COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.: 3120-01
Bill No.: SB 844
Subject: Taxation & Revenue-Property; County Government; Cities, Towns & Villages
Type: Original
Date: January 14, 2002
FISCAL SUMMARY
| FUND AFFECTED | FY 2003 | FY 2004 | FY 2005 |
| Blind Pension | 0 | ($1,040,000) | $195,000 |
| Total Estimated
Net Effect on All State Funds |
$0 | ($1,040,000) | $195,000 |
| FUND AFFECTED | FY 2003 | FY 2004 | FY 2005 |
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2003 | FY 2004 | FY 2005 |
| Political Subdivisions | 0 | ($208,100,000) | $38,900,000 |
| Local Government | $0 | ($208,100,000) | $38,900,000 |
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 4 pages.
ASSUMPTION
Officials from the Department of Revenue assume no administrative impact to their organization.
Officials from the State Tax Commission assume total assessed valuation for 2002 is $68 billion. They assume a six percent increase in valuation for the 2003 reassessment, resulting in $4 billion of additional valuation, and $240 million increased revenues for political subdivisions at an average $6 tax rate. The State Tax Commission assumes a statewide average of six percent property ownership change, which would result in an average 15% increase in value for those properties. Acquisition-based reassessment would result in $40 million in increased revenues to local political subdivisions, and the loss of $240 million in potential revenue, for a net $200 million statewide loss for local governments.
Oversight assumes there would also be losses to the Blind Pension Fund as a result of this proposal. Oversight also assumes the first year affected by the proposal would be calendar year 2003 taxes collected in FY 2004. Further there would be increasing fluctuation in assessed valuation changes because of the cumulative effect of deferred reassessment. Residential properties reassessed after several years would have large increases in assessed valuation when ownership changes.
Oversight calculates the fiscal impact of this proposal as follows:
Assessed valuation for 2002 $68,000,000,000
Estimated local tax collections lost for 2003 without reassessment
6% of $68 Billion x $6 per hundred ($244,800,000)
Estimated 2003 local tax collections increased due to ownership change
6% of 15% of $68 Billion x $6 per hundred $36,700,000
Net local tax loss in 2003
($244,800,000 less $36,700,000) ($208,100,000)
Local tax gain in 2004
($36,700,000 plus 6%) $38,900,000
ASSUMPTION (continued)
Estimated Blind Pension Fund tax collections lost for 2003 without reassessment
(6% of $68 Billion x 3 cents per hundred) ($1,224,000)
Estimated 2003 Blind Pension Fund tax collections increased due to ownership change
(6% of 15% of $68 Billion x 3 cents per hundred) $184,000
Net Blind Pension Fund tax loss in 2003
($1,224,000 less $183,600) ($1,040,000)
Blind Pension Fund tax gain in 2004
($184,000 plus 6%) $195,000
| FISCAL IMPACT - State Government | FY 2003
(10 Mo.) |
FY 2004 | FY 2005 |
| BLIND PENSION FUND | |||
| Loss - Reduced Property Tax | $0 | ($1,040,000) | $195,000 |
| ESTIMATED NET EFFECT ON BLIND PENSION FUND |
$0 |
($1,040,000) |
$195,000 |
| FISCAL IMPACT - Local Government | FY 2003
(10 Mo.) |
FY 2004 | FY 2005 |
| POLITICAL SUBDIVISIONS | |||
| Loss - Reduced Property Tax | $0 | ($208,100,000) | $38,900,000 |
| ESTIMATED NET EFFECT ON POLITICAL SUBDIVISIONS |
$0 |
($208,100,000) |
$38,900,000 |
FISCAL IMPACT - Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
DESCRIPTION
This proposal would prohibit reassessment of previously assessed real property and improvements until a transfer of ownership occurs.
This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space. This proposal would affect total state revenue.
SOURCES OF INFORMATION
Department of Revenue
State Tax Commission
NOT RESPONDING
Office of Administration
Division of Budget and Planning
Mickey Wilson, CPA
Acting Director
January 14, 2002