COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:2211H.01P Bill No.:Perfected HB 1086 Subject:Property, Real and Personal; Taxation and Revenue - Property; Housing;
Landlords and Tenants; Counties; State Tax Commission; Taxation and Revenue -
Sales and Use
Type:Original Date:March 5, 2025Bill Summary:This proposal modifies provisions relating to the classification of certain
residential real property used for short-term rentals.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2026FY 2027FY 2028Total Estimated Net
Effect on General
Revenue $0$0$0
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND AFFECTEDFY 2026FY 2027FY 2028Blind Pension Fund
(0621)* $0(Unknown)(Unknown)
Total Estimated Net
Effect on Other State
Funds $0(Unknown)(Unknown)
*Oversight assumes the fiscal impact to the Blind Pension Fund could reach the $250,000
threshold.
Numbers within parentheses: () indicate costs or losses. L.R. No. 2211H.01P
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND AFFECTEDFY 2026FY 2027FY 2028Total Estimated Net
Effect on All Federal
Funds $0$0$0
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND AFFECTEDFY 2026FY 2027FY 2028Total 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 2026FY 2027FY 2028Local Government$0(Unknown)(Unknown) L.R. No. 2211H.01P
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FISCAL ANALYSIS
ASSUMPTION
Section 137.016 - Classification of Certain Residential Real Property
Officials from the Office of Administration - Budget and Planning (B&P) note this proposal
would classify single family short-term rental property as residential real property. B&P notes
that such property is currently assessed as either commercial or mixed-use (residential and
commercial). Residential real property is assessed at 19% of true market value, while
commercial real property is assessed at 32% of true market value.
B&P notes that in addition to local property taxes, the Blind Pension Trust fund levies a
statewide property tax of $0.03 per $100 value. Therefore, assessing such property as only
residential real property will likely result in lower state and local property tax collections by an
unknown amount.
Officials at the State Tax Commission (STC) have reviewed this proposal and determined this
proposal may have a negative impact on the taxing jurisdictions relying on property taxes as a
source of revenue. Current statute allows assessors to assess single family homes as commercial
properties if they are regular rented out for time periods less than a month, and this proposal
would require assessors to assess these homes as residential property, which includes a lower
rate.
Officials from the Adair County SB 40 Board assume a reduction in funding from personal
property and/or real property taxes would have significant consequences on critical supports for
individuals with intellectual and developmental disabilities (IDD), limiting access to critical
supports for those who rely on them. Senate Bill 40 organizations such as Adair County SB40
Developmental Disability Board assess local needs and nurture a strong network of high-quality
services that are essential to over 465 people with IDD and their families. These services,
supported by personal property taxes, include employment opportunities, inclusive community
programs, and vital resources for families.
Officials from the Callaway County SB 40 Board assume a reduction in funding from personal
property and/or real property taxes would have significant consequences on critical supports for
individuals with intellectual and developmental disabilities (IDD), limiting access to critical
supports for those who rely on them. Senate Bill 40 organizations such as Callaway County
Special Services, Callaway County, assess local needs and nurture a strong network of high-
quality services that are essential to over 201 people with IDD and their families. These services,
supported by personal property and/or real property taxes, include employment opportunities,
inclusive community programs, and vital resources for families.
Officials from the Department of Social Services, Lawrence County SB 40 Board, and the
County Employees Retirement Fund (CERF) each assume the proposal will have no fiscal L.R. No. 2211H.01P
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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 the proposed legislation will have a negative
fiscal impact for at least the first year.
Oversight notes the following assessment value rates by subclass per the State Tax Commission
manual:
SubclassRate(1) residential19%(2) agricultural and horticultural12%(3) utility, industrial, commercial, railroad, and other property32%
Oversight assumes the reclassification of single family short-term rental properties from 32% to
19% could result in a reduction in assessed values and subsequent tax revenues; therefore,
Oversight will show an unknown negative impact to the Blind Pension Fund and local political
subdivisions.
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. However, 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.
Oversight is uncertain what proportion of assessed value would be reclassified under this
proposal.
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).
Oversight notes to reach a revenue impact of $250,000 on the Blind Pension Fund would require
a change in assessed value of approximately $830,000,000. Based on information from the State
Tax Commission’s website, Oversight notes the following assessed values by category:
SubclassAssessed ValueResidential$81,710,151,058Commercial$30,214,171,778
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 L.R. No. 2211H.01P
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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 listing of political subdivisions included in the Missouri Legislative Information
System (MOLIS) database is available upon request.
FISCAL IMPACT – State GovernmentFY 2026
(10 Mo.)
FY 2027FY 2028BLIND PENSION FUNDRevenue Reduction - §137.016 – Loss
of tax revenue from the reclassification
of single family short-term rental
properties
$0(Unknown)(Unknown)
ESTIMATED NET EFFECT ON
THE BLIND PENSION FUND$0(Unknown)(Unknown)
FISCAL IMPACT – Local GovernmentFY 2026
(10 Mo.)
FY 2027FY 2028LOCAL POLITICAL
SUBDIVISION
Revenue Reduction - §137.016 – Loss
of tax revenue from the reclassification
of single family short-term rental
properties$0(Unknown)(Unknown)
ESTIMATED NET EFFECT ON
LOCAL POLITICAL
SUBDIVISIONS$0(Unknown)(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. 2211H.01P
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FISCAL DESCRIPTION
Currently, real property is divided into three separate classifications based on the use or purpose
of the property. Each of the subclassifications of property are assessed at different rates. When
real property is used for different purposes resulting in different classifications, the county
assessor must allocate to each classification the percentage of the true value in money of the
property devoted to each use.
This bill requires that when a single-family home is leased, in whole or in part, for 30
consecutive days or less, such a home will not be considered "transient housing".
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 and Planning
State Tax Commission
Department of Social Services
County Employees Retirement Fund (CERF)
Callaway County SB 40 Board
State Tax Commission
Adair County SB 40 Board
Rolling Hills Consolidated Library
Lawrence County SB 40 Board
City of Kansas City
Julie MorffJessica HarrisDirectorAssistant DirectorMarch 5, 2025March 5, 2025