COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:0831H.05C Bill No.:HCS for HJR Nos. 33 & 45 Subject:Taxation and Revenue - Property; Property, Real and Personal; Constitutional
Amendments; Department of Revenue
Type:Original Date:March 7, 2023Bill Summary:This amendment proposes a constitutional amendment relating to real
property tax assessments.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2024FY 2025FY 2026
General Revenue*
$0 or (More than
$10,000,000)$0 $0 or Unknown
Total Estimated Net
Effect on General
Revenue
$0 or (More than
$10,000,000)$0$0 or Unknown
*The potential fiscal impact of “(More than $10,000,000)” in FY 2024 would be realized only if
a special election were called by the Governor to submit this joint resolution to voters. Also, if
voters approve the joint resolution, the savings to the state from a reduction of Senior Citizen
Property Tax Credits could possibly reach the $250,000 threshold.
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND AFFECTEDFY 2024FY 2025FY 2026Blind Pension Fund*$0$0$0 or (Unknown)Total Estimated Net
Effect on Other State
Funds $0$0$0 or (Unknown)
* Oversight assumes the unknown fiscal impact to the Blind Pension Fund could reach
($250,000) relative to what it would have received under current law
Numbers within parentheses: () indicate costs or losses. L.R. No. 0831H.05C
Bill No. HCS for HJR Nos. 33 & 45
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March 7, 2023
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND AFFECTEDFY 2024FY 2025FY 2026Total Estimated Net
Effect on All Federal
Funds $0$0$0
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND AFFECTEDFY 2024FY 2025FY 2026Total 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 2024FY 2025FY 2026Local Government$0*$0$0 or (Unknown)
*Transfers and costs net to zero if the Governor calls a special election. L.R. No. 0831H.05C
Bill No. HCS for HJR Nos. 33 & 45
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March 7, 2023
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FISCAL ANALYSIS
ASSUMPTION
Officials from Office of the Secretary of State assume, each year, a number of joint resolutions
that would refer to a vote of the people a constitutional amendment and bills that would refer to a
vote of the people the statutory issue in the legislation may be considered by the General
Assembly.
Unless a special election is called for the purpose, Joint Resolutions proposing a constitutional
amendment are submitted to a vote of the people at the next general election. Article XII section
2(b) of the Missouri Constitution authorizes the governor to order a special election for
constitutional amendments referred to the people. If a special election is called to submit a Joint
Resolution to a vote of the people, section 115.063.2 RSMo requires the state to pay the costs.
The cost of the special election has been estimated to be $10 million based on the cost of the
2022 primary and general election reimbursements.
The Secretary of State’s office is required to pay for publishing in local newspapers the full text
of each statewide ballot measure as directed by Article XII, Section 2(b) of the Missouri
Constitution and Section 116.230-116.290, RSMo. Funding for this item is adjusted each year
depending upon the election cycle. A new decision item is requested in odd numbered fiscal
years and the amount requested is dependent upon the estimated number of ballot measures that
will be approved by the General Assembly and the initiative petitions certified for the ballot. In
FY 2014, the General Assembly changed the appropriation so that it was no longer an estimated
appropriation.
For the FY24 petitions cycle, the SOS estimates publication costs at $70,000 per page. This
amount is subject to change based on number of petitions received, length of those petitions and
rates charged by newspaper publishers.
The Secretary of State’s office will continue to assume, for the purposes of this fiscal note, that it
should have the full appropriation authority it needs to meet the publishing requirements.
Because these requirements are mandatory, the SOS reserves the right to request funding to meet
the cost of the publishing requirements if the Governor and the General Assembly again change
the amount or continue to not designate it as an estimated appropriation.
Oversight has reflected, in this fiscal note, the state potentially reimbursing local political
subdivisions the cost of having this joint resolution voted on during a special election in fiscal
year 2024. This reflects the decision made by the Joint Committee on Legislative Research that
the cost of the elections should be shown in the fiscal note. The next scheduled statewide
primary election is in August 2024 and the next scheduled general election is in November 2024
(both in FY 2025). It is assumed the subject within this proposal could be on one of these ballots;
however, it could also be on a special election called for by the Governor (a different date).
Therefore, Oversight will reflect a potential election cost reimbursement to local political
subdivisions in FY 2024. L.R. No. 0831H.05C
Bill No. HCS for HJR Nos. 33 & 45
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March 7, 2023
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Officials from the State Tax Commission (STC) have determined that this bill proposes
residential real property be valued at the most recent assessed value, or the fair market value for
said property be determined at the most recent sale. This bill also proposes that the increase of
real residential property is the Consumer Price Index percentage rate of increase or 2%
whichever is less. Additionally, the bill would freeze the assessment for property owners that are
65 years of age or older.
If an individual 65 or over purchases a new home, the assessment would be frozen at the
previous sale price or assessment. This proposal has an unknown fiscal impact on the State Tax
Commission, however the limitation on assessment growth may negatively impact revenues for
school districts, counties, cities, fire districts and other local taxing jurisdictions supported by
property tax revenues.
Additionally, restrictions on assessment growth may create disparities and inequities over time
among residential properties and categories of homeowners, potentially shifting a greater share
of the tax burden from one class of homeowner to another. A newer home's true market value
used for assessment may increase far more than an older home or vice versa depending on
market conditions. An assessment limit may impact assessment growth and over time potentially
create a large disparity.
Officials from the Office of Administration - Budget and Planning note this proposal would
go to a public vote in November 2024. If voter approved, B&P assumes that this provision would
become effective for tax year 2025. This proposal would freeze the assessment value of real
property used as a primary residence for individuals 65 years and older who own their home.
B&P notes that the Blind Pension Trust Fund levies a property tax rate of $0.03 per $100 of
assessed value. Since this proposal requires subsequent jurisdiction approval, this proposal will
not have a direct impact on revenues to the Blind Pension Trust Fund. However, this proposal
may result in an indirect loss to Blind Pension Trust Fund Revenues.
Officials from the Department of Social Services and the Office of the State Auditor each
assume 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.
Officials from the City of Kansas City assume this legislation is projected to have a negative
fiscal impact of an indeterminable amount. Residential real property assessed valuation growth
would be limited to the change in the consumer price index (CPI) of most recent previous
assessment or 2% annual increase in assessed valuation whichever is less. Currently the
permitted reassessment revenue growth is based on the lower of actual growth, the change in CPI
or 5% L.R. No. 0831H.05C
Bill No. HCS for HJR Nos. 33 & 45
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March 7, 2023
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The City of Springfield anticipates there could be a fiscal impact from this bill but does not
have sufficient data to determine whether an impact would be positive or negative.
Officials from the Newton County Health Department assume this will, over time, create a
negative fiscal impact on the department as collected tax revenue will decrease as citizens
become age eligible.
Officials from the Fruitland Area Fire Protection District (FRUI) - Cape Girardeau assume
this would have fiscal impact; it is currently unknown how much. Since they are funded by
taxes, this could have a very negative effect in terms of being able to upgrade equipment to meet
the needs of the district. Equipment and supplies keep increasing in cost, while good for the
taxpayer in capping taxes; it would force the district to find alternative ways to fund their
operations.
The County Employees’ Retirement Fund (CERF) indicates that this proposal would likely
result in reductions in contribution revenue to CERF of an unknown amount annually. A certain
portion of the moneys that are used to fund the County Employees’ Retirement Fund are tied to
the collection of real property taxes. Data is not available to quantify how changes to real
property assessments under HCS/HJR 33 would impact contribution revenue but CERF assumes
the impact would be negative.
Oversight notes this proposal would set the true value of a property (that has been sold since its
most recent assessment) at the total fair market value of the compensation received by the seller.
Oversight assumes if the compensation received by the seller is substantially different from the
value as determined by the county assessor, this proposal could impact property tax revenues for
the Blind Pension Fund and local political subdivisions. Oversight notes the STC conducts a
biennial ratio study
recent sale price or value estimated by an independent appraisal. Most county ratios studies
indicate the assessed values are below (in some cases substantially below) the market value
proxy.
For purposes of this fiscal note, Oversight assumes this provision could cause an increase in
assessed values. Oversight will show a range of impact for this provision from $0 (the joint
resolution is not passed or tax levies are able to be adjusted) to an unknown gain in revenue.
Additionally, for properties that have not sold since their most recent assessment, Oversight
assumes this proposal would limit increases in the assessed values of individual residential
property to the change in CPI per year (estimated at 6.5% for 2022) or 2% whichever is lower.
Oversight used a two property example to demonstrate the potential changes to the assessed
values as a result of this proposal. L.R. No. 0831H.05C
Bill No. HCS for HJR Nos. 33 & 45
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Table I: Assessed Values Prior Year
Market
Value
Prior Year
Assessed Value
(19%)
Current Year
Market Value
(Assumed)
Assessed
Value Current
(19%)
Assessed
Value
Proposed*
Property
1
$100,000 $19,000 $105,000 $19,950 $19,380 Property
2
$100,000 $19,000 $100,000 $19,000 $19,000 Total$200,000 $38,000 $205,000 $38,950 $38,380
*For purposes of this example, Oversight assumed a 5% increase in the market value of property
1 and no change in the market value of property 2.
**Oversight assumed the assessed value would be either the market value times 19% or the prior
year assessed value plus a 2% increase whichever is lower.
Table II: Tax Rates
Assessed
Values
Growth
Factor*
Maximum
Allowed Revenue
(Prior Year
Revenue plus
Growth Factor)
Tax Rate
Ceiling
(Maximum
Revenue/
Assessed
Value)*100
Prior Year (Assumed)$38,000 N/A$1,900 5.00Current Year Current Law $38,950 2.50%$1,948 5.00Current Year Proposed Law $38,380 1.00%$1,919 5.00
*The growth factor used in the tax levy calculation is either actual growth in assessed valuation,
inflation based on CPI (6.5%) or 5% whichever is lower. In this example under the proposed
law, actual growth is below inflation, therefore the growth factor used in the tax levy calculation
is the actual growth rate of assessed values or 1% ((($38,380-$38,000)/$38,000)*100).
Currently, growth in assessed values allows the tax rate to fall over time. In this example under
the proposed legislation, the tax rate would fall at a slower rate than under the current law.
Oversight notes some taxing entities have tax rate ceilings that are at their statutory or voter
approved maximum. For these taxing entities, any decrease in the assessed values would not be
offset by a higher tax rate (relative to current law) rather it would result in a loss of revenue.
In the example above, the growth in total assessed value as capped by this proposal was less than
inflation (the most recent certification provided by STC). Oversight notes if the growth in total
assessed values is less than inflation this proposal would result in a reduction of the maximum L.R. No. 0831H.05C
Bill No. HCS for HJR Nos. 33 & 45
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March 7, 2023
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allowed revenue which would impact all taxing entities. Inflation as of December of 2022 was
6.5% (all items per BLS).
Based on information provided by the Office of the State Auditor, Oversight notes, in 2020,
there were over 2,500 tax entities with 4,000 different tax rates. Of those entities, 2,980 tax rate
ceilings were below the entities’ statutory or voter approved maximum tax rate and 1,098 tax rate
ceilings were at the entities’ statutory or voter approved maximum rate. (These numbers do not
include entities which use a multi-rate method and calculate a separate tax rate for each subclass
of property.) The distribution of tax on individual property owners would change as noted below
in Table III.
Table III: Distribution of Individual Property Tax
Prior Year
Tax
Burden
Assessed Value
Current (Table I)
Tax Burden
Current
Assessed Value
Proposed (Table I)
Tax Burden
Proposed
Property 1$950.00 $19,950 $998 $19,380 $969 Property 2 $950.00 $19,000 $950 $19,000 $950 Total$1,900.00 $38,950 $1,948 $38,380 $1,919
Oversight notes the Blind Pension Fund (0621) is calculated as an annual tax of three cents on
each one hundred dollars valuation of taxable property ((Total Assessed Value/100)*.03).
Because this proposal reduces the assessed value portion of this equation, the Blind Pension
Fund will experience a decrease in revenue relative to what it would have received under current
law. Below is an example of how this proposal would impact the Blind Pension Fund using the
two property example.
Table IV: Blind Pension Trust Fund
Assessed ValueBlind Pension Trust Fund
(Assessed Value/100)*0.03
Prior Year$38,000$11.40Current Year Current Law $38,950$11.69Current Year Proposed Law$38,380 $11.51
Oversight assumes the magnitude of the impact to the Blind Pension Fund would depend on
prevailing market conditions.
Oversight assumes the impact from setting the assessed value at the compensation the seller
would receive would be smaller than the impact from the cap on assessed values given that it
would affect a smaller subset of properties. However, if this assumption is incorrect, this could
alter the fiscal impact as presented in this fiscal note. L.R. No. 0831H.05C
Bill No. HCS for HJR Nos. 33 & 45
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Based on Demographic Characteristics for Occupied Housing Units from the United States
Census Bureau, Oversight notes there are 517,775 owner-occupied housing units where the age
of the householder is 65 years of age or older. Oversight is uncertain how many would be
exempt from increases in assessed value.
In addition, Oversight assumes there could be a saving to General Revenue from a reduction the
amount of Senior Citizen Property Tax Credits claimed. Oversight will show a range of impact
of $0 (no reduction) to an unknown savings.
Oversight will show a range of impact of $0 (not voter approved or the tax burden is shifted to
real property owner) to an unknown loss in property tax revenue from property tax exemptions
for age qualified taxpayers to local political subdivisions.
In addition, Oversight assumes there could be costs to local taxing entities to implement and
monitor aged qualified individual’s property assessed value freezes. Oversight will show an
unknown cost to local political subdivisions for implementation.
Oversight notes this proposal is contingent on a voter approved amendment to the Constitution.
Oversight will show the impact as either $0 (Constitutional amendment is not approved by
voters) to an unknown loss in revenue to the Blind Pension Fund and local political subdivisions
beginning in FY 2026.
Oversight assumes there could be costs for implementation and computer programming.
Oversight will show an unknown cost to county assessors to implement this proposal beginning
in FY 2026.
Oversight received a limited number of responses from local political subdivisions related to the
fiscal impact of this proposal. Oversight has presented this fiscal note on the best current
information available. Upon the receipt of additional responses, Oversight will review to
determine if an updated fiscal note should be prepared and seek the necessary approval to
publish a new fiscal note.
Oversight only reflects the responses received from state agencies and political subdivisions;
however, other local political subdivisions were requested to respond to this proposed legislation
but did not. A general listing of political subdivisions included in the Missouri Legislative
Information System (MOLIS) database is available upon request. L.R. No. 0831H.05C
Bill No. HCS for HJR Nos. 33 & 45
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FISCAL IMPACT – State GovernmentFY 2024
(10 Mo.)
FY 2025FY 2026GENERAL REVENUETransfer Out - SOS - reimbursement of
local election authority election costs if
a special election is called by the
Governor
$0 or (More
than
$10,000,000)$0$0
Cost Avoidance – possible reduction in
the amount of Senior Property Tax
Credit claims $0$0
$0 or
Unknown
ESTIMATED NET EFFECT ON
GENERAL REVENUE
$0 or (More
than
$10,000,000)$0
$0 or
Unknown
BLIND PENSION FUND Revenue Gain - from an unknown
impact on assessed values if
assessments are based on compensation
received$0$0
$0 or
Unknown
Revenue Loss - loss of property tax on
property that appreciates more than the
change in CPI or 2%$0$0
$0 or
(Unknown)
Revenue Loss - from a possible
difference in assessed value of property
from age-qualified taxpayers relative to
current law$0$0
$0 or
(Unknown)
ESTIMATED NET EFFECT ON
THE BLIND PENSION FUND$0$0
$0 or
(Unknown) L.R. No. 0831H.05C
Bill No. HCS for HJR Nos. 33 & 45
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March 7, 2023
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FISCAL IMPACT – Local GovernmentFY 2024
(10 Mo.)
FY 2025FY 2026LOCAL POLITICAL
SUBDIVISIONS
Transfer In - Local Election
Authorities - reimbursement of election
costs by the State for a special election
$0 or More
than
$10,000,000
$0$0
Costs - Local Election Authorities -
cost of a special election if called for by
the Governor
$0 or (More
than
$10,000,000)$0$0
Costs - County Assessors - computer
programing, administrative costs, and
implementation and monitoring of
assessed value increase exemptions on
certain properties$0$0
$0 or
(Unknown)
Revenue Gain - from an unknown
impact on assessed values if
assessments are based on compensation
received
$0$0$0 or
Unknown
Revenue Loss - loss of property tax on
property that appreciates more than the
change in CPI or 2%$0$0
$0 or
(Unknown)
Revenue Loss – from assessed value
increase exemptions for age-qualified
taxpayers
$0$0
$0 or
(Unknown)
ESTIMATED NET EFFECT ON
LOCAL POLITICAL
SUBDIVISIONS$0$0
$0 or
(Unknown)
FISCAL IMPACT – Small Business
Oversight assumes there could be a fiscal impact to small businesses if tax rates are adjusted
relative to changes in assessed value. L.R. No. 0831H.05C
Bill No. HCS for HJR Nos. 33 & 45
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March 7, 2023
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FISCAL DESCRIPTION
This legislation proposes a constitutional amendment relating to real property tax assessments.
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
State Tax Commission
Office of Administration - Budget and Planning
Department of Social Services
Office of the Secretary of State
Office of the State Auditor
City of Kansas City
City of Springfield
Newton County Health Department
Fruitland Area Fire Protection District (FRUI) - Cape Girardeau
County Employees Retirement Fund (CERF)
Julie MorffRoss StropeDirectorAssistant DirectorMarch 7, 2023March 7, 2023