Subject: Cities, Towns and Villages; Economic Development; Taxation and Revenue - Sales and Use; Transportation

Bill Summary: This proposal excludes tax revenue derived from certain transportation sales taxes imposed by the City of Kansas City from TIF and MODESA economic activity taxes used to pay redevelopment costs.

ESTIMATED NET EFFECT ON GENERAL REVENUE FUND
FUND AFFECTED	FY 2009	FY 2010	FY 2011


Total Estimated Net Effect on General Revenue Fund	$0	$0	$0

ESTIMATED NET EFFECT ON OTHER STATE FUNDS
FUND AFFECTED	FY 2009	FY 2010	FY 2011


Total Estimated Net Effect on Other State Funds	$0	$0	$0

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 2009	FY 2010	FY 2011


Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)
FUND AFFECTED	FY 2009	FY 2010	FY 2011


Total Estimated Net Effect on FTE	0	0	0

☐ 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).

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 2009	FY 2010	FY 2011
Local Government	$0	$0	$0

Officials from the Department of Revenue assume the proposal would not fiscally impact their agency.

Officials from the Kansas City Area Transportation Authority (KCATA) state annually, approximately $3 million is reduced from Kansas City's 3/8-cent transit sales tax for TIF related projects levied pursuant to Section 94.600. If current trends continue, the Kansas City, Missouri budget director estimates the reductions will increase by 15% annually as new TIF projects come on line. SB 1131 would authorize the exemption from TIF transit projects using taxes authorized by Section 94.600 and Section 94.577 RSMo as follows:

1. The bill would make possible the continuation of the Section 94.600 authorized 3/8 cent sales tax for transit, and the new tax would be exempt from TIF projects approved beginning April 1, 2009.

2. The bill would authorize imposing a new transit tax of up to 1/8-cent for light rail transit under Section 94.600. This tax would be exempt from all TIF projects.

3. The bill would authorize a new transit tax of up to 1/4-cent for light rail transit under Section 94.577 (1/4 cent). This tax would be exempt from all TIF plans.

It is estimated, if the 3/8-cent sales tax is renewed as proposed, beginning April 1, 2009, the TIF reduction could be $23 million to $50 million through the life of the tax. This estimation is dependent upon the number of projects implemented. If the light rail taxes are imposed, the fiscal impact on the City would be much more substantial and could easily exceed $50 million depending on the percentage tax implemented by the City.

Removal of the TIF reduction would not cause any negative fiscal impact to the State of Missouri, but would result in a positive fiscal impact on Kansas City.

Officials from the City of Kansas City did not respond to our request for fiscal impact.

Oversight assumes this proposal would result in a savings to the Kansas City Area Transportation Authority and a potential loss to Kansas City’s Special Allocation Account (TIF) and Downtown Economic Stimulus Act (MODESA) account.

No direct fiscal impact to small businesses would be expected as a result of this proposal.

This substitute excludes tax revenues, derived from certain transportation sales taxes imposed by the City of Kansas City, from the allocation of economic activity taxes for payment of redevelopment costs under Missouri's Downtown and Rural Economic Stimulus Act and Real Property Tax Increment Allocation Redevelopment Act. The definition of the term "transportation purposes" contained within the provision of law authorizing the transportation sales tax provision has been expanded to include the development and operation of bus and para-transit systems.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

FISCAL IMPACT - Local Government	FY 2009 (10 Mo.)	FY 2010	FY 2011
LOCAL POLITICAL SUBDIVISIONS

Savings - Kansas City Area Transportation Authority - certain sales tax proceeds no longer allowed to be used for TIF or MODESA purposes	Unknown	Unknown	Unknown

Loss - Kansas City Special Allocation Fund - certain sales tax proceeds no longer allowed to be used for TIF or MODESA projects.	(Unknown)	(Unknown)	(Unknown)

ESTIMATED NET EFFECT TO LOCAL POLITICAL SUBDIVISIONS	$0	$0	$0

FISCAL IMPACT - State Government	FY 2009 (10 Mo.)	FY 2010	FY 2011

	$0	$0	$0