COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.: 3780-02
Bill No.: SB 914
Subject: Education; Gambling.
Type: Original
Date: February 18, 2002
FISCAL SUMMARY
| FUND AFFECTED | FY 2003 | FY 2004 | FY 2005 |
| Gaming Commission | $0 | $0 | $0 |
| Gaming Proceeds for Education | $0 | $0 | $0 |
| Various Education Funds | $42,136,550 to $58,643,150 | $84,273,640 to $128,986,300 | $84,273,640 to $140,586,300 |
| Total Estimated
Net Effect on All State Funds |
$42,136,550 to $58,643,150 | $84,273,640 to $128,986,300 | $84,273,640 to $140,586,300 |
| FUND AFFECTED | FY 2003 | FY 2004 | FY 2005 |
| None | |||
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2003 | FY 2004 | FY 2005 |
| Local Government | $3,492,600 to $5,326,667 | $6,985,260 to $11,953,333 | $6,985,260 to $13,242,222 |
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 8 pages.
ASSUMPTION
REPEAL LOSS LIMIT AND RAISE ADMISSION FEE BY $1;
Officials from the Missouri Gaming Commission (GAM) state this bill would not affect the operation of their agency. GAM estimates that it would, however, generate $62.5 million in additional revenue in FY 2003, $136.7 million in FY 2004 and $148.3 million in FY 2005 for the state of Missouri based upon the following calculations;
Admission Fee Increase:
Projected admissions before repeal of $500 loss limit $47,661,299
Additional admissions related to repeal $ 2,320,000
Projected annual admissions if bill passes $49,981,299
FY 2003 for six months $24,990,650 ($49,981,299 / 2)
Gaming Tax Increase:
Increase of AGR tax to state related to repeal of loss limit.
Year one ramp up increase $75.0 million
Subsequent years $98.3 million
FY 2003 January 2003 to June 30, 2003 $37.5 million
FY 2004 June 2003 to December 2003 $37.5 million
FY 2004 January 2004 to June 30, 2004 $49.2 million
Total for FY 2004 $86.7 million
FY 2005 July 2004 to June 30, 2005 $98.3 million
FY 2003 FY 2004 FY 2005
Increased admission fee revenue $24,990,650 $49,981,300 $49,981,300
Increased of AGR from repeal of loss limit $37,500,000 $86,700,000 $98,300,000
TOTAL INCREASE FROM PROPOSAL $62,490,650 $136,681,300 $148,281,300
ASSUMPTION (continued)
Officials from the Department of Social Services - Division of Family Services (DFS) state that by repealing the loss limit, the number of individuals who embark on an excursion gambling boat may change, thereby changing the revenue for early childhood initiatives. DFS, however, defers to the Office of Administration for the calculation of additional revenues.
Officials from the Department of Elementary and Secondary Education (DES) state this proposal repeals the loss limit and increases the admission fee. The money generated from the elimination of the loss limits is to be used for the Missouri college guarantee fund, the higher education academic scholarship program, or the foundation formula. It is left up to the General Assembly to decide the allocation of money to each. Therefore, there is no way to know whether more money would be available to help fund the formula.
Officials from the Department of Higher Education (CBHE) state this bill would capture gaming revenue for the Missouri College Guarantee Program and the Academic Scholarship ("Bright Flight"), which are both administered by the CBHE. CBHE states they have no method of calculating additional gaming revenues generated pursuant to this proposal. However, it is assumed that the increases would not cause additional administrative costs related to growth in these programs.
Officials from the Department of Public Safety - Missouri Veterans' Commission, and Missouri Highway Patrol each state this proposal would not fiscally impact their respective agencies.
Since the general assembly shall determine the distribution of the revenues generated by this proposal between the Missouri College Guarantee Fund, the Higher Education academic scholarship program, and state aid to school districts pursuant to the foundation formula, Oversight has simply lumped the estimated revenue generated into a category called "Various Education Funds".
Oversight reviewed the effect of the loss limits on the state of Iowa and found that Iowa's win per patron increased by approximately $7.50 when they abolished loss limits. According to reports by the Gaming Commission, the average Adjusted Gross Receipts (AGR) per patron for the last twelve months (February 2001 through January 2002) was $51.44. Oversight assumes this proposal would increase the AGR per patron in Missouri to $58.94. Assuming a 5% increase in the number of admissions, Oversight estimates the state impact from gaming tax would be $46,653,000 annually ($23,326,000 for 6 months in FY 2003), of which 90% goes to the State and 10% goes to the home dock cities and counties. For fiscal note purposes, Oversight will range the potential fiscal impact from the low to high estimates in gaming tax revenues. Oversight has utilized GAM's estimate for increased admissions.
ASSUMPTION (continued)
Oversight assumes only the increase in the State's portion of the admission fee and the gaming tax would be available to the various education fundings. Oversight assumes the home dock cities and counties would keep their portion of the increased revenue resulting from the three year repeal of the loss limit.
Oversight assumes GAM's response only related to the State's increased revenue projection, therefore, to determine GAM's estimate of the home dock cities and counties' portion, Oversight divided the estimated increase in gaming tax by 90% (18% of 20%) and then multiplied by 10% (2% of 20%).
INCREASE IN THE HIGHER EDUCATION ACADEMIC SCHOLARSHIP PROGRAM SCHOLARSHIP FOR THE FIRST ACADEMIC YEAR OF STUDY FROM $2,000 TO $3,000 (173.250):
In response to similar legislation from last year, officials from the Coordinating Board for Higher Education (CBHE) stated this bill would capture additional gaming revenue for the Missouri College Guarantee Program and increase the Academic Scholarship ("Bright Flight") award by $1,000, to $3,000.
BRIGHT FLIGHT INCREASE - In the past two fiscal years there have been approximately
8,100 students receive the Bright Flight Scholarship. Although all participating students receive $1,000 per semester, not all students receive the award for both semesters due to enrollment changes or other causes of lost eligibility. Thus the mathematical average award is not $2,000 per student, but $1,900 per student. Therefore an increase in the award amount from $2,000 to $3,000 would entail a $950 average increase per student. This produces a fiscal impact of 8,100 x $950 = $7,695,000 per academic year, which is equivalent to one fiscal year. This program, like all state grants and scholarships is subject to appropriations. Additionally, the number of students participating in this program has not increased over the past two years and there is no increase anticipated for FY 2003.
Oversight assumes additional funding of the Bright Flight Scholarship program out of the "various education funds" utilized in this fiscal note.
This proposal may impact Total State Revenues.
| FISCAL IMPACT - State Government | FY 2003
(6 Mo.) |
FY 2004 | FY 2005 |
| GAMING COMMISSION FUND | |||
| Income - increased admissions from repeal of $500 loss limit | $1,160,000 | $2,320,000 | $2,320,000 |
| Income - raise admission fee from $2 to $3 | $23,830,650 | $47,661,300 | $47,611,300 |
| Transfer Out - To various education funds | ($24,990,650) | ($49,981,300) | ($49,981,300) |
| ESTIMATED NET EFFECT TO THE GAMING COMMISSION FUND |
$0 |
$0 |
$0 |
| GAMING PROCEEDS FOR EDUCATION FUND | |||
| Income - 3 year repeal of $500 loss limit | $20,993,400 to $37,500,000 | $41,987,340 to $86,700,000 | $41,987,340 to $98,300,000 |
| Transfer Out - To various education funds | ($20,993,400 to $37,500,000) | ($41,987,340 to $86,700,000) | ($41,987,340 to $98,300,000) |
| ESTIMATED NET EFFECT TO THE GAMING PROCEEDS FOR EDUCATION FUND |
$0 |
$0 |
$0 |
| VARIOUS EDUCATION FUNDS | |||
| Transfer In - From Gaming Commission Fund for the increased admission fee revenue |
$24,990,650 |
$49,981,300 |
$49,981,300 |
| Transfer In - Proceeds from repeal of $500 loss limit | $20,993,400 to $37,500,000 | $41,987,340 to $86,700,000 | $41,987,340 to $98,300,000 |
| Costs - Department of Higher Education | |||
| Increased Bright Flight Scholarships | ($3,847,500) | ($7,695,000) | ($7,695,000) |
| ESTIMATED NET EFFECT TO VARIOUS EDUCATION FUNDS | $42,136,550 to $58,643,150 | $84,273,640 to $128,986,300 | $84,273,640 to $140,586,300 |
| FISCAL IMPACT - Local Government | FY 2003
(6 Mo.) |
FY 2004 | FY 2005 |
| HOME DOCK CITIES AND COUNTIES | |||
| Income - increased admissions from repeal of $500 loss limit | $1,160,000 | $2,320,000 | $2,320,000 |
| Income - 3 year repeal of $500 loss limit | $2,332,600 to $4,166,667 | $4,665,260 to $9,633,333 | $4,665,260 to $10,922,222 |
| ESTIMATED NET EFFECT TO HOME DOCK CITIES AND COUNTIES |
$3,492,600 to $5,326,667 |
$6,985,260 to $11,953,333 |
$6,985,260 to $13,242,222 |
FISCAL IMPACT - Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
DESCRIPTION
This proposal repeals the $500 gaming loss limit for a period of three years beginning January 1, 2003. The repeal of the loss limit will expire on December 31, 2005.
The moneys generated by the repeal of the loss limit shall be used to fund: (1) the Missouri College Guarantee Fund; (2) the Higher Education Academic Scholarship Program; and (3) school districts pursuant to the Foundation Formula.
One year following the repeal, and the subsequent year, the Gaming Commission must deliver a report to the General Assembly. The report shall include the impact of the repeal on state revenue, compulsive gamblers, and state tourism.
This proposal also increases the admission fee on gambling boats from $2 to $3. The additional dollar will be used to fund: (1) the Missouri College Guarantee Fund; (2) the Higher Education Academic Scholarship Program; and (3) school districts pursuant to the Foundation Formula.
Under this proposal, the Higher Education Academic Scholarship Program (also known as "Bright Flight") scholarship amount is increased from $2,000 per year to $3,000 per year.
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
Missouri Gaming Commission
Department of Elementary and Secondary Education
Department of Higher Education
Missouri Highway Patrol
Department of Social Services
Missouri Veterans' Commission
Mickey Wilson, CPA
Acting Director
February 18, 2002