COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:3968H.02C Bill No.:HCS for HB 2133 Subject:Tax Credits; Health Care Professionals; Department of Health and Senior
Services; Department of Revenue
Type:Original Date:April 26, 2022Bill Summary:This proposal 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
Up to ($3,037,543)Up to ($3,049,321)Total Estimated Net
Effect on General
Revenue $0
Up to ($3,037,543)Up to ($3,049,321)
*Oversight notes the HCS provides a program cap of $3 million for the Rural Physician Tax
Credit. The above amount also includes 1 FTE for DOR.
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.02C
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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 2025General Revenue01 FTE1 FTETotal Estimated Net
Effect on FTE 01 FTE1 FTE
☒ 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.02C
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FISCAL ANALYSIS
ASSUMPTION
Rural Physician Tax Credit – Section 135.1140
Officials from the Department of Revenue (DOR) assume this proposal, starting January 1,
2023, makes a primary care physician or dentist that practices in a county of less than 25,000
inhabitants eligible to receive a tax credit equal to $15,000. The tax credit has a $3 million
annual cap and should the number claiming the credit exceed the cap, then the cap shall be
apportioned. The tax credit received is not refundable, transferrable or sellable, but can be
carried forward up to 5 years.
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 44 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.02C
Bill No. HCS for HB 2133
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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.02C
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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 essentially 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 version of the proposal added dentists as qualifying for the credit. The Department is
unable to determine how many dentists would also apply for the credit. The HCS version also
places a $3 million annual cap on the credit and requires the Department to apportion the credit.
Therefore, this proposal would be a loss to general revenue of the $3 million annual cap.
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 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 that according to the National Library of Medicine (2019) there were 3,101
licensed Dentists in Missouri with 50 dentist per 100,000 residents’ saturation.
Oversight estimates, from rural population provided by Economic research above, there could
be up to 755 Dentists in rural Missouri (1,509,860/100,000)*50) L.R. No. 3968H.02C
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Oversight notes the Department of Health and Senior Services (DHSS) provided additional
data regarding the rural primary care physician workforce, in previous version of the bill as
follow:
Oversight notes the proposal states the cumulative amount of tax credits allowed to all taxpayers
under this section shall not exceed three million dollars per tax year. Therefore, Oversight will
assume the average tax credit utilized for individual taxpayer (primary physician or dentist
practicing in rural are) under the proposal will be lesser or greater of $1,707 (calculations shown
in the table below).
High
Number of Physicians
1,002 (MO -
DHSS)
Number of Dentists755 (NIH)Average Amt. of Tax
Credit utilized per
candidate $ $1,707
Total Tax Credits awarded $ 3,000,000
Officials from the Office of Administration – Budget & Planning assume the proposal creates
a tax credit for primary care physicians and dentists working in rural areas. This credit is not
refundable, sellable, transferable, but can be carried forward for 5 years. The amount of tax
credits available for this program is $3,000,000 per tax year. If the total amount of credits
claimed exceeds $3 million in a tax year, the credits are to be apportioned among claimants.
Therefore, this proposal could lower general revenues by up to $3,000,000 beginning in FY2024.
This provision could impact TSR and the calculation under Article X, Section 18(e). Due to the
carryforward provision in any given year, the amount redeemed may exceed the estimate shown
after the first full fiscal year.
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)
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.
101499010031002Average 1002 L.R. No. 3968H.02C
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Medical Students Financial Assistance (Loan Program) – Sections 191.500, 191.515,
191.520, 191.525, 335.230, and 335.257
Officials from the Department of Health and Senior Services (DHSS) state this proposal
would not create a fiscal impact.
Oversight, in response to the similar proposal SB 757 – 2022, contacted DHSS officials for
more information regarding their response. DHSS officials stated this proposal adds the
practitioners to the statute who are already defined in the regulation (PRIMO – 19 SCS 10-4.010
and NLS – 19 CSR 10-6.010) and the amounts that students may qualify for are also currently in
the regulation.
DHSS also stated this act also modifies the Nursing Student Loan Program by modifying the
amount of financial assistance available to students from $5,000 each academic year for
professional nursing programs to $10,000 each academic year and from $2,500 each academic
year for practical nursing programs to $5,000 each academic year (increasing the amount given
to each eligible student utilizing the current fund and appropriated amount).
Finally, DHSS also stated this act modifies the Nursing Student Loan Repayment Program by
removing the June and December deadlines for qualified employment verification while
retaining the requirement that such employment be verified twice each year. Simply changing the
regulations from specified months each year to twice a year allows DHSS to remain in
compliance if it is off a month checking for compliance.
According to the submitted budget books, Oversight notes the following budget authority and
expenditures for the PRIMO program over the past three years:
FY 2019 FY 2020 FY 2021
Budget Authority (all funds) $2,915,434 $2,995,292 $3,298,929
Actual Expenditures $2,726,907 $2,961,261 $3,245,230
Unexpended funds $ 188,527 $ 34,031 $ 53,699
Appropriation authority (10.745) for PRIMO for FY 2022 includes:
From General Revenue $378,750
From DHSS federal fund $425,000
From Heath Access Incentive Fund $650,000
From Prof. & Practical Nurse (0565)$650,000
From DHSS donated fund $956,790
TOTAL $3,060,540
Based on responses from the Department of Health and Senior Services, Oversight will assume
the proposal will not create a material fiscal impact to the state. L.R. No. 3968H.02C
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In response to the similar proposal, SB 757 – 2022, officials from the University of Missouri
state the proposed legislation could have a positive impact for the University of Missouri. The
University currently has 1,300 students which would qualify for this program. The impact
amount cannot be determined.
Officials from University of Central Missouri state this bill has an indeterminate fiscal impact
on their organization.
Officials from the Department of Commerce and Insurance, the Department of Health and
Senior Services, the Office of the State Treasurer, and the Department of Higher Education
and Workforce Development each 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.02C
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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
Up to
($3,000,000)
Up to
($3,000,000)
ESTIMATED NET EFFECT ON
GENERAL REVENUE
$0
Up to
($3,037,543)
Up to
($3,049,321)
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
Rural Primary Care Physician Tax Credit (Section 135.1140)
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 25,000 inhabitants will
be allowed to claim a tax credit against the taxpayer's state tax liability. L.R. No. 3968H.02C
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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
assigned, transferred, sold, or conveyed. This bill will automatically sunset six years after the
effective date.
Financial Assistance for Health Professional Students (Sections 191.500, 191.515, 191.520,
191.525, 335.230, and 335.257)
This bill expands the pool of eligible students that may apply to the Department of Health and
Senior Services for a student loan under Chapter 191, RSMo, from students pursuing a degree of
doctor of medicine or doctor of osteopathy to now include students seeking a degree in the area
of psychiatry, a degree of doctor of dental surgery or dental medicine, or a bachelor of science
degree in dental hygiene and provides that all eligible students must be residents of the state. The
cap for a loan to an eligible student shall also be raised from $7,500 to $25,000 for each
academic year.
This bill also raises the amount of financial assistance available to qualified applicants through
the nursing student loan program under Chapter 335 from $5,000 to $10,000 for a student of a
professional nursing program and from $2,500 to $5,000 for a student of a practical nursing
program.
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
Office of the State Treasurer
Department of Higher Education and Workforce Development
Department of Revenue
Office of the Secretary of State
Joint Committee on Administrative Rules
Department of Health and Senior Services
University of Central Missouri L.R. No. 3968H.02C
Bill No. HCS for HB 2133
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Julie MorffRoss StropeDirectorAssistant DirectorApril 26, 2022April 26, 2022