 135.500);
(15) The proposal adds an additional $4 million (per year) in tax credits available for investments in distressed communities and states that the cumulative total tax credits authorized in the Certified Capital Company Program shall no more than $140 million (Section 135.503);
DESCRIPTION (continued)
(16) The proposal makes various other changes to the CAPCO program, such as CAPCO certification requirements, investment options, requirement of qualified Missouri businesses to remain in Missouri, additional reporting procedures, and adding qualified Missouri agriculture businesses to available investment options for the new round of CAPCO credits (Section 135.500 - Section 135.527).
(17) Expands the definition of a "distressed community" (Section 135.530);
(18) Makes various changes to the Tax Credits for Investments in or Relocating a Business to a Distressed Community (Section 135.535)
(19) Changes the amount of Credits for Investing in Transportation Development of a Distressed Community from an $10 million to $7,500,000 per year (Section 135.545);
(20) Changes the Tax Credit for Contributions to Innovation Centers from a $9 million aggregate cap to a $4 million annual cap (Section 348.302);
(21) Changes the definition of "allowable costs" for redevelopment and remediation projects to include demolition of any building or structure which is located on the site of an abandoned or underutilized property within Washington in Franklin County (Section 447.700);
(22) Changes the definition of an "industry" which may receive assistance from the Job Development Fund to include a consortium of entities organized to provide common training to the member entities' employees. The Basic Industry Retraining Program is expanded to support all new investment, not just capital investment (Sections 178.892, 620.470, 620.474);
(23) Reduces the limit on tax credits relating to the Individual Training Account Program from $6 million to no more than $1 million annually (Section 620.1450);
(24) House Amendment 5 authorizes the City of Springfield, in cooperation with the Director of the Department of Economic Development, to designate up to 3 satellite zones within the City. The Director must approve the City's overall plan for enterprise zone and satellite zone use prior to the designation;
(25) House Amendment 8 authorizes tax credit programs for sexual violence service centers and unplanned pregnancy resource centers, while reducing the tax credits allowed for the Research and Development Tax Credit Program from $9.7 million to $5.7 million.
DESCRIPTION (continued)
(26) House Amendment 11 increases the maximum population of enterprise zones not located in a metropolitan area from 20,000 inhabitants to 25,000; and
(27) House Amendment 12 authorizes a conveyance of land.
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
Department of Economic Development
Department of Revenue
Department of Insurance
Department of Agriculture
Department of Natural Resources
Department of Higher Education
Department of Elementary and Secondary Education
Department of Labor and Industrial Relations
Office of the Secretary of State
Department of Social Services
Office of Administration
Department of Public Safety
Office of the Attorney General
Newton County
City of Salem
City of Springfield
City of Sugar Creek
NOT RESPONDING: Christian County Clerk, Greene County Clerk
Jeanne Jarrett, CPA
Director
May 31, 2001