COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:4303S.03T Bill No.:Truly Agreed To and Finally Passed SS for SCS for SB 724 Subject:Auditor, State; Attorney General; Counties; County Government; County
Officials; Political Subdivisions; Department of Revenue
Type:Original Date:June 2, 2022Bill Summary:This proposal modifies provisions relating to financial statements of political
subdivisions.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2023FY 2024FY 2025
General Revenue*
(Unknown, could
exceed $1,834,605)$0 to (Unknown)$0 to (Unknown)
Total Estimated Net
Effect on General
Revenue*
(Unknown, could
exceed $1,834,605)$0 to (Unknown)$0 to (Unknown)
* The fiscal impact to the state is the potential loss of the Department of Revenue’s 2%
collection fee. Oversight has ranged the impact from $0 (debt is already considered uncollectible
and DOR would not have received the 2% fee even without this proposal) to $1,834,605 (which
represents if DOR would have collected 100% of the $91 million of outstanding debt allowed to
be reduced by this proposal). Oversight assumes the actual loss to the state is on the very low
end of this range
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. 4303S.03T
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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 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 2025
Local Government*
Unknown, less than
$1,934,605
Unknown to
(Unknown)
Unknown to
(Unknown)
* The net fiscal impact to the local political subdivision is the potential loss of the Department of
Revenue’s 2% collection fee. Oversight has ranged the impact from $0 (debt is already
considered uncollectible and DOR would not have received the 2% fee even without this
proposal) to $1,834,605 (which represents if DOR would have collected 100% of the $91 million
of outstanding debt allowed to be reduced by this proposal). Oversight assumes the actual
impact is on the very low end of this range. L.R. No. 4303S.03T
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FISCAL ANALYSIS
ASSUMPTION
§§50.815 & 50.820 – County Financial Statements
Officials from Office of Administration - Budget and Planning (B&P) assume these
provisions modify the requirements associated with the publishing of political subdivision
financial statements. B&P defers to the county governments for the fiscal impact of these
provisions.
In response to similar legislation from 2020, HB 1814, officials at Henry County assumed a
savings of $1,800 annually in publication costs from this proposal.
Oversight inquired with Henry County regarding this proposal. The County currently submits a
14 page document to the newspaper which lists out every dollar by vendor. Since this proposal
requires a summary of data to be published in the newspaper, Henry County’s publishing costs
would be reduced as the number of pages would be reduced that would be submitted to the
newspaper.
In response to similar legislation from 2020, HB 1814, officials at Lincoln County assumed a
savings of $2,000 annually in publication costs from this proposal.
In response to similar legislation from 2020, HB 1814, officials at Livingston County assumed a
savings of $2,500 annually in publication costs from this proposal.
Oversight assumes using the counties above as an example, if the average savings of the three
counties publication costs is $2,100 and 96 counties (2
nd
, 3
rd
and 4
th
class counties) in Missouri
published their financials in the newspaper, the potential savings could be up to $201,600
($2,100 * 96) per year. Therefore, Oversight will reflect a potential savings in publication costs
for counties to post their financials through a newspaper of general circulation in their county
that could exceed $100,000 annually from this proposal.
In response to similar legislation from this year, SB 845, officials from Boone County and
Greene County each assumed the proposal will have no fiscal impact on their respective
organizations. Oversight does not have any information to the contrary. Therefore, Oversight
will reflect a zero impact in the fiscal note for these agencies.
§105.145 – Financial statements of political subdivisions L.R. No. 4303S.03T
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Officials from the Office of Administration - Budget and Planning (B&P) state §105.145 of
the proposal excludes the fine for failure to submit annual financial statements for political
subdivisions with gross revenues of less than $5,000, or for political subdivisions that have not
levied or collected sales or use taxes in the fiscal year. This may result in a revenue loss for both
the state and schools.
It also provides grace from fines if the failure to timely submit the annual financial statement is
the result of fraud or other illegal conduct and allows a refund by the Department of Revenue
(DOR) of any fines already paid under these circumstances. The 90% downward adjustment
DOR is allowed to make on outstanding fine or penalty balances after January 1, 2022 results in
the amount of collections being reduced for both the state and DOR collection fees. A similar
downward adjustment may be made by DOR if the outstanding fines are deemed uncollectable.
These downward adjustments will likewise result in a revenue loss for both the state and schools.
Based on information from DOR, the department started imposing this fine in August 2017. B&P
defers to DOR for more specific estimates of fines and actual collection costs.
Officials from the Department of Revenue (DOR) state §105.145- Annual Financial Statement
(Effective August 28, 2022) provides that currently local political subdivisions are required to
file annual financial statements with the State Auditor’s Office. Failure to file those statements
results in the political subdivision being assessed a fine of $500 per day per statutes, which is
deposited into local school district funds. DOR notes that the Department started imposing this
fine in August 2017. DOR receives notice from the State Auditor’s Office if a political
subdivision does not file their annual financial statement. At that time, the DOR sends a notice to
the political subdivision and thirty days later the fee starts to accumulate.
DOR collects the fine by offsetting any sales or use tax distributions due to the political
subdivisions. In essence, the DOR only gets to collect the fee if the political subdivision has a
sales or use tax. Most of these political subdivisions do not have a sales or use tax for the
Department to collect, so the DOR assumes much of what is owed is uncollectable. This is not
state money but local political subdivision funds.
Currently, a transportation development district that has gross revenues of less than $5,000 in a
fiscal year is not subject to this fine. This proposal adds language that any political subdivision
with less than $5,000 in revenue or has not levied or collected sales or use taxes in the fiscal year
in which the report is due is not subject to the fine. This will change how the DOR determines
the fine.
This proposal also adds a provision that if failure to file the report is a result of fraud or other
illegal conduct by an employee of the political subdivision, they will not be subject to the fine.
The DOR notes that per statute, the Department is allowed to retain 2% of the amount collected
for administration. Since the program began, DOR has collected $66,621 (rounded) which has L.R. No. 4303S.03T
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been deposited into General Revenue. All DOR collection fees are deposited into General
Revenue and are not retained by the Department.
Current records of the Department show total fines assessed of $105,253,522 and that
$3,331,032 (rounded) has been collected. The DOR is showing the assessment of the fines by the
county in which the district that owes the fine is located. L.R. No. 4303S.03T
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County
Total Fine
Imposed
Total Fine
Collected
Adair$751,000.00$1,500.00Andrew$63,500.00$0.00Atchison$855,000.00$0.00Audrain$1,014,500.00$0.00Barry$1,863,500.00$16,202.57Barton $0.00$0.00Bates$944,000.00$30,500.00Benton$236,500.00$0.00Bollinger$1,682,500.00$0.00Boone$259,000.00$24,588.62Buchanan$1,100,000.00$53,342.38Butler$1,624,000.00$35,414.25Caldwell$100,000.00$15,312.17Callaway$493,000.00$2,635.05Camden$1,002,000.00$22,360.55Cape Girardeau$280,000.00$0.00Carroll$3,127,000.00$0.00Carter$1,908,000.00$103,500.00Cass$4,128,500.00$5,184.54Cedar$221,000.00$28,500.00Chariton$659,500.00$39,500.00Christian$2,219,500.00$0.00Clark$652,000.00$37,500.00Clay$1,211,000.00$14,500.00Clinton$982,000.00$16,500.00Cole$633,000.00$5,097.95Cooper$1,220,000.00$17,500.00Crawford$1,335,500.00$15,500.00Dade$211,500.00$0.00Dallas$1,202,500.00$0.00Daviess$623,500.00$0.00DeKalb$643,500.00$0.00Dent$194,500.00$0.00Douglas$0.00$0.00Dunklin$1,790,000.00$14,131.34Franklin$1,357,000.00$1,064.01 L.R. No. 4303S.03T
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Gasconade$65,500.00$5,036.88Gentry$1,372,000.00$26.98Greene$705,500.00$0.00Grundy$847,500.00$0.00Harrison$588,000.00$0.00Henry$786,000.00$77,296.43Hickory$614,500.00$0.00Holt$1,701,000.00$10,500.00Howard$888,000.00$147,500.00Howell$642,500.00$11,000.00Iron$29,500.00$12,000.00Jackson$2,060,500.00$297,846.94Jasper$327,500.00$101,100.62Jefferson$1,203,000.00$19,301.01Johnson$589,500.00$1,500.00Knox$1,168,500.00$0.00Laclede$240,000.00$12,000.00Lafayette$283,500.00$34,028.54Lawrence$2,699,500.00$0.00Lewis$1,583,000.00$0.00Lincoln$1,051,500.00$31,000.00Linn$795,500.00$15,000.00Livingston$1,158,000.00$0.00Macon$236,500.00$0.00Madison$1,777,500.00$79,389.02Maries$118,000.00$0.00Marion$55,500.00$0.00McDonald$161,500.00$0.00Mercer$439,000.00$0.00Miller$801,500.00$4,598.44Mississippi$101,000.00$4,977.98Moniteau$0.00$0.00Monroe$42,000.00$10,000.00Montgomery$311,000.00$3,500.00Morgan $0.00$0.00New Madrid$1,631,500.00$122,693.96Newton$440,500.00$25,500.00 L.R. No. 4303S.03T
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Nodaway$2,637,000.00$19,500.00Oregon $0.00$0.00Osage$610,500.00$12,104.21Ozark$43,000.00$43,000.00Pemiscot$2,513,000.00$6,500.00Perry$1,613,500.00$0.00Pettis$599,000.00$0.00Phelps$333,500.00$50,000.00Pike$19,500.00$0.00Platte$890,000.00$22,500.00Polk$507,500.00$0.00Pulaski$1,327,500.00$17,000.00Putnam$3,000.00$0.00Ralls$177,500.00$38,326.99Randolph$1,177,000.00$10,500.00Ray$2,211,500.00$0.00Reynolds$595,500.00$1,184.60Ripley$342,500.00$0.00Saline$849,500.00$0.00Schuyler$449,000.00$18,500.00Scotland$757,500.00$0.00Scott$1,853,000.00$620.44Shannon$287,000.00$135,998.71Shelby$6,500.00$6,500.00St. Charles$1,361,500.00$67,084.06St. Clair$2,012,500.00$265.88St. Francois$294,000.00$0.00St. Louis$3,260,500.00$895,058.73St. Louis City$5,548,000.00$149,299.59Ste. Genevieve$0.00$0.00Stoddard$1,346,500.00$136,084.38Stone$886,022.00$88,521.99Sullivan$695,500.00$0.00Taney$1,453,500.00$8,500.00Texas$1,096,500.00$42,500.00Vernon$1,227,000.00$12,000.00Warren$10,500.00$10,500.00 L.R. No. 4303S.03T
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Washington$680,500.00$12,000.00Wayne$1,026,000.00$852.29Webster$429,000.00$0.00Worth$19,000.00$0.00Wright $0.00$0.00Grand Total$105,253,522.00$3,331,032.10
This proposal would result in fewer fines being assessed in the future. As stated previously,
many of these current political subdivisions do not have any sales or use tax collected, so they
may be able to avoid future penalties.
This proposal also allows for a one-time reduction of a political subdivisions current outstanding
balance. Should a political subdivision file its reports by January 1, 2022, they will be entitled to
a one-time downward adjustment of their existing fine by 90%.
The current outstanding balance is $101,922,490 ($105,253,522 owed - $3,331,032.10 collected,
rounded). This is money the Department notes is owed, but most likely uncollectable. Should it
be collected, it would be forwarded to the local school district funds. If all the fine money is
eligible for the one-time reduction, this would result in $94,728,170 ($105,253,522 * .90,
rounded) no longer being owed.
Oversight notes if all political subdivisions file their report and receive the reduction, it would
be a loss of $89,895,636 to the local school districts from not receiving the fine money, a loss to
the state of $1,834,605 in collection fees and a gain to the local political subdivisions of
$91,730,241($101,922,490 * 90%).
Reducing the future fines would help save the local political subdivisions money; however, due
to the uncollectability of most of this money, the DOR assumes no additional impact to the state.
Oversight does not have any information to the contrary. Therefore, Oversight will reflect a
potential loss of fine revenue stated by DOR to the General Revenue Fund for this proposal.
Also, Oversight notes that because of the new language for certain local political subdivisions
who have gross revenues of less than $5,000 or who have not levied or collected a sales and use
tax in the fiscal year or if the failure to file a financial statement is the result of fraud or illegal
conduct by an employee or officer of the political subdivision and the political subdivision
complies with filing the financial statement within thirty days of the discovery of the fraud or
illegal conduct, then the fine shall not be assessed and could result in a savings to local political
subdivisions on fine fees. Therefore, Oversight will also reflect a savings to local political
subdivisions of $0 to unknown for this proposal.
Oversight also notes this proposal is allowing a political subdivision that files its financial
statement before January 1, 2022, to receive a one-time 90% reduction of their outstanding
balance of their fines owed. L.R. No. 4303S.03T
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Oversight also notes that the loss in fine revenue collected by DOR would result in a savings to
the local political subdivisions who would no longer need to pay the fine revenue. It would also
result in a loss of revenue to School Districts on these fines no longer being collected.
Therefore, Oversight will reflect a savings to local political subdivisions on the fines no longer
being collected and a loss of 98% of the fine revenue no longer going to the school districts for
this proposal. Oversight notes that the Department of Revenue is allowed to retain two percent of
the fine revenue collected (per §105.145.11). Oversight assumes a large majority of the
$101,922,490 of outstanding fines to be uncollectible. Therefore, Oversight will range the fiscal
impact from this proposal from $0 to DOR’s estimates.
In response to similar legislation from 2021, SB 547, officials from the City of Corder, the City
of HughesvilleCity of O’Fallon each assumed the proposal will have no fiscal impact
on their organizations. Oversight does not have any information to the contrary. Therefore,
Oversight will reflect a zero impact in the fiscal note for these cities.
Oversight only reflects the responses received from state agencies and political subdivisions;
however, other cities and counties were requested to respond to this proposed legislation but did
not. A general listing of political subdivisions included in Oversight’s database is available upon
request.
§164.450 – Bonded Indebtedness of School Districts
Officials from the Office of Administration - Budget and Planning (B&P) assume this
provision seeks to halt construction on any school district project funded through the issuance of
bonds that exceeds its approved budget by more than 10%. The project cannot continue until
voter approval is received for further bonded indebtedness for the project. The provision allows
any taxpayer to seek and requires the court to order injunctive relief against a school district to
enforce the provisions of this section. B&P defers to the school districts within the specified
county for more specific estimates of the fiscal impact.
SEQ CHAPTER \h 1Oversight
within St. Charles County only, and may create a fiscal impact to such districts. Therefore,
Oversight will reflect a $0 or Unknown cost to these school districts.
Bill as a Whole
Officials from the Attorney General’s Office, the Department of Commerce and Insurance,
the Department of Elementary and Secondary EducationOffice of the State Auditor,
St. Louis County, the Joint Committee on Administrative Rules and the Office of the State
Courts Administrator
organizations. Oversight does not have any information to the contrary. Therefore, Oversight
will reflect a zero impact in the fiscal note for these agencies. L.R. No. 4303S.03T
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Except for the impact stated in the above section, DOR assumes the rest of the sections will not
fiscally impact the DOR.
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.
Oversight assumes the SOS could absorb the costs of printing and distributing regulations
related to this proposal. If multiple bills pass which require the printing and distribution of
regulations at substantial costs, the SOS could request funding through the appropriation process.
Oversight only reflects the responses received from state agencies and political subdivisions;
however, other counties, circuit clerks and schools were requested to respond to this proposed
legislation but did not. A listing of political subdivisions included in the Missouri Legislative
Information System database is available upon request. L.R. No. 4303S.03T
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FISCAL IMPACT – State GovernmentFY 2023
(10 Mo.)
FY 2024FY 2025GENERAL REVENUELoss – DOR – 2% of collection fee on
future potential fines no longer assessed
because Local Political Subdivisions no
longer required to file due to changes in
the bill (§105.145) p.8-9
$0 to
(Unknown)
$0 to
(Unknown)
$0 to
(Unknown)
Loss – DOR – 2% collection fee that
may have been collected if not for the
one-time decrease of 90% of the
outstanding balance from the local
political subdivision if they submit a
timely financial statement (§105.145)
p.8-9
$0 or up to
($1,834,605)$0$0
ESTIMATED NET EFFECT ON
GENERAL REVENUE
(Unknown,
could exceed
$1,834,605)
$0 to
(Unknown)
$0 to
(Unknown) L.R. No. 4303S.03T
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FISCAL IMPACT – Local GovernmentFY 2023
(10 Mo.)
FY 2024FY 2025LOCAL POLITICAL
SUBDIVISIONS
Savings – in publication costs on
financials posted in a newspaper of
general circulation (§§50.815 &
50.820) p.3
Could exceed
$100,000
Could exceed
$100,000
Could exceed
$100,000
Savings – on potential fines for certain
LPS (§105.145) p.8-9$0 to Unknown$0 to Unknown$0 to Unknown
Loss – School districts receiving less
fine revenue (from savings above)
(§105.145) p.8-9
$0 to
(Unknown)
$0 to
(Unknown)
$0 to
(Unknown)
Costs – Certain school districts in St.
Charles County (§164.450) p.9
$0 or
(Unknown)
$0 or
(Unknown)
$0 or
(Unknown)
Savings – on fine revenue that is
reduced with a one-time reduction of
90% on the outstanding balance due if
they submit a timely financial statement
(§105.145) p.8-9
$0 or up to
$91,730,241$0$0
Loss – School Districts – reduction in
fine revenue from one-time adjustment
of fine revenue (§105.145) p.8-9
$0 or up to
($89,895,636)$0$0
ESTIMATED NET EFFECT ON
LOCAL POLITICAL
SUBDIVISIONS
Unknown, less
than
$1,934,605
Unknown to
(Unknown)
Unknown to
(Unknown)
FISCAL IMPACT – Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
FISCAL DESCRIPTION
This act modifies provisions relating to financial statements of political subdivisions.
This legislation is not federally mandated, would not duplicate any other program and would not
require additional capital improvements or rental space. L.R. No. 4303S.03T
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SOURCES OF INFORMATION
Office of Administration – Budget and Planning
Department of Commerce and Insurance
Department of Revenue
Attorney General’s Office
Office of the Secretary of State
Department of Elementary and Secondary Education
Office of the State Courts Administrator
St. Louis County
Office of the State Auditor
Joint Committee on Administrative Rules
City of Corder
City of Hughesville
City of O’Fallon
Boone County
Greene County
Henry County
Lincoln County
Livingston County
Julie MorffRoss StropeDirectorAssistant DirectorJune 2, 2022June 2, 2022