LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 6865 NOTE PREPARED: Dec 23, 2024
BILL NUMBER: HB 1511 BILL AMENDED:
SUBJECT: Riverfront Economic Development Tax Area.
FIRST AUTHOR: Rep. Pfaff BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: This bill allows the legislative body of a city or a county without a consolidated
city to adopt a resolution establishing a riverfront economic development tax area. It sets forth requirements
for the location of the tax area. It requires the legislative body to make findings when adopting a resolution.
It also requires the legislative body to submit a resolution establishing a tax area to the Budget Committee
and Budget Agency for review and approval.
The bill allows a tax area to receive incremental state income tax revenue and incremental sales tax revenue
attributable to the tax area. It requires a city or county that establishes a tax area to establish a riverfront
economic development area fund. It provides that a tax area terminates not later than 25 years after the date
on which the resolution establishing the tax area is adopted.
Effective Date: July 1, 2025.
Explanation of State Expenditures: Budget Committee and State Budget Agency (SBA): The bill requires
the Budget Committee to meet and make a recommendation to the SBA on an ordinance adopted by a city
or county establishing a riverfront economic development tax area. The SBA is required to approve a
resolution before incremental revenue can be allocated to the tax area. These provisions are routine
administrative functions and should be able to be implemented with no additional appropriations, assuming
near customary agency staffing and resource levels.
Department of State Revenue (DOR): The DOR will experience an increase in workload and expenses to
compute the income tax and sales tax incremental amounts for each tax area. The DOR should be able to
implement the bill’s requirements within existing staffing and resource levels.
Incremental Tax Financing Fund: If a city or county establishes a tax area, a nonreverting state fund for the
tax area, known as the Incremental Tax Financing Fund, would be created. Incremental sales tax and income
tax would be deposited in this fund and distributed monthly to the fiscal officer of the city or county. The
fund would be administered by the DOR.
HB 1511 1 Explanation of State Revenues: The bill allows a riverfront economic development tax area to capture
incremental income tax revenue attributable to wages earned in the tax area and incremental sales and use
tax revenue remitted by businesses operating in a tax area. The bill could potentially reduce revenue
beginning in FY 2025. The revenue loss could be significant and would depend on several factors, including
the number of tax areas that are established, the boundaries of the tax areas, and the incremental economic
activity that occurs within each tax area. State income tax revenue is deposited in the General Fund. Sales
tax revenue is deposited in the General Fund (99.838%), Commuter Rail Service Fund (0.131%), and
Industrial Rail Service Fund (0.031%).
Explanation of Local Expenditures: The bill requires the city or county legislative body to submit the
following information to the Budget Committee: a copy of the resolution establishing the tax area, a map of
the tax area, a list of employers in the area and street names and the range of street numbers of each street
in the area, and any other information requested by the Budget Committee.
Explanation of Local Revenues: The bill allows a city or county to establish a riverfront economic
development tax area with boundaries that border at least one side of a river and are located within a certain
distance from the river. A tax area would receive incremental state income tax and sales tax revenue
attributable to the tax area for up to 25 years. The amount of incremental revenue will depend on the
boundaries of the tax area and the incremental economic activity that occurs in the area.
All incremental revenue would be deposited in a local riverfront economic development area fund. Money
in this fund may only be used for certain expenses related to capital improvements and facilities located in,
physically connected to, or directly serving the tax area.
State Agencies Affected: Department of State Revenue, State Budget Agency, General Assembly.
Local Agencies Affected: Cities and counties.
Information Sources:
Fiscal Analyst: Lauren Tanselle, 317-232-9586.
HB 1511 2