COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. No.:         4519-02

Bill No.:          HCS for HB 1836

Subject:           Property, Real and Personal; State Tax Commission; Taxation and Revenue - Property

Type:              Original

Date:               February 28, 2008

Bill Summary:            Would make changes to property tax statutes.

FISCAL SUMMARY

Numbers within parentheses: ( ) indicate costs or losses.

This fiscal note contains 6 pages.

☐ Estimated Total Net Effect on All funds expected to exceed $100,000 savings or (cost).

☒ Estimated Net Effect on General Revenue Fund expected to exceed $100,000 (cost).

FISCAL ANALYSIS

ASSUMPTION

Assessment Process for Possessory Interest

Officials from the Office of Administration, Division of Budget and Planning, the Department of Elementary and Secondary Education, the Department of Revenue, Linn State Technical College, the Metropolitan Community Colleges, Clinton County, the City of Centralia, and the City of St. Louis assumed a previous version of the proposal would have no fiscal impact to their organizations.

Officials from the State Tax Commission (TAX) assumed a previous version of this proposal would have no fiscal impact on their organization. TAX officials stated that the proposal would nullify the assessment of this type of property, and could have a fiscal impact to local governments. TAX officials were not able to provide an estimate of the number or current assessed valuation of eligible properties.

Oversight assumes that this proposal could apply to certain leased real property which is on or adjacent to a commercial airport and owned by a political subdivision. The proposal would specify a method for determining the assessed valuation for tax purposes of such properties. Oversight assumes the assessed valuation of such properties would be reduced if this proposal was implemented. The proposal would become effective after 2008 taxes are determined and would become effective for 2009 taxes in FY 2010. Accordingly, Oversight concludes that the fiscal impact to local governments and the Blind Pension Fund for years after FY 2009 is unknown.

Property Tax Credit for Rolling Stock Expenditures

Officials from the Department of Revenue assume this proposal would have no fiscal impact on their organization.

In response to a similar proposal (HB 1810 LR 4268-01), officials from the State Tax Commission (TAX) assumed the proposal would create a tax credit against a freight line company's ad valorem property tax. TAX assumed that only those freight line companies that are defined by Section 137.1003. (4) RSMo would be eligible for the tax credit. There are approximately 345 freight line companies that could qualify for this credit.

ASSUMPTION (continued)

In calendar year 2006, the amount of freight line ad valorem property tax was $3.5 million dollars and in calendar year 2007, the amount of freight line ad valorem property tax was $4.1 million dollars. TAX assumes that annual taxes would be approximately $4 million dollars. If we assume that each of these companies have significant eligible expenses to offset the total amount of tax due, the State of Missouri would be required to annually reimburse the local political subdivision approximately $4 million dollars. This credit would be effective on January 1, 2009 for property taxes due in FY 2010.

Officials from the Department of Transportation did not respond to our request for information.

Oversight will use the State Tax Commission estimate of tax credits allowable and the reimbursement due to political subdivisions. The reimbursement for local revenues lost would be known in FY 2010, and appropriated and paid in FY 2011.

FISCAL IMPACT - Small Business

This proposal could have a fiscal impact to small businesses which own or lease possessory interests in real property on or adjacent to certain commercial airports.

FISCAL DESCRIPTION

This proposal would define the assessment valuation process for possessory interests in certain real property on or adjacent to certain commercial airports, and provide a property tax credit for freight company rolling stock improvements.

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

Office of Administration

            Division of Budget and Planning

Department of Elementary and Secondary Education

Department of Revenue

State Tax Commission

Linn State Technical College

Metropolitan Community Colleges

Clinton County

City of Centralia

City of St. Louis

NOT RESPONDING

Department of Transportation

                                                                                                Mickey Wilson, CPA

                                                                                                Director

                                                                                                February 28, 2008