COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:0687H.01I Bill No.:HB 519 Subject:Taxation and Revenue - General; Motor Fuel; Taxation and Revenue - Sales and
Use; Tax Incentives; Transportation; Department of Revenue
Type:Original Date:February 14, 2023Bill Summary:This proposal modifies provisions relating to motor fuel tax exemption.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND
AFFECTED
FY 2024FY 2025FY 2026Fully
Implemented
(FY 2027)
Total Estimated
Net Effect on
General
Revenue $0$0$0$0
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND
AFFECTED
FY 2024FY 2025FY 2026Fully
Implemented
(FY 2027)
State Road
Fund*
($513,112 to
$12,821,146)
($171,037 to
$4,273,715)
($171,037 to
$4,273,715)$0
Total Estimated
Net Effect on
Other State
Funds
($513,112 to
$12,821,146)
($171,037 to
$4,273,715)
($171,037 to
$4,273,715)$0
*Fiscal impact is due to timing of when motor fuel tax refunds are processed. This proposal
changes the motor fuel tax refunds from a fiscal year basis to a calendar year basis, pushing
forward into a different fiscal year some of the refund requests (this coupled with the incremental
increase in the motor fuel tax increases drives the fiscal impact). By FY 2027, Oversight
assumes the net timing differences will end (last gas tax increase starts on July 1, 2025) and there
will be no fiscal impact beyond FY 2026.
Numbers within parentheses: () indicate costs or losses. L.R. No. 0687H.01I
Bill No. HB 519
Page 2 of
February 14, 2023
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND
AFFECTED
FY 2024FY 2025FY 2026Fully
Implemented
(FY 2027)
Total Estimated
Net Effect on
All Federal
Funds $0$0$0$0
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND
AFFECTED
FY 2024FY 2025FY 2026Fully
Implemented
(FY 2027)
Total Estimated
Net Effect on
FTE 000$0
☒ 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
AFFECTED
FY 2024FY 2025FY 2026Fully
Implemented
(FY 2027)
Local
Government
($189,781 to
$4,742,068)
($63,261 to
$1,580,690)
($63,261 to
$1,580,690)$0 L.R. No. 0687H.01I
Bill No. HB 519
Page 3 of
February 14, 2023
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FISCAL ANALYSIS
ASSUMPTION
Officials from the Department of Revenue (DOR) assume the following regarding this
proposal:
Motor Fuel Refund Period Change
SB 262 adopted in 2021, created a provision that would increase the motor fuel tax rate over a
period of five years. At the time, motor fuel (gasoline and diesel) were taxed at $0.17 per gallon.
SB 262 would allow the motor fuel rate to increase each year on July 1st until the highest rate of
$0.295 was reached. At that time, the motor fuel rate would remain $0.295 into the future.
The rate is currently increasing as follows:
FY Tax RateRefund Can Be Claimed
(July to Sept)
Tax IncreaseTotal Motor Fuel
Tax
Fully Implemented
(FY FY 2027)
FY 2022FY 2023$0.025$0.195FY 2023FY 2024$0.05$0.220FY 2024FY 2025$0.075$0.245FY 2025FY 2026$0.1$0.270FY 2026+FY 2027+$0.125$0.295$0
SB 262 also contained a provision that created a refund program for highway users who did not
want to pay the increased motor fuel rate. While they would still be required to pay the tax at the
fuel pump they could request from DOR that the increased amount be refunded to them. The
refund period was established starting July 1- Sept 30th of the following fiscal year. Since the
rate hike is for the full fiscal year (July to June) the refund period also covered that same fiscal
year. In order to receive the refund a taxpayer completes a form with the statutorily required
information and the extra motor fuel tax is refunded.
This proposal changes the refund period. Instead of claiming the credit from July to Sept after
the fiscal year ends, this proposal moves the refund period to January 1st to April 15th of each
year. Filing at this time of year, will result in refund claim forms having 2 separate motor fuel
rates on them. This will start on January 1, 2024. L.R. No. 0687H.01I
Bill No. HB 519
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February 14, 2023
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Timing of Refund ClaimsCurrent Refund TimingProposed Refund Timing
Date of Purchase
Fuel
Tax
Rate
Date
Fiscal
YearDateFiscal Year
10/2021 - 12/2021$0.025 7/2022 - 9/2022FY 20237/2022 - 9/2022FY 20231/2022 - 6/2022$0.025 7/2022 - 9/2022FY 20237/2022 - 9/2022FY 20237/2022 - 12/2022$0.050 7/2023 - 9/2023FY 20241/2023 - 4/2023FY 20241/2023 - 6/2023$0.050 7/2023 - 9/2023FY 20247/2023 - 9/2023FY 20247/2023 - 12/2023$0.075 7/2024 - 9/2024FY 20251/2024 - 4/2024FY 20241/2024 - 6/2024$0.075 7/2024 - 9/2024FY 20251/2025 4/2025FY 20257/2024 - 12/2024$0.100 7/2025 - 9/2025FY 20261/2025 - 4/2025FY 20251/2025 - 6/2025$0.100 7/2025 - 9/2025FY 20261/2026 - 4/2026FY 20267/2025 - 12/2025$0.125 7/2026 - 9/2026FY 20271/2026 - 4/2026FY 20261/2026 - 6/2026$0.125 7/2026 - 9/2026FY 20271/2027 - 4/2027FY 20277/2026 - 12/2026$0.125 7/2027 - 9/2027FY 20281/2027 - 4/2027FY 2027
This proposal will not result in any additional gains or losses to the motor fuel funds than what
was projected in SB 262. It changes the timing of the refunds and not who or how many
taxpayers may qualify for the refund. So the impact below shows how much of the refunds will
now shift to another fiscal year (refund period).
DOR notes that the first refund period was completed from July 2022 to September 2022 for the
increase that occurred from October 1, 2021 to June 30, 2022. That increase was $0.025. So it
will not be impacted. DOR records indicate $423,947 in refunds were claimed, while receiving
an additional $70,621,241 from the increased motor fuel rate. Therefore, DOR refunded
approximately 0.6% ($423,947/$70,621,251) of the additional revenue.
DOR has done revenue estimates for SB 262, that were updated using the FY 2022 motor fuel
gallons sold data for this fiscal note. Additionally, for SB 262, DOR had assumed a low range of
refunds at 15% (based on another state with a similar program). DOR assumes that given the
increasing price of the fuel tax and current economic conditions, more than the 0.6% refunds
currently requested could be received in the upcoming fiscal years. For this fiscal note, DOR is
showing the refund claims ranging from the current 0.6% to the 15% under SB 262 for the shift
in the refund period. L.R. No. 0687H.01I
Bill No. HB 519
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February 14, 2023
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Estimated Cash Flow Impact from Refund Claim Due to Date Timing FY 2024FY 2025FY 2026State FundLowHighLowHighLowHighState Road Fund($513,112)($12,821,146)($171,037)($4,273,715)($171,037)($4,273,715) Local Funds CART($84,347)($2,107,586)($28,116)($702,529)($28,116)($702,529)Other($105,434)($2,634,482)($35,145)($878,161)($35,145)($878,161)Total Local($189,781)($4,742,068)($63,260)($1,580,689)($63,260)($1,580,689)
This proposal will result in the Department needing to change the forms and the computer
program to accept more than one tax rate at a time. This is estimated to cost $10,000. Having
more than one motor fuel tax rate on the refund claim form may slow down the processing of the
forms. DOR needs one Associate Customer Service Representative ($32,100) for every 6,000
claims processed at a single rate per year. Additionally, records indicate the average time to
process a refund request was 19 days. If it is determined that additional FTE are needed to help
process the refunds, DOR will seek those through the appropriation process.
Currently, taxpayers are allowed to submit these forms electronically or a hard copy mailed.
Should the forms be mailed to DOR separate than their tax return, DOR assumes no additional
impact. However, if a taxpayer mails their claim form with their individual income tax return,
this could slow down the processing of the returns and require additional temporary staff
($12,750) to help sort out those claim forms.
SB 262 requires all refund requests to be processed within 45 days or DOR must pay interest on
the claim. If moving the deadline results in slower processing times, this could result in an
unknown amount of interest being paid.
Oversight assumes DOR is provided with core funding to handle a certain amount of activity
each year. Oversight assumes DOR could absorb the programming costs related to this proposal.
If multiple bills pass which require additional staffing and duties at substantial costs, DOR could
request funding through the appropriation process. L.R. No. 0687H.01I
Bill No. HB 519
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February 14, 2023
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Officials from the Office of Administration - Budget and Planning (B&P) assume the
following regarding this proposal:
This proposal would change the timing for motor fuel tax refund claims for the additional fuel
tax passed in SB 262 (2021). Currently, motor fuel tax refund claims must be made on a fiscal
year basis (July through June motor fuel tax purchases) and refund claims must be made between
July 1 and September 30 of the following fiscal year.
This proposal would change the refund claims to tax year (January through December) with
claims to be made from January 15 through April 15 of the tax year following the year in which
the motor fuel purchases were made. Table 1 shows the change in the refund due date depending
on when the motor fuel is purchased.
Table 1: Timing of Refund Claims
Current Refund Timing
Proposed Refund
Timing
Date of Purchase
Fuel
Tax
Rate
Date
Fiscal
YearDate
Fiscal
Year10/2021 - 12/2021$0.025 7/2022 - 9/2022FY 2024
7/2022 -
9/2022FY 20241/2022 - 6/2022$0.025 7/2022 - 9/2022FY 2024
7/2022 -
9/2022FY 20247/2022 - 12/2022$0.050 7/2023 - 9/2023FY 2025
1/2023 -
4/2023FY 20241/2023 - 6/2023$0.050 7/2023 - 9/2023FY 2025
1/2024 -
4/2024FY 20257/2023 - 12/2023$0.075 7/2024 - 9/2024FY 2026
1/2024 -
4/2024FY 20251/2024 - 6/2024$0.075 7/2024 - 9/2024FY 2026
1/2025 -
4/2025FY 20267/2024 - 12/2024$0.100 7/2025 - 9/2025FY 2026
1/2025 -
4/2025FY 20261/2025 - 6/2025$0.100 7/2025 - 9/2025FY 2026
1/2026 -
4/2026FY 2026 L.R. No. 0687H.01I
Bill No. HB 519
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7/2025 - 12/2025$0.125 7/2026 - 9/2026FY 2027
1/2026 -
4/2026FY 20261/2026 - 6/2026$0.125 7/2026 - 9/2026FY 2027
1/2027 -
4/2027FY 20277/2026 - 12/2026$0.125 7/2027 - 9/2027FY 2028
1/2027 -
4/2027FY 2027
B&P notes that this proposal would not change the number of taxpayers that qualify for the
motor fuel tax refund, only the timing of the refund claims. Therefore, this proposal will not
result in additional gains or losses beyond those already estimated in the TAFP fiscal note for SB
262 (2021).
The first round of refund claims were received between July 2022 and September 2022. B&P
notes that the $0.025 increase in the fuel tax during FY 2022 generated refund claims of
$423,947. Using the number of gallons sold, B&P estimates that the additional tax generated
$70,621,251 in additional motor fuel revenue. Therefore, B&P estimates that highway use
refund claims were approximately 0.6% ($423,947 / $70,621,251) of the additional fuel tax
revenue.
However, as the fuel tax increases over the remaining years, it is likely that fuel tax refunds will
also increase. Therefore, based on this new information, B&P has updated the refund estimates
for SB 262 (2021). B&P will show refund claims ranging between 0.6% and 15% of the
additional revenue generated.
While this proposal will not increase the overall number of refunds, this proposal will have a
cash flow impact in FY 2024 through FY 2026 for all state and local fuel tax funds by moving
some motor fuel refund claims into an earlier fiscal year. Using updated refund estimates for SB
262 (2021), B&P estimates that this proposal could increase refunds by $702,893 to $17,563,213
in FY 2024, depending on the number of qualifying taxpayers that make refund claims. In FY
2025 and FY 2026, refund claims may increase by $234,298 to $5,854,404 each year. There will
no longer be a cash flow impact by FY 2027. Table 2 shows the estimated impacts by fund.
Table 2: Estimated Cash Flow Impact from Refund Claim Due Date Timing FY 2024FY 2025FY 2026State FundLowHighLowHighLowHighState Road Fund($513,112)($12,821,146)($171,037)($4,273,715)($171,037)($4,273,715) Local Funds L.R. No. 0687H.01I
Bill No. HB 519
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CART($84,347)($2,107,586)($28,116)($702,529)($28,116)($702,529)Other($105,434)($2,634,482)($35,145)($878,161)($35,145)($878,161)Total Local($189,781)($4,742,068)($63,261)($1,580,690)($63,261)($1,580,690)
Officials from the Missouri Department of Transportation defer to the DOR for the potential
fiscal impact of this proposal.
Officials from the Missouri Highway PatrolMissouri Department of Conservation and
Office of Administration
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.
Oversight assumes this proposal will not increase or decrease revenue; rather, only the timing of
the motor fuel tax refunds will change. Oversight will reflect the cash flow estimates as
provided by DOR and B&P as the estimates have been updated to reflect the actual amount that
was refunded (0.6%) in FY 2022. Oversight will range the cash flow impact as DOR and B&P
have indicated (from a low of 0.6% (actual) to an estimated 15%). Oversight notes, once all of
the tax increases have gone into effect, there will be no further fiscal impact due to cash flow
changes.
FISCAL IMPACT – State
Government
FY 2024
(10 Mo.)
FY 2025FY 2026FY 2027STATE ROAD FUNDCash Flow – timing of the motor
fuel tax refunds – moved up to
CY instead of FY
($513,112 to
$12,821,146)
($171,037 to
$4,273,715)
($171,037 to
$4,273,715)
$0ESTIMATED NET EFFECT
ON THE STATE ROAD
FUND
($513,112 to
$12,821,146)
($171,037 to
$4,273,715)
($171,037 to
$4,273,715)$0
FISCAL IMPACT – Local
Government
FY 2024
(10 Mo.)
FY 2025FY 2026FY 2027LOCAL POLITICAL
SUBDIVISIONS L.R. No. 0687H.01I
Bill No. HB 519
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Cash Flow –timing of the motor
fuel tax refunds
($189,781 to
$4,742,068)
($63,261 to
$1,580,690)
($63,261 to
$1,580,690)
$0ESTIMATED NET EFFECT
ON LOCAL POLITICAL
SUBDIVISIONS
($189,781 to
$4,742,068)
($63,261 to
$1,580,690)
($63,261 to
$1,580,690)$0
FISCAL IMPACT – Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
FISCAL DESCRIPTION
Currently, exemptions and refunds issued for any additional tax on motor fuel are based on a
fiscal years. Beginning in fiscal year 2024, they will be based on the tax year.
This bill specifies that claims will be filed on or after January 15th but not later than April 15th
after the close of the tax year for which the exemption and refund is claimed.
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
Department of Revenue
Office of Administration - Budget and Planning
Missouri Department of Transportation
Office of Administration
Missouri Department of Conservation
Missouri Highway Patrol
Julie MorffRoss StropeDirectorAssistant DirectorFebruary 14, 2023February 14, 2023