COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:3968H.01I Bill No.:HB 2133 Subject:Tax Credits; Health Care Professionals; Department of Health and Senior
Services; Department of Revenue
Type:Original Date:April 5, 2022Bill Summary:Establishes a tax credit for primary care physicians working and residing in
rural counties.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2023FY 2024FY 2025
General Revenue
Fund
$0
More than or
Less than
($7,053,543)
More than or
Less than
($7,063,431)
Total Estimated Net
Effect on General
Revenue $0
More than or
Less than
($7,053,543)
More than or
Less than
($7,063,431)
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND AFFECTEDFY 2023FY 2024FY 2025Total Estimated Net
Effect on Other State
Funds $0$0$0
Numbers within parentheses: () indicate costs or losses. L.R. No. 3968H.01I
Bill No. HB 2133
Page 2 of
April 5, 2022
BB:LR:OD
ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND AFFECTEDFY 2023FY 2024FY 2025Total Estimated Net
Effect on All Federal
Funds $0$0$0
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND AFFECTEDFY 2023FY 2024FY 2025Total Estimated Net
Effect on FTE 000
☒ Estimated Net Effect (expenditures or reduced revenues) expected to exceed $250,000 in any
of the three fiscal years after implementation of the act or at full implementation of the act.
☐ Estimated Net Effect (savings or increased revenues) expected to exceed $250,000 in any of
the three fiscal years after implementation of the act or at full implementation of the act.
ESTIMATED NET EFFECT ON LOCAL FUNDSFUND AFFECTEDFY 2023FY 2024FY 2025Local Government$0$0$0 L.R. No. 3968H.01I
Bill No. HB 2133
Page 3 of
April 5, 2022
BB:LR:OD
FISCAL ANALYSIS
ASSUMPTION
Officials from the Department of Revenue (DOR) assume this proposal, starting January 1,
2023, allows for a primary care physician that practices in a county of less than 35,000
inhabitants to receive a tax credit equal to $15,000. The tax credit received is not refundable,
transferrable or sellable, nor can the credit be carried forward. This tax credit does not have a
cap.
The qualified physician must be a primary care physician and practice medicine in a rural
county. Verification of these requirements would need to be done prior to the issuance of the tax
credits. Verification and certification processes are usually handled by other agencies. Once
another agency verifies a person's qualifications, they are given a receipt that is attached to the
tax return for DOR to process. Requiring DOR to do the verification is outside their normal
administrative scope. DOR assumes in order to do this verification they will need 2 Associate
Customer Service Representatives ($26,328) for the review and processing.
Per this proposal, physicians practicing in 33 counties in Missouri while the physicians in the rest
of the counties may be eligible. Information from the Department of Commerce and Insurance
shows that 29,080 physicians are actively paying licensing fees to them and an additional 1,613
assistant physicians are paying the fees. A report in 2015 on the physician workforce in
Missouri by the Department of Health and Senior Services, showed the average salary of a
family practice physician was $150,000 and the following number of physicians by their primary
specialty. L.R. No. 3968H.01I
Bill No. HB 2133
Page 4 of
April 5, 2022
BB:LR:OD
Number of Physicians
Practicing in Missouri per
Primary Specialty
Primary
Specialty
Internal Medicine3,483Family/General Medicine2,348Pediatrics1,588Emergency Medicine966Anesthesiology 958Radiology858General Surgery853Psychiatry828Obstetrics/Gynecology819Cardiology568Orthopedic456Ophthalmology392Neurology385Oncology264Otolaryngololy252Urology220Dermatology218Physical Medicine/ Rehab171Plastic Surgery146Neurological Surgery144Endocrinology95Allergy/Immunology81Geriatrics26Medical Genetics11
A more recent report (2018) by the Robert Graham Center of Policy Studies in Family Medicine
stated Missouri has 3,716 primary care physicians of which 1,548 are in family medicine. The
rest of the group is made up of physicians that specialize in internal medicine, pediatrics, general
practice or geriatrics.
This proposal does not indicate which specialties will be allowed to claim they are a “primary
care physician” under this proposal. For the purpose of the fiscal note, they show a range from
the 1,548 family care physicians to the 3,716 primary care physicians receiving this credit
annually. Additionally, they are unable to determine which of these physicians are in a rural
county. Therefore, this impact may be overstated. L.R. No. 3968H.01I
Bill No. HB 2133
Page 5 of
April 5, 2022
BB:LR:OD
Given the report by DHSS indicates the average salary was $150,000 in 2015, the Department
used its internal Income Tax Model that contains confidential taxpayer data to estimate the
average amount of tax liability a person has if their income is $150,000-$200,000. The average
tax liability is $7,000.
Since the average amount of the tax liability is $7,000 and the credit is not refundable or can be
carried over, it is essential a deduction. DOR used the $7,000 to calculate the impact.
FY LowHigh2023(Less than $10,836,000)(Less than $26,012,000)2024(Less than $10,836,000)(Less than $26,012,000)2025(Less than $10,836,000)(Less than $26,012,000)
This will be a loss of revenue to the state starting with the filing of the tax returns on January 1,
2024 (FY 2024).
This would be a new income tax credit and it would be added to the MO-TC and information
about the credit would be added to their website and changes would be needed in their individual
income tax system. DOR notes the costs to update these items is $3,596.
Oversight notes that DOR stated the estimates could be “well overstated”, because the statistical
analysis (shown above) did not differentiate between rural and suburban workforce.
Oversight notes the research posted by the Bureau of Labor Statistics 2021, shows there were
5,180 licensed primary care physicians in Missouri with median salary of $203,740.
According to the recent article in USDA - Economic Research Services - 2021, Missouri covers
68,886 square miles, with a 2020 estimated population of 6,154,913 people – 1,509,860 living in
rural areas (USDA-ERS). Additionally, according to the recent statistics in Missouri Workforce
Update - Rural Information HUB - 2018, there are 47 to 52 primary care physicians for every
100,000 rural residents in Missouri.
Oversight estimates there were between 710 ((1,509,860 /100,000) *47) to could exceed 785
((1,509,860 /100,000) *52) licensed physician working in rural Missouri at any given time
between 2015 to 2018 who would qualify for given the tax credit under the proposal.
Oversight notes the Department of Health and Senior Services (DHSS) provided additional
data regarding the rural primary care physician workforce as follow:
FY2019 Rural
Primary Care
Providers
(PCP)
FY2020 Rural
PCP
FY2021 Rural
PCP
FY2022 Rural
PCP
Note: Primary Care includes
General Family Medicine, General
Practice, General Internal
Medicine and General Pediatrics. L.R. No. 3968H.01I
Bill No. HB 2133
Page 6 of
April 5, 2022
BB:LR:OD
Using DOR’s average amount of the tax liability of $7,000 where the credit is not refundable or
can be carried over and DHSS totals, thus amount to the essential credit deduction, Oversight
calculated the impact as follows:
High
Number of Physicians
1,002 (MO -
DHSS)
Average Amt. of Tax
Credit utilized $ 7,000
Total Tax Credits awarded $ 7,014,000
Officials from the Office of Administration – Budget & Planning assume that beginning with
tax year 2023, primary care physicians that practice and reside in a rural county may receive a
tax credit of up to $15,000. The tax credit is not refundable; it cannot be sold, transferred, or
assigned; and it cannot be carried forward or back.
A rural county is defined as any county with a population less than 35,000 residents. B&P notes
that there are 82 counties in Missouri with populations less than the 35,000 limit.
B&P notes that based on medical information, the term “primary care physician” includes
internal medicine, pediatrics, family medicine, and OB-GYNs.
Based on data published by the U.S. Department of Health and Human Services, in 2020 there
were 9,571 primary care physicians practicing in Missouri, of which 601 practiced in a
qualifying rural county. In addition, based on available research, B&P determined that the
average annual salary for a primary care physician is $181,142 in Missouri and that rural and
urban physicians earn similar levels of income.
B&P notes that because this tax credit is both non-refundable and is not allowed to be carried
forward to future tax years, the credit is limited by a taxpayer’s tax liability in any given year.
Based on 2018 tax year data, the most current complete year available, the average net Missouri
tax liability for individuals making $181,000 was approximately $7,000. Therefore, B&P
estimates that this proposal could reduce TSR and GR by $4,221,317 (601 physicians x $7,024
net tax liability) annually beginning in FY24. B&P notes that while this tax credit would be
available for tax year 2023, it will not impact revenues until FY24 when income tax returns are
filed.
Oversight for purpose of this fiscal note, will use the DHSS total workforce totals and show
impact that could be lesser or greater of $7,014,000 to the general revenue in the fiscal note. (The
impact is dependent on the annual workforce and wages paid)
101499010031002Average 1002 L.R. No. 3968H.01I
Bill No. HB 2133
Page 7 of
April 5, 2022
BB:LR:OD
Oversight notes that the DOR also stated the Department would need minimum of 2 additional
FTEs in order to comply with the proposal. However, Oversight notes the DOR estimates are
potentially overestimated. Therefore, Oversight will reflect 1 FTE (Customer Service
Representatives at $26,328 annually) for the review and processing in the fiscal note beginning
FY 2024 for 6 Mo. and full impact in FY 2025. (Oversight bases the DOR’s FTE need on DHSS
totals)
Officials from the Department of Commerce and Insurance and the Department of Health
and Senior Services both assume the proposal will have no fiscal impact on their organization.
Oversight does not have any information to the contrary. Therefore, Oversight will reflect a zero
impact in the fiscal note for these agencies.
Rule Promulgation
Officials from the Joint Committee on Administrative Rules assume this proposal is not
anticipated to cause a fiscal impact beyond its current appropriation.
Officials from the Office of the Secretary of State (SOS) note many bills considered by the
General Assembly include provisions allowing or requiring agencies to submit rules and
regulations to implement the act. The SOS is provided with core funding to handle a certain
amount of normal activity resulting from each year's legislative session. The fiscal impact for
this fiscal note to the SOS for Administrative Rules is less than $5,000. The SOS recognizes that
this is a small amount and does not expect that additional funding would be required to meet
these costs. However, the SOS also recognizes that many such bills may be passed by the
General Assembly in a given year and that collectively the costs may be in excess of what the
office can sustain with its core budget. Therefore, the SOS reserves the right to request funding
for the cost of supporting administrative rules requirements should the need arise based on a
review of the finally approved bills signed by the governor. L.R. No. 3968H.01I
Bill No. HB 2133
Page 8 of
April 5, 2022
BB:LR:OD
FISCAL IMPACT – State GovernmentFY 2023FY 2024
(6 Mo.)
FY 2025GENERAL REVENUECosts – DOR (p.6) Personnel Service$0($13,164)($26,591) Fringe Benefits$0($11,072)($22,239) Expense & Equipment$0($13,307)($491)Total Costs - $0($37,543)($49,321)FTE Change0 FTE1 FTE1 FTECost – Section 135.1140 – Family
Physician Tax Credits (p.6)
$0
More than or
less than
($7,014,00)
More than or
less than
($7,014,00)
ESTIMATED NET EFFECT ON
GENERAL REVENUE
$0
More than or
Less than
($7,051,543)
More than or
Less than
($7,063,431)
Estimated Net FTE Change on General
Revenue
0 FTE1 FTE1 FTEFISCAL IMPACT – Local GovernmentFY 2023
(10 Mo.)
FY 2024FY 2025$0$0$0
FISCAL IMPACT – Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
FISCAL DESCRIPTION
For all tax years beginning on or after January 1, 2023, a primary care physician, as defined in
the bill, that practices and resides in a county in Missouri with fewer than 35,000 inhabitants will
be allowed to claim a tax credit against the taxpayer's state tax liability in an amount equal to
$15,000.
In no event will the total amount of a tax credit authorized under this bill exceed a taxpayer's
income tax liability for the tax year for which such credit is claimed. No tax credit claimed under
this section shall be carried forward to any subsequent tax year. The tax credit will not be L.R. No. 3968H.01I
Bill No. HB 2133
Page 9 of
April 5, 2022
BB:LR:OD
assigned, transferred, sold, or conveyed. This bill will automatically sunset six years after the
effective date.
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 – Budget & Planning
Department of Commerce and Insurance
Department of Revenue
Office of the Secretary of State
Joint Committee on Administrative Rules
Department of Health and Senior Services
Julie MorffRoss StropeDirectorAssistant DirectorApril 5, 2022April 5, 2022