COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:0685S.01I Bill No.:SB 104 Subject:Taxation and Revenue - Property Type:Original Date:February 14, 2023Bill Summary:This proposal reduces the assessment percentage of personal property.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND
AFFECTED
FY 2024FY 2025FY 2026Fully
Implemented
(FY 2037)
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 2037)
Blind Pension
Fund $0($180,462)($360,924)($2,406,158)
Total Estimated
Net Effect on
Other State
Funds $0($180,462)($360,924)($2,406,158)
Numbers within parentheses: () indicate costs or losses. L.R. No. 0685S.01I
Bill No. SB 104
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February 14, 2023
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND
AFFECTED
FY 2024FY 2025FY 2026Fully
Implemented
(FY 2037)
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 2037)
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 2037)
Local
Government*$0
Up to
($48,171,590)
Up to
($96,343,180)
Up to
($642,287,864)
*Oversight notes local property tax revenues are designed to be revenue neutral from year to
year. The tax levy is adjusted relative to the assessed value to produce roughly the same revenue
from the prior year with an allowance for growth. Some taxing entities will be able to increase
the tax rate levied on other property to make-up for the lost revenue from reduced assessments
for personal property. L.R. No. 0685S.01I
Bill No. SB 104
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February 14, 2023
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FISCAL ANALYSIS
ASSUMPTION
Section 137.115 Personal Property Tax
Officials from the State Tax Commission (STC) note this provision has a possible negative
fiscal impact on local taxing jurisdictions such as school districts, counties, cities who rely on
property tax assessments as a source of revenue. Under the criteria of SB 104, the percentage of
true market value for personal property is reduced by 1% per year until the assessed value is 20
1/3% of the true market value. Using values for 2021 published on the State Tax Commission
website, the personal property assessed values accounts for 18.38% of the total assessment which
would equal $23,575,808,975.94. If the assessment percentage is reduced by 1%, the new
assessed value for personal property would be $22,868,463,972.16. The loss in assessed value
would correlate to a loss in taxes collected of $49,395,981.11. It is not possible to calculate
values for the following 12 years of reductions due to changes in assessment of personal property
and tax levy increases or rollbacks.
Officials from the Department of Revenue (DOR) note currently personal property is assessed
at a rate of 33 1/3% of appraised value, to determine its assessed value. This proposal starting
January 1, 2024 through December 31, 2035 would lower that rate by 1% per year, reducing the
assessed value of the property. This would reduce the rate to 21 1/3% by December 31, 2035.
Then on January 1, 2036, it would set the new permanent personal property assessment rate at
20%. The County Assessors and the State Tax Commission handle the assessment of personal
property. DOR will defer to them for the fiscal impact of this provision.
The Department notes that the constitutionally created Blind Pension Fund (Article III, Section
38(b)) receives $.03 for each $100 valuation of taxable property in the state of Missouri.
Reducing the assessed rate will decrease the amount they receive. DOR defers to the
Department of Social Services for the estimated loss of funding.
Officials from the Office of Administration - Budget and Planning (B&P) note this proposal
reduces the personal property assessment value percentage from 33.33% to 20% beginning with
tax year 2024. For calendar years 2024 through 2035, the assessment percentage is reduced by
1% from the previous year’s percentage. Beginning with calendar year 2036, personal property
is to be assessed at 20% of its true value.
Based on data published by STC, B&P determined that approximately 19.2% of all property is
personal property and the total personal property assessed value for 2021 was $24,686,570,012.
B&P then used the 2021 property tax levy audit report to estimate a population weighted
statewide local property tax levy. In addition, B&P notes that the Blind Pension Trust Fund has
a property tax levy of $0.03 per $100 valuation. L.R. No. 0685S.01I
Bill No. SB 104
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February 14, 2023
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B&P further notes that property taxes are levied for a calendar year, with the taxes owed by
December 31
st
of that year. Therefore, a reduction to a tax year’s assessed value will impact
collections for the following fiscal year. For example: tax year 2024 reduction will impact FY25
collections.
B&P estimates that this proposal could reduce revenues to the Blind Pension Trust Fund by
$180,462 and local property tax collections by $48,171,590 in FY25. Once fully implemented in
FY37, this proposal could reduce revenues to the Blind Pension Trust Fund by $2,406,158 and
local property tax collections by $642,287,864. Table 1 shows the estimated impact per year.
Table 1: Estimated Impact per Year
Tax Year /
Fiscal Year
Estimated
Local Loss
Estimated Loss to
Blind Pension
Fund
TY24 /
FY25($48,171,590)($180,462)
TY25 /
FY26($96,343,180)($360,924)
TY26 /
FY27($144,514,769)($541,386)
TY27/
FY28($192,686,359)($721,847)
TY28 /
FY29($240,857,949)($902,309)
TY29/
FY30($289,029,539)($1,082,771)
TY30 /
FY31($337,201,129)($1,263,233)
TY31 /
FY32($385,372,718)($1,443,695)
TY32 /
FY33($433,544,308)($1,624,157)
TY33 /
FY34($481,715,898)($1,804,618)
TY34 /
FY35($529,887,488)($1,985,080)
TY35 /
FY36($578,059,078)($2,165,542)
TY36 /
FY37($642,287,864)($2,406,158)
Officials from the Department of Social Services (DSS) Family Support Division (FSD) note
Section 137.115 RSMo is amended to state that beginning January 1, 2024 and continuing until
2035, the percent of true value at which the assessor will annually assess personal property will L.R. No. 0685S.01I
Bill No. SB 104
Page 5 of
February 14, 2023
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be reduced by 1 percent per year. Beginning January 1, 2036, the assessor will annually assess
all personal property at 20 percent of its true value in money.
Blind Pension (BP) is funded from 0.03% of each $100 assessed valuation of taxable property.
Reducing the personal property tax rate could impact the amount received for the Blind Pension
fund.
According to the State Tax Commission Annual Report
$128,268,819,238 total assessed valuation for the State of Missouri comes from personal
property. FSD made the assumption that this statute does not govern the assessment percentages
of real property assessed by the tax commission (Centrally Assessed Companies). Therefore,
any funds received for the BP fund from that source were not considered in the calculation of the
fiscal impact of this legislation.
Personal property is currently assessed at 33 1/3 percent of true value in money. Therefore, the
$23,573,005,309 in property tax assessments reported in 2021 is 33 1/3% of the true value of
personal property, which means the true value of the personal property assessed was
$70,726,088,536 ($23,573,005,309/0.3333.)
This proposed legislation will affect the BP fund as follows:
Calendar
Year
True Value of
Personal
Property
Assessed at
Current Rate of
19%
Assessment
Rate, as
amended per
year
Amended
Assessed Value
of Personal
Property
Personal
Property
Tax
Collections
for the BP
fund (0.03%
of each
$100
assessed)
Reduction
in
Collections
for the BP
Fund
2023$70,726,088,53633 1/3%$23,573,005,309$7,071,902$02024$70,726,088,53632 1/3%$22,865,744,424$6,859,723$212,1782025$70,726,088,53631 1/3%$22,158,483,538$6,647,545$424,3572026$70,726,088,53630 1/3%$21,451,222,653$6,435,367$636,5352027$70,726,088,53629 1/3%$20,743,961,768$6,223,189$848,7132028$70,726,088,53628 1/3%$20,036,700,882$6,011,010$1,060,8912029$70,726,088,53627 1/3%$19,329,439,997$5,798,832$1,273,0702030$70,726,088,53626 1/3%$18,622,179,111$5,586,654$1,485,2482031$70,726,088,53625 1/3%$17,914,918,226$5,374,475$1,697,4262032$70,726,088,53624 1/3%$17,207,657,341$5,162,297$1,909,6042033$70,726,088,53623 1/3%$16,500,396,455$4,950,119$2,121,7832034$70,726,088,53622 1/3%$15,793,135,570$4,737,941$2,333,9612035$70,726,088,53621 1/3%$15,085,874,685$4,525,762$2,546,1392036$70,726,088,53620%$14,145,217,707$4,243,565$2,828,336 L.R. No. 0685S.01I
Bill No. SB 104
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February 14, 2023
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Therefore, FSD estimates that the fiscal impact to the BP fund as a result of this legislation
would be $212,178 in SFY 24; $424,357 in SFY 25; $636,535 in SFY 26; $848,713 in SFY 27;
$1,060,891in SFY 28; $1,273,070 in SFY 29; $1,485,248 in SFY 30; $1,697,426 in SFY 31;
$1,909,604 in SFY 32; $2,121,783 in SFY 33; $2,333,961 in SFY 34; $2,546,139 in SFY 35;
and $2,828,336 ongoing.
If the state chooses to continue funding BP payments at the current level, a general revenue
pickup would be needed to replace lost BP fund revenue resulting from this legislation. The
current BP payment is $750 per participant. If enacted, the BP payment would be reduced by
$205 to $545 without the replacement of funding.
Oversight assumes this proposal reduces the percentage at which personal property is assessed,
effectively reducing the assessed value of personal property over time. Oversight notes the
revenue growth in property tax is determined by the following method:
Last year’s revenues plus an allowance for growth equal to either:
• Inflation;
• Growth in total assessed value, or;
• 5%, whichever is lowest.
Oversight assumes if
any reduction in the percentage at which real residential property is assessed would reduce the
maximum allowed revenue growth (relative to current law) which could impact all taxing
entities. For example:
Year
Assessed
Value Real
Assessed
Value PP
Total Assessed
Value Real
and PP
Revenue
Growth
Factor
Maximum
Allowed
Revenue
Base Year
(Assumed) $4,250,000,000$750,000,000$5,000,000,000$6,240,000
Current Law
(Next Year)
(33.3%)$4,377,500,000$772,500,000$5,150,000,0003%$6,427,200
Next Proposed
(Next Year)
(32.3%) $4,377,500,000$749,301,802$5,126,801,8022.47%$6,394,335
Oversight applied a 3% growth in real and personal property. To calculate the proposed assessed
value, Oversight reduced the 33.3% currently applied to personal property values by the
proposed 1% reduction in year one (33.3% - 1% = 32.3%).
*Using the $750,000,000 assessed value for personal property; Oversight calculated the full
value of the personal property: L.R. No. 0685S.01I
Bill No. SB 104
Page 7 of
February 14, 2023
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Full Value of personal Property *.333 = $750,000,000
Full Value of personal Property = $750,000,000 /.333
Full Value of personal Property = $2,252,252,252
Using the full value of the personal property, Oversight applied a growth rate of 3% and
calculated the different assessed values below.
$2,252,252,252 x 1.03$2,319,819,820Total RP Value w/Growth$2,319,819,820 x 0.333$772,500,000Assessed Value RP (Current Law)Or$2,319,819,820 x 0.323$749,301,802Assessed Value RP (Proposed Law)
Oversight notes, in the example above, the proposal functionally eliminates the allowable
increase in revenues attributable to growth. Revenues become fixed in time. However, Oversight
notes the maximum allowed revenue would be lower than what could have been achieved under
current law. Oversight notes the above example only includes the initial 1% reduction in
assessed value and does not account for the implications of the future reductions.
Alternatively, if inflation or 5% is the lowest option for determining the maximum allowed
revenue, the calculation of revenue growth may not be limited by the reduction in assessed
personal property. However, Oversight notes property tax revenues are designed to be revenue
neutral from year to year. The tax rate is adjusted relative to the assessed value to produce
roughly the same revenue from the prior year with an allowance for growth. Therefore, this
proposal may result in a higher tax rate relative to current law thus distributing more of the tax
burden to real property owners (as personal property assessed values decrease).
Oversight notes some taxing entities have tax rate ceilings that are at their statutory or voter
approved maximum or are at a fixed rate. 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
an actual loss of revenue.
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.)
Oversight notes the proposed reduction in the percentage at which personal property is assessed
could reduce the maximum allowed revenue growth (relative to current law) which could impact
all taxing entities. Therefore, Oversight will note B&P’s estimated impact for all local political
subdivisions on the fiscal note. L.R. No. 0685S.01I
Bill No. SB 104
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February 14, 2023
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In addition, Oversight notes the Office of Administration - Budget and Planning estimates this
proposal could reduce revenues to the Blind Pension Trust Fund beginning in FY 2025.
Oversight does not have information to the contrary and therefore, Oversight will reflect the
estimates as provided by B&P to show the loss in property tax revenue for the Blind Pension
Fund.
Officials from the City of Springfield and the Newton County Health Department each
assume this proposal would have a negative fiscal impact on their respective city/county of an
indeterminate amount.
Officials from the City of Kansas City and the St Louis County Health Department each
assume the proposal will have no fiscal impact on their respective organizations.
Officials from the Cole Camp Ambulance District note as a small Rural Ambulance District
that relies heavily on property tax income, any reduction in property taxes without a provision
that would replace the funds either through patient transports or sales tax increase, would greatly
reduce the capabilities to provide adequate care to their patients.
Officials from the Lincoln County Assessor assume this proposal would slowly shift the tax
burden from personal property to real property over the term of reductions. Officials also assume
computing issues will play into each assessment year to correspond with the annual reductions.
Officials from the Fruitland Area Fire Protection District (FRUI) - Cape Girardeau assume
this proposal, in the long run, would have a fiscal impact. Increased costs for supplies, labor
costs, fuel, and equipment will continue. If their major source of income through property taxes
is decreased, even over time, the results would be a reduction in services and possibly staff
reductions to compensate for lost revenues.
Officials from the Office of the State Auditor 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 this agency. L.R. No. 0685S.01I
Bill No. SB 104
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February 14, 2023
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FISCAL IMPACT – State
Government
FY 2024
(10 Mo.)
FY 2025FY 2026Fully
Implemented
(FY 2037)
BLIND PENSION FUNDRevenue Loss -§137.115
Reduction in Assessed value
of personal property $0($180,462)($360,924)($2,406,158)
ESTIMATED NET
EFFECT ON BLIND
PENSION FUND$0($180,462)($360,924)($2,406,158)
FISCAL IMPACT – Local
Government
FY 2024
(10 Mo.)
FY 2025FY 2026Fully
Implemented
(FY 2037)
LOCAL POLITICAL
SUBDIVISIONS
Revenue Loss -§137.115
Reduction in Assessed value
of personal property$0
Up to
($48,171,590)
Up to
($96,343,180)
Up to
($642,287,864)
ESTIMATED NET
EFFECT ON LOCAL
POLITICAL
SUBDIVISIONS$0
Up to
($48,171,590)
Up to
($96,343,180)
Up to
($642,287,864)
FISCAL IMPACT – Small Business
Oversight assumes there could be an impact to small businesses because taxing jurisdictions may
be able to increase the levy to all other property owners to make up for the lost revenue.
FISCAL DESCRIPTION
Current law requires personal property to be assessed at 33.3% of its true value in money.
Beginning with the 2024 calendar year, this act reduces such percentage by one percent a year
through the 2035 calendar year. Beginning with the 2036 calendar year, personal property shall
be assessed at 20% of its true value in money. L.R. No. 0685S.01I
Bill No. SB 104
Page 10 of 10
February 14, 2023
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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
State Tax Commission
Office of Administration - Budget and Planning
Department of Social Services
Office of the State Auditor
City of Kansas City
City of Springfield
Newton County Health Department
St Louis County Health Department
Lincoln County Assessor
Fruitland Area Fire Protection District (FRUI) - Cape Girardeau
Cole Camp Ambulance District
Julie MorffRoss StropeDirectorAssistant DirectorFebruary 14, 2023February 14, 2023