COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:1282S.02I Bill No.:SJR 31 Subject:Appropriations; Constitutional Amendments; Taxation and Revenue - General;
Taxation and Revenue - Income; Taxation and Revenue - Sales and Use
Type:Original Date:February 11, 2025Bill Summary:This proposal modifies provisions relating to taxation.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2026FY 2027FY 2028
General Revenue**$0 or More than
($8,019,054)*
$0 to Unknown*** or
Less than
($119,135,661)
$0 to Unknown*** or
Greater than
($238,164,022)
Total Estimated Net
Effect on General
Revenue***
$0 or More than
($8,019,054)
$0 to Unknown***
or Less than
($119,135,661)
$0 to Unknown***
or Greater than
($238,164,022)
* Oversight notes the potential fiscal impact of “(More than $8,000,000)” would be realized
only if a special election were called by the Governor to submit this joint resolution to voters. All
other impacts to state funds would be realized only if the joint resolution is approved by voters.
**Oversight notes, under current law, the state individual income tax rate (4.70% in TY 2025) is
to be reduced in annual 0.1% increments (if certain triggers are met) until it reaches 4.5%. This
proposal allows for additional reductions of the individual income tax rate until the rate is
reduced to zero. Additionally, it allows for reductions of the corporate income tax rate until the
rate is reduced to zero. Oversight notes revenues for individual income tax for FY 2024 total
$9,048,940,276 and revenues for corporate income tax for FY 2024 total $1,050,710,284.
However, Oversight assumes the reduction and elimination of the individual and corporate tax
would require implementing language and any fiscal impact would be calculated in the
implementing language’s fiscal note. Additional individual income and corporate tax rate
changes could occur beyond FY 2028 (pending voter approval AND additional triggers
being met – those are not reflected in the table above). Oversight notes the impact would be
significant.
***Oversight notes the potential savings to the General Revenue Fund are from cost avoidance
if appropriation authority of the General Assembly is limited by this proposal (pending voter
approval). Oversight assumes the impact would be significant. Oversight notes that although the
proposed spending limit on general revenue and various state funds may have a positive fiscal
impact on state funds, the spending limit may have a negative fiscal impact on state departments
and programs who receive the funds. L.R. No. 1282S.02I
Bill No. SJR 31
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ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND AFFECTEDFY 2026FY 2027FY 2028Tax Reform Fund$0$0$0 or UnknownOther State Funds*$0$0 or Unknown$0 or UnknownConservation
Commission Fund
(0609) $0
$0 or could exceed
$4,471
$0 or could exceed
$13,413
Parks and Soils State
Sales Tax Fund(s)
(0613 & 0614)$0
$0 or could exceed
$5,589
$0 or could exceed
$10,730
State Road Bond Fund
(0319) $0
$0 or less than
($7,694,555)
$0 or less than
($15,389,111)
State Road Fund
(0320) $0
$0 or less than
($5,617,025)
$0 or less than
($11,234,051)
State Transportation
Fund (0675) $0
$0 or less than
($153,891)
$0 or less than
($307,782)
Total Estimated Net
Effect on Other State
Funds $0
$0 or Unknown to
(Less than
$13,455,411)
$0 or Unknown to
(Less than
$26,906,801)
*Oversight notes the potential savings to other state funds are from cost avoidance if
appropriations are limited by this proposal (pending voter approval). Oversight notes that
although the proposed spending limit on general revenue and various state funds may have a
positive fiscal impact on state funds, the spending limit may have a negative fiscal impact on
state departments and programs who receive the funds.
Numbers within parentheses: () indicate costs or losses.
ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND AFFECTEDFY 2026FY 2027FY 2028Federal Funds$0$0$0Total Estimated Net
Effect on All Federal
Funds* $0$0$0
*Cost avoidance and losses net to $0. Oversight notes the potential savings to federal funds is
from cost avoidance if appropriations are limited by this proposal (pending voter approval)
followed by a loss of those funds if they are not appropriated. L.R. No. 1282S.02I
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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*
$0 or could exceed
($1,923,639)**
$0 or could exceed
($3,847,278)**
*Potential costs and state reimbursements net to zero in FY 2026 if a special election is called.
**Oversight assumes some local political subdivisions may experience a loss of state funds if
funds are subject to an appropriation limit. L.R. No. 1282S.02I
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FISCAL ANALYSIS
ASSUMPTION
Section 20.2 - Appropriation Spending Limits
Officials from the Office of Administration - Budget and Planning (B&P) note this section
would limit the total budget based on Missouri population growth.
The following limits would be applied to appropriation growth:
appropriation plus population growth
o
appropriation.
appropriation
appropriation less population growth
o
appropriation
B&P notes the following issues with the proposed language:
be used. B&P notes that the U.S. Census Bureau provides 1-year ACS population
estimates, 5-year ACS population estimates, and intercensal (July to June) estimates.
o
year from 2010 through 2023.
o
year from 2010 through 2023.
o
each year from 2010 through 2023.
credits, and other tax preferences “issued” in the previous fiscal year. This provision will
artificially reduce the amount of money that may be appropriated.
o
already excluded from anticipated (and actual) revenues. Thus, they are already
not included in appropriation funding.
o
required to report non-taxable sales on their sales tax reports.
o
claimed, which may be well after appropriations for a given fiscal year have been
made. For example, it can take years before the true value of a deduction,
subtraction, or certain tax credits is known as taxpayers may amend their tax
returns for three years. L.R. No. 1282S.02I
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o
appropriation limit would essentially negate the associated tax collections. For
example, the SALT Parity tax credits are granted to individual taxpayers for
income tax paid by their business. This prevents both the business and the
individual from paying taxes on the exact same income. Subtracting those tax
credits from the appropriation limit, would essentially offset all the income earned
through the pass-through entity tax.
o
sending in taxes (for sales of non-taxable items) or by claiming the items on their
tax returns (like the standard deduction).
up to 102% of the prior year’s appropriation amount. B&P notes that in the event
population growth was greater than 2%, this emergency limit could be lower than the
actual appropriation limit for that year.
o
the current budget appropriation or should include supplementals appropriations
for prior budget years.
o
term is exceptionally broad and vague. Therefore, B&P assumes that it would
encompass all state and federal funds as well as cash balances.
o
the FY28 budget cycle. It is unclear whether the intent is to start the spending
limit for FY28; however, the needed data would not be available.
o
calendar year growth. B&P notes that population figures are available with a
minimum of a one-and-a-half-year lag.
o
budget would have already been enacted.
B&P notes that this limit applies to all spending sources, not just GR spending. Based on data
published by the U.S. Census Bureau, Missouri’s population has grown between 0.1% and 0.3%
each year since at least 2010, using the intercensal estimates.
Officials from the Department of Revenue (DOR) note this is a constitutional amendment that
may be voted on at the November 2026 general election. If the amendment is not adopted, there
will be no fiscal impact. If adopted, it is assumed it becomes effective January 1, 2027. This
amendment modifies how the state budget is to be calculated and provides for reductions in the
individual income tax rate. It should be noted this is at the beginning of a tax year but in the
middle of a budget year.
Currently per Article X, Section 20.1 the budget of the state of Missouri does not allow any
expenses of the state government to be incurred in any year which expenses exceed the sum of L.R. No. 1282S.02I
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revenue. Therefore, the language just codifies that the state cannot spend more money than it
receives in revenue.
Section 20.1
This proposal adds language placing additional limits on the amount the state can appropriate
(spend) annually. DOR notes that many of the terms used in this proposal appear vague and are
not defined. DOR notes that when working with tax laws and budgets all terms need clear and
concise definitions. However, DOR is not responsible for determining how funds are
appropriated. DOR defers to BAP for impact of this provision.
Officials from the Department of Health and Senior Services note Section 20.2 limits the
general assembly’s ability to increase appropriation authority based on the increase of population
in the State. This legislation could restrict the Department's ability to request additional
appropriation authority for new Federal Dollars appropriated to the State, as well as responding
to inflation in current programs. Without the ability to increase appropriation, the Department's
ability to respond to emergency situation such as Pandemics, Natural Disasters or Man made
disaster could be restricted. Without sufficient appropriation authority funds received from
Federal Partners may not be able to be utilized. In addition, as inflation occurs, and no new
ability to increase spending or utilization of funds the Department's ability to maintain current
programs could be affected.
The Department has an unknown impact as the department cannot determine how this will
impact their agency and would be based on the circumstances at the time and that any pandemic
response actuals would not be indicative of the past specific impacts.
Officials from the Department of Economic Development (DED) defer to the Office of
Administration - Budget and Planning for the potential fiscal impact of this proposal. DED has
GR-funded programs that could be impacted by a reduction in income revenues, but DED would
like to defer to Budget and Planning for the Statewide GR and TSR impacts.
Officials from the Department of Mental Health defer to the Office of Administration Division
of Budget and Planning for a statewide revenue reduction estimate. As the department cannot
predict how any remaining post reduction funds will be appropriated, the department can only
say this legislation may impact the department’s ability to carry out its functions.
Oversight notes the following spending authority operating totals according to the 2024 Budget
Fast Facts report:
General Revenue ............................................................... $14,948,248,625
Federal Funds .................................................................... $24,033,697,397
Other Funds ....................................................................... $11,485,732,808
TOTAL .............................................................................. $50,467,678,830 L.R. No. 1282S.02I
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Oversight notes the following spending authority amounts from FY 2015 to FY 2025 per the
Budget Fast Facts
Spending Authority - Operating Total
Fiscal
Year
General
Revenue
Change
from
Previous
YearFederal Funds
Change
from
Previous
Year
Other State
Funds
Change
from
Previous
Year
FY 20158,699,393,636N/A8,586,505,770N/A8,845,623,626N/AFY 20168,854,825,3601.8%8,638,730,0180.6%8,535,220,982-3.5%FY 20179,526,396,5987.6%9,078,330,2425.1%8,653,400,7931.4%FY 20189,367,307,893-1.7%9,250,792,1271.9%9,092,186,6195.1%FY 20199,425,983,5070.6%9,497,895,0082.7%9,377,311,5443.1%FY 202010,110,992,9967.3%9,851,393,4163.7%9,698,133,5723.4%FY 202110,008,035,292-1.0%14,755,905,16549.8%10,516,644,3818.4%FY 202210,427,854,9464.2%14,184,101,561-3.9%10,350,616,534-1.6%FY 202312,084,286,01415.9%23,574,743,69566.2%11,468,044,52810.8%FY 202415,221,017,35626.0%24,291,613,1173.0%12,333,832,0717.5%FY 202514,948,248,625-1.8%24,033,697,397-1.1%11,485,732,808-6.9%
Oversight notes according to the US Census Bureau, the state population increased by
approximately 0.31% from 2022-2023.
Oversight will show the proposed spending limit on appropriated funds as cost avoidance to the
general revenue fund, federal funds, and various state funds, pending voter approval.
Oversight is unable to determine future growth for the state population and is unable to
determine how much the limit would impact future appropriations relative to what would have
occurred without an appropriation limit. Therefore, Oversight will show the fiscal impact as a
range of $0 (not approved by voters) to an unknown positive amount as surplus funds are
generated. Oversight assumes the fiscal impact could be significant.
Oversight notes that although the proposed spending limit on general revenue and various state
funds may have a positive fiscal impact on state funds, the spending limit may have a negative
fiscal impact on state departments and programs who receive the funds.
Section 26 - Sales Tax
Officials from the Office of Administration - Budget and Planning (B&P) note this provision
would remove the prohibition on expanding state and local sales / use taxes to goods and services
that were not taxable as of January 1, 2015. L.R. No. 1282S.02I
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This provision would allow the general assembly to expand the state sales tax to include services.
If a bill expanding sales tax to services is passed and approved, the state statutory sales tax rate
shall be capped at 3.775%.
This proposal would also levy a 6% state sales tax on lobbying services.
Existing Sales Tax Reduction
B&P notes that the current total state sales tax rate is 4.225%, of which 4% is statutory. B&P
further notes that of the 4% statutory tax, 3% is for general sales tax and 1% is dedicated to
education (per Section 144.701). B&P assumes that the 0.225% reduction (4% - 3.775%) will be
fully taken against the 3% general sales tax.
This proposal would enact the tax rate reduction beginning the January after a bill expanding
sales tax to services is passed and approved. B&P notes that this proposal does not consider
when the expansion is actually enacted. Therefore, a bill could pass that expands sales tax but
that does not become effective until well after this sales tax cut has been triggered and enacted.
This could result in a negative impact to state funds.
B&P notes that the 3% general tax on tangible goods is deposited into the state General Revenue
(GR) fund. However, the 3% general tax on motor vehicles, trailers, boats, and outboard motors
are deposited into multiple road related funds.
Tangible Personal Property Sales Tax – 3% General Rate
In FY24, GR sales tax collections were $3,184,104,292. B&P estimates that there were
$106,136,809,747 in GR taxable sales. Therefore, B&P estimates that a 0.225% reduction in the
tax rate could reduce GR by $238,807,822 annually.
Motor Vehicle Sales Tax – 3% General Rate
B&P notes that the 3% tax on motor vehicles is deposited into the State Road Bond Fund (50%);
the State Road Fund (36.5%); the State Transportation Fund (1%); and the Fuel Local Deposit
Fund (FLOYD)(12.5%) which is then distributed to local jurisdictions.
In FY24, the state 3% MV sales tax collections were $410,376,290. B&P estimates that there
were $13,679,209,673 in MV taxable sales. Therefore, B&P estimates that a 0.225% reduction
in the tax rate could reduce MV sales tax collections by $30,778,222 annually.
Existing Sales Tax Summary
B&P estimates that if triggered, this provision could reduce general revenue by $238,807,822
annually. This provision could also reduce motor vehicle sales tax funds by $30,778,222
annually. Table 1 shows the estimate impact by fund. L.R. No. 1282S.02I
Bill No. SJR 31
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Table 1: Estimated Impact by FundState FundsFY1 (1/2 Year)FY2+General Revenue($119,403,911)($238,807,822)State Road Bond Fund($7,694,555)($15,389,111)State Road Fund($5,617,025)($11,234,051)State Transportation Fund($153,891)($307,782)
Local Funds FLOYD($1,923,639)($3,847,278)
Potential Expansion to Services
This proposal would allow the general assembly to expand the state sales tax law to include
services. B&P notes that it is unknown what services may be included in such expansion, the
timing, or potential tax rate(s). In addition, any future legislation would contain actual estimated
impacts to state and local revenues.
However, B&P pulled personal consumption data published by the BEA to provide an idea of
what sales tax collections could be if state law was expanded to include all, or some, services.
Table 2 shows personal consumption expenditures for services within Missouri from 2021 –
2023.
Table 2: Consumption by Service Category ($M)Service Category202120222023All Services$179,672.8 $196,321.8 $212,649.7 Health care$48,863.2 $52,049.9 $58,085.6 Transportation services - MV
Services$6,289.1 $6,963.1 $7,416.6
Financial services and insurance$21,927.7 $24,039.3 $26,354.1 Education services$4,887.4 $5,145.3 $5,347.7 Professional and other services$3,952.1 $4,037.1 $4,265.5 Personal care and clothing services$1,674.4 $1,928.8 $2,153.7
Table 3 shows potential revenue gains by expanding the sales tax base to all, or some, services.
B&P notes that under this proposal the new GR tax rate would be 2.775%. L.R. No. 1282S.02I
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Table 3: Potential Revenue Gains from Sales Tax ExpansionPotential 1% Tax ($M)202120222023All Services$1,796.7 $1,963.2 $2,126.5 Health care$488.6 $520.5 $580.9 Transportation services - MV Services$62.9 $69.6 $74.2 Financial services and insurance$219.3 $240.4 $263.5 Education services$48.9 $51.5 $53.5 Professional and other services$39.5 $40.4 $42.7 Personal care and clothing services$16.7 $19.3 $21.5 Potential 2.775% Tax ($M)202120222023All Services$4,985.9 $5,447.9 $5,901.0 Health care$1,356.0 $1,444.4 $1,611.9 Transportation services - MV Services$174.5 $193.2 $205.8 Financial services and insurance$608.5 $667.1 $731.3 Education services$135.6 $142.8 $148.4 Professional and other services$109.7 $112.0 $118.4 Personal care and clothing services$46.5 $53.5 $59.8
New Sales Tax on Lobbying Services
Section 26.2 levies a new additional state sales tax of 6% on lobbying services. B&P notes that
lobbying services is not currently taxable under Chapter 144 (Sales Tax Law). B&P notes that
Chapter 144 is currently limited to sales of tangible personal property. Therefore, until the
general assembly passes the corresponding statutory bill expanding Chapter 144 to include
rendered services, B&P assumes that only this 6% tax in this proposal plus 0.225%
Constitutional (DNR and MDC) taxes would be applied to lobbying services. B&P further
assumes that all revenue generated from the 6% tax would be deposited into general revenue.
If subsequent legislation expands sales tax to include services, then the state tax rate for lobbying
services would increase to include existing state and local sales taxes. For a total state rate of
10% (3.775% statutory + 0.225% MDC and DNR + 6% proposed).
B&P was unable to find exact information on the amount of revenue generated from lobbying
services. However, B&P was able to find that on average, lobbying fees range from $5,000 to
$10,000 depending on the complexity of the issue.
Based on data published by the Missouri Ethics Committee, there are 856 registered lobbyists in
Missouri, with 2,147 principles. Assuming each principal pays between $5,000 and $10,000 for L.R. No. 1282S.02I
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lobbying services, B&P estimates that lobbying services generate from $10,730,000 to
$107,300,000 in service-related sales.
Therefore, B&P estimates that this provision could generate greater than $643,800 ($10,730,000
x 6%) to significantly less than $6,438,000 ($107,300,000 x 6%) in new general revenue. In
addition, this proposal could generate greater than $13,413 to significantly less than $134,125 in
new revenue to MDC and greater than $10,730 to significantly less than $53,650 in new revenue
to DNR.
If voter approved, this provision would become effective January 1, 2027. Therefore, this
provision may increase general revenue by greater than $321,900 to significantly less than
$3,219,000 in FY27. Beginning FY28 this provision could increase general revenue by
$643,800 to significantly less than $6,438,000 annually.
Officials from the Department of Revenue (DOR) note the following:
Section 26.1(1)
Currently, the Missouri Constitution contains a prohibition on increasing state and local sales tax
on any transaction that was not taxed as of January 1, 2015. At that time only tangible personal
property was assessed sales tax. This proposal repeals that language effective January 1, 2027
(the effective date of the amendment).
This proposal also on January 1, 2027, would modify the current state sales tax rate. The current
state sales tax rate for all items other than motor vehicles is 4.225% which is divided as follows:
General Revenue 3%
School District Trust Fund (Section 144.701) 1%
Conservation Commission Fund (Article IV, Section 43(a)) 0.125%
Parks, Soil & Water Funds (Article IV, Section 47(a)) 0.1%
The current Motor Vehicle Sales and Use tax is 4.225% (Article IV, Section 30(b)) – which is
distributed as follows:
State Road Bond Fund 1.5%
Highway Use 1.5%
Highway Use is constitutionally divided as follow:
10% counties- Local money goes into the FLOYD FUND
15% cities – Local money goes into the FLOYD FUND
2% transportation fund
73% state road fund
Conservation is .125%
Parks, Soil & Water is .1%
The 1% to school districts goes to:
50% to School District Trust Fund
50% to Highway Use (as listed above) L.R. No. 1282S.02I
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As noted above the current statutory sales tax rate is 4% with the constitutionally created state
sales tax rate being 0.225%. This proposal, effective January 1, 2027, lowers the statutorily
created rate from 4% to 3.775%. DOR notes this reduction would be to the general revenue
portion of the sales tax on regular items purchased and on several different funds on motor
vehicles.
DOR calculated the impact to the designated funds from this reduction.
Table 1: Estimated Impact by FundState FundsFY1 (1/2 Year)FY2+General Revenue($119,403,911)($238,807,822)State Road Bond Fund($7,694,555)($15,389,111)State Road Fund($5,617,025)($11,234,051)State Transportation Fund($153,891)($307,782) Local Funds FLOYD($1,923,639)($3,847,278)
This would result in DOR needing to modify the sales tax rate in its computer systems ($7,327),
and changes to its forms and website ($2,200).
Section 26.1(2)
This proposal would allow the General Assembly to pass additional legislation making services
subject to state sales tax law. It should be noted that expansion of the state sales tax law could
also expand the local sales tax. DOR assumes it is unknown what services may be included in
such expansion, the timing, or potential tax rate.
For informational purposes only and using the Bureau of Economic Analysis report on personal
consumption, if the law were expanded to include all included services in the report, then a 1%
sales tax would generate $1,796,728,000 in new revenue. DOR notes any fiscal impact from an
expansion of the sales tax would require implementing language and any fiscal impact would be
calculated in the implementing language’s fiscal note.
Section 26.2
This proposal will implement a new state sales tax on lobbying services starting January 1, 2027.
The rate in the proposal is 6% and it will be deposited into general revenue. Additionally, this
new tax on lobbying services would be assessed the constitutionally created state sales tax
bringing the rate on lobbying to 6.225%.
DOR does not have information on lobbying services nor was the department able to find exact
information on the amount of revenue generated from lobbying services. However, the L.R. No. 1282S.02I
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department found that on average, lobbying fees range from $5,000 to $10,000 depending on the
complexity of the issue or type of service provided.
Using data published by the Missouri Ethics Committee, there are 856 registered lobbyists in
Missouri, with 2,147 principles. If every lobbyist charges between $5,000 and $10,000 for their
service to each of their principles the lobbying services would generate from $10,730,000 to
$107,300,000 in service-related sales. Therefore, this provision could generate greater than
$667,943 ($10,730,000 x 6.225%) to significantly less than $6,679,425 ($107,300,000 x 6.225%)
in new revenue.
FundLow ImpactHigh ImpactGeneral Revenue$643,800$6,679,425Park, Soil & Water $10,730$107,300Conservation Commission$13,413$134,125Total TSR$667,943$6,679,425
DOR notes that sales tax is remitted one month behind collection and therefore if this proposal is
adopted, the department can expect 5 months collection in FY 2027. This would result in an
impact per fiscal year.
FundFY 2027FY 2028+General Revenue$268,250 - $2,682,500$643,800 - $6,438,000Park, Soil & Water $5,589 - $55,885$10,730 - $107,300Conservation Commission$4,471 - $44,708$13,413 - $134,125
This would result in DOR needing to add another taxable item to its computer systems ($7,327),
changes to its forms and website ($2,200).
Tax Reform Fund
Officials from the Office of Administration - Budget and Planning (B&P) note this section
creates the “Tax Reform Fund” within the state treasury. Beginning FY28, if the amount of net
GR collections is $1 million or more than the “anticipated GR expenditures” then the excess
amount of collections shall be deposited into the new “Tax Reform Fund.” The general
assembly may also appropriate additional monies to the fund.
This proposal specifies that once the new fund has maintained a balance of $120 million and net
GR collections exceed “anticipated general fund expenditures” by at least $1 million, then the
individual income tax rate shall be reduced by at least 0.1%. For every $60 million over the
$120 million minimum balance, the individual income tax rate shall be reduced by an additional
0.05%. Multiple reductions may occur in any given year. Reductions to the individual income
tax rate(s) shall continue until the tax is eliminated. B&P notes that this will eventually result in
a loss of approximately 64% GR, or $8,515,185,571 as of FY24. L.R. No. 1282S.02I
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Once the individual income tax has been eliminated, the general assembly shall utilize the “Tax
Reform Fund” to phase-out the corporate income tax. B&P notes that this proposal does not
specify how the corporate income shall be phased out. B&P notes that this will eventually result
in an additional loss of approximately 7% GR, or $893,012,937 as of FY24.
Monies in the “Tax Reform Fund” may be used to supplement the budget if GR collections
decline in a year following a reduction to the individual income tax. Monies may be
appropriated from the fund equal to either the actual budget shortfall or $60 million per each
0.05% reduction that occurred to the individual income tax the previous year.
B&P notes the following issues with the proposed language:
the Governor recommended budget or the TAFP budget. In addition, it is unclear
whether supplemental expenditures are included.
triggering rate reductions. However, it is unclear how long the fund must “maintain” the
$120 million balance.
after both individual and corporate income taxes have been eliminated. However, section
20(a)3 only allows the funds to be used in a year after a reduction to the individual
income tax rate. Therefore, once the individual income tax has been eliminated, monies
could continue to be diverted to the new fund, but there would be no allowable way to
spend the fund balance.
Officials from the Department of Revenue (DOR) note this proposal creates a Tax Reform
Fund (Fund) which is to be used to justify individual income tax rate reductions in the future.
This proposal appears to want to eliminate the individual income tax and the corporate tax. After
that this new Fund is to be used to help cover any shortfalls in the state budget.
Starting July 1, 2027 (FY 2028) if the amount of net general revenue collected by the state
exceeds the anticipated general fund revenue expenditures for a fiscal year by more than $1
million, each fiscal year there is a surplus of at least $1 million, then all revenue over the $1
million should be deposited into the Tax Reform Fund.
Per this proposal, if the transfers were made and the balance in the Fund reaches and maintains
$120 million, the General Assembly shall authorize an individual income tax decrease of at least
one-tenth of one percent. This proposal, however, does not define or clarify how long the Fund
must “reach and maintain” this balance to trigger the reduction. Additionally, the proposal states
that if the Fund balance exceeds $120 million the General Assembly can decrease the individual
income tax rate another one-twentieth of one percent for every additional $60 million over $120
million. L.R. No. 1282S.02I
Bill No. SJR 31
Page 15 of 24
February 11, 2025
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DOR notes any fiscal impact from a reduction in the individual income tax would require
implementing language and any fiscal impact would be calculated in the implementing
language’s fiscal note.
The current individual income tax rate is 4.7% for tax year 2025 and is scheduled to continue to
decrease until it reaches 4.5% per SB 3. This proposal appears to want to reduce the individual
income tax rate and eventually the corporate tax rate over a number of years until both have been
eliminated. This proposal says that once the individual income tax is reduced to zero then the
general assembly should gradually reduce and eliminate the corporate tax rate.
DOR has not seen drafted language at the time of completing this fiscal note that would reduce
the corporate income tax rate. Should such language be brought forward, then it should be noted
that per Section 148.720 whenever there is a reduction in the corporate tax rate there shall be a
proportional decrease in the financial institutions tax as well.
DOR notes that creating a new state fund that will accept transfers will not fiscally impact DOR.
Transferring $120 million to the Fund that would or could have been spent on other specific
purposes will not have a fiscal impact on DOR. Limiting how much can be budgeted to each
agency may impact DOR in the future if the department is to receive less funding than it does
now. That amount is $0 (none taken away) to Unknown but could exceed $250,000.
Oversight notes this proposal will create a cap on expenditures unrelated to revenues; thereby
potentially creating surplus funds. Oversight notes it is unknown how much surplus would be
generated. Surplus funds in excess of $1 million are to be transferred to the Tax Reform Fund.
Oversight notes this provision allows for the eventual elimination of individual income tax and
corporate income tax once the rates reach 0%. Oversight notes total revenues for individual
income tax for FY 2024 total $9,048,940,276 and the revenues for corporate income tax for FY
2024 total $1,050,710,284. However, Oversight assumes the reduction and elimination of the
individual and corporate tax would require implementing language and any fiscal impact would
be calculated in the implementing language’s fiscal note.
Responses regarding the proposed legislation as a whole
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. L.R. No. 1282S.02I
Bill No. SJR 31
Page 16 of 24
February 11, 2025
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The cost of the special election has been estimated to be $8 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 FY26 petitions cycle, the SOS estimates publication costs at $60,000 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 2026. 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 general
election is in November 2026 (FY 2027). It is assumed the subject within this proposal could be
on this ballot; 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 2026.
Officials from the Department of Natural Resources and the Missouri Department of
Agriculture defer to the Office of Administration for the potential fiscal impact of this
proposal.
Officials from the Department of Corrections defers to the Office of Administration Division
of Budget and Planning for a statewide revenue reduction estimate.
Officials from the Office of Administration and the Missouri Department of Conservation
each defer to the Office of Administration - Budget and Planning for the potential fiscal impact
of this proposal.
Officials from the Department of Public Safety - Highway Patrol defer to the Department of
Revenue for the potential fiscal impact of this proposal. L.R. No. 1282S.02I
Bill No. SJR 31
Page 17 of 24
February 11, 2025
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Officials from the Department of Social Services note this bill could impact Social Services'
ability to carry out its functions. The department defers to the Office of Administration - Budget
and Planning for the potential fiscal impact of this proposal.
Officials from the Department of Public Safety - Veterans Commission note the proposed
legislation proposes a reduction in the current state tax income. The department defers to the
Office of Administration Division of Budget and Planning for a statewide revenue reduction
estimate. As the department cannot predict how any remaining post reduction funds will be
appropriated, the department can only say this legislation may impact the department’s ability to
carry out its functions.
In response to a similar proposal (HJR 1, 2025), officials from the Missouri Lottery assume
these proposals have an unknown fiscal impact on Lottery. The proposals place limitations on
the total amount of moneys available for appropriation each fiscal year. Lottery’s prize
appropriation and vendor payment appropriations are directly correlated with Lottery ticket sales.
If Lottery ticket sales increase greatly from one fiscal year to the next, a limitation on the prize
appropriation will result in the Lottery’s inability to pay player prizes and a limitation on its
vendor payment appropriations will result in the Lottery’s inability to pay its vendors for Lottery
games. If Lottery is unable to pay prizes and pay its vendors, Lottery sales may be negatively
impacted resulting in a negative impact on proceeds to education.
Officials from the Department of Higher Education and Workforce Development defer to the
Office of Administration - Budget and Planning for the potential fiscal impact of this proposal.
In response to a similar proposal (HJR 1, 2025), officials from the University of Central
Missouri assume a fiscal impact of an indeterminate amount.
Officials from the Attorney General’s Office, Office of Administration - Administrative
Hearing Commission, Department of Commerce and Insurance, Department of Labor and
Industrial Relations, Department of Public Safety - Capitol Police, Department of Public
Safety - Director’s Office, Department of Public Safety - Fire Safety, Department of Public
Safety - Gaming Commission, Department of Public Safety - State Emergency
Management Agency, Office of the Governor, Missouri Ethics Commission, Missouri
Department of Transportation, MODOT & Patrol Employees' Retirement System,
Petroleum Storage Tank Insurance Fund, Office of the State Public Defender, State
Treasurer's Office, University of Missouri System, Missouri Consolidated Health Care
Plan, Missouri State Employee's Retirement System, and the State Tax Commission each
assume the proposal will have no fiscal impact on their respective organizations.
Officials from the City of Kansas City assume the proposal will have no fiscal impact on their
organization. L.R. No. 1282S.02I
Bill No. SJR 31
Page 18 of 24
February 11, 2025
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Oversight assumes some local political subdivisions may experience a loss of state funds if
funds are subject to an appropriation limit. (For instance, school districts may experience a loss
of funds if foundation formula payments are subject to a limit on appropriations.)
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.
FISCAL IMPACT – State GovernmentFY 2026
(10 Mo.)
FY 2027FY 2028GENERAL REVENUETransfer Out - SOS - reimbursement of
local election authority election costs if
a special election is called by the
Governor
$0 or (More
than
$8,000,000)$0$0
Potential Cost Avoidance - Section 20.2
- Limit on appropriation if approved by
voters (dependent upon population
change) - p. (7)$0$0 or Unknown$0 or Unknown
Potential Revenue Reduction - Section
26.1 - Reduction of state sales tax rate
if approved by voters - pp. (8-9)$0
$0 or
($119,403,911)
$0 or
($238,807,822)
Potential Revenue Gain - Section 26.2 -
Sales tax on lobbying services if
approved by voters - pp. (10-13)$0
0 or could
exceed
$268,250
0 or could
exceed
$643,800
Potential Transfer Out - Section 20(a) -
To Tax Reform Fund if approved by
voters- p. (15)$0$0
$0 or
(Unknown)
Potential Cost - DOR - Form and
computer changes($19,054)$0$0
ESTIMATED NET EFFECT ON
GENERAL REVENUE
$0 or
More than
($8,019,054)
$0 to
Unknown or
Less than
($119,135,661)
$0 to
Unknown or
Greater than
($238,164,022) L.R. No. 1282S.02I
Bill No. SJR 31
Page 19 of 24
February 11, 2025
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FISCAL IMPACT – State GovernmentFY 2026
(10 Mo.)
FY 2027FY 2028TAX REFORM FUNDPotential Transfer In - Section 20(a) -
from general revenue - p. (15)$0$0$0 or Unknown
ESTIMATED NET EFFECT ON
TAX REFORM FUND$0$0
$0 or
Unknown
OTHER STATE FUNDSPotential Cost Avoidance - Section 20.2
- Limit on appropriation if approved by
voters - p. (7)$0$0 or Unknown$0 or Unknown
ESTIMATED NET EFFECT ON
OTHER STATE FUNDS$0
$0 or
Unknown
$0 or
Unknown
CONSERVATION COMMISSION
FUND
Potential Cost Avoidance - Section 20.2
- Limit on appropriation if approved by
voters - p. (7)$0$0 or Unknown$0 or Unknown
Potential Revenue Gain - Section 26.2 -
Sales tax on lobbying services if
approved by voters - pp. (10-13)$0
$0 or could
exceed $4,471
$0 or could
exceed $13,413
ESTIMATED NET EFFECT ON
CONSERVATION COMMISSION
FUND $0
$0 or could
exceed $4,471
$0 or could
exceed $13,413
PARKS AND SOILS STATE SALES
TAX FUNDS L.R. No. 1282S.02I
Bill No. SJR 31
Page 20 of 24
February 11, 2025
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FISCAL IMPACT – State GovernmentFY 2026
(10 Mo.)
FY 2027FY 2028Potential Cost Avoidance - Section 20.2
- Limit on appropriation if approved by
voters - p. (7)$0$0 or Unknown$0 or Unknown
Potential Revenue Gain - Section 26.2 -
Sales tax on lobbying services if
approved by voters - pp. (10-13)$0
$0 or could
exceed $5,589
$0 or could
exceed $10,730
ESTIMATED NET EFFECT ON
PARKS AND SOILS STATE SALES
TAX FUNDS$0
$0 or could
exceed $5,589
$0 or could
exceed $10,730
STATE ROAD BOND FUNDPotential Cost Avoidance - Section 20.2
- Limit on appropriation if approved by
voters - p. (7)$0$0 or Unknown$0 or Unknown
Potential Revenue Reduction - Section
26.1 - Reduction of state sales tax rate
if approved by voters - pp. (8-9)$0
$0 or
($7,694,555)
$0 or
($15,389,111)
ESTIMATED NET EFFECT ON
STATE ROAD BOND FUND$0
$0 or less than
($7,694,555)
$0 or less than
($15,389,111)
STATE ROAD FUNDPotential Cost Avoidance - Section 20.2
- Limit on appropriation if approved by
voters - p. (7)$0$0 or Unknown$0 or Unknown
Potential Revenue Reduction - Section
26.1 - Reduction of state sales tax rate
if approved by voters - pp. (8-9)$0
$0 or less than
($5,617,025)
$0 or less than
($11,234,051)
ESTIMATED NET EFFECT ON
STATE ROAD FUND$0
$0 or less than
($5,617,025)
$0 or less than
($11,234,051) L.R. No. 1282S.02I
Bill No. SJR 31
Page 21 of 24
February 11, 2025
KLP:LR:OD
FISCAL IMPACT – State GovernmentFY 2026
(10 Mo.)
FY 2027FY 2028STATE TRANSPORTATION FUNDPotential Cost Avoidance - Section 20.2
- Limit on appropriation if approved by
voters - p. (7)$0$0 or Unknown$0 or Unknown
Potential Revenue Reduction - Section
26.1 - Reduction of state sales tax rate
if approved by voters - pp. (8-9))$0
$0 or less than
($153,891)
$0 or less than
($307,782)
ESTIMATED NET EFFECT ON
STATE TRANSPORTATION FUND$0
$0 or less than
($153,891)
$0 or less than
($307,782)
FEDERAL FUNDSPotential Cost Avoidance - Section 20.2
- Limit on appropriation if approved by
voters - p. (7)$0$0 or Unknown$0 or Unknown
Loss – reduction in state share of
federal funds if funds are not
appropriated$0
$0 or
(Unknown)
$0 or
(Unknown)
ESTIMATED NET EFFECT ON
FEDERAL FUNDS$0$0$0
FISCAL IMPACT – Local GovernmentFY 2026
(10 Mo.)
FY 2027FY 2028LOCAL POLITICAL
SUBDIVISIONS
Transfer In - Local Election Authorities
- reimbursement of election costs by the
State for a special election
$0 or More
than
$8,000,000$0$0
Costs - Local Election Authorities - cost
of a special election if called for by the
Governor
$0 or (More
than
$8,000,000)$0$0 L.R. No. 1282S.02I
Bill No. SJR 31
Page 22 of 24
February 11, 2025
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FISCAL IMPACT – Local GovernmentFY 2026
(10 Mo.)
FY 2027FY 2028Potential Revenue Reduction - Section
26.1 - FLOYD - Reduction of sales tax
rate if approved by voters - pp. (8-9)$0
$0 or
($1,923,639)
$0 or
($3,847,278)
Potential Revenue Reduction - Section
20.2 - Limit on appropriation if
approved by voters - p. (18)$0
$0 or
(Unknown)
$0 or
(Unknown)
ESTIMATED NET EFFECT ON
LOCAL POLITICAL
SUBDIVISIONS$0
$0 or could
exceed
($1,923,639)
$0 or could
exceed
($3,847,278)
FISCAL IMPACT – Small Business
Small businesses’ taxation may be impacted by this proposal (pending voter approval).
FISCAL DESCRIPTION
This constitutional amendment, if approved by the voters, modifies provisions relating to
taxation.
STATE SPENDING
This constitutional amendment, if approved by the voters, provides that the General Assembly
shall have a spending limit equal to the previous fiscal year's appropriations plus the percentage
growth in population, provided that the population grew by more than one percent from the
previous calendar year. If the population grew by more than zero but less than one percent, the
spending limit shall be equal to the previous fiscal year's appropriations plus one percent of such
amount. If the population decreased from the previous calendar year, the spending limit shall be
equal to the previous year's appropriations minus the percentage decline in population.
Total state appropriations may exceed the spending limits only under certain conditions, as
described in the amendment.
The amendment establishes the "Tax Reform Fund" in the state treasury. For all fiscal years
beginning on or after July 1, 2027, if net general revenue collections exceed anticipated
expenditures by more than $1 million, such excess revenues shall be deposited into the fund. In
any fiscal year in which a deposit is made into the fund and the balance of the fund is equal to or
greater than $120 million, the General Assembly shall reduce the top rate of income tax by at L.R. No. 1282S.02I
Bill No. SJR 31
Page 23 of 24
February 11, 2025
KLP:LR:OD
least 0.1%, with an additional 0.05% reduction for each $60 million in excess of the $120 million
minimum balance. Such reductions shall continue until the income tax is eliminated.
Upon the elimination of the income tax, the General Assembly shall use the Tax Reform Fund to
gradually reduce and eliminate the corporate income tax.
Upon elimination of the corporate income tax, the Tax Reform Fund shall be used to supplement
budget shortfalls, as described in the amendment. (Sections 20 and 20(a))
SALES TAXES
Current law imposes a statewide sales tax at a statutory rate of 4%, with an additional 0.225%
rate that is constitutionally authorized, for a total statewide sales tax rate of 4.225%. This
constitutional amendment, if approved by the voters, provides that the General Assembly shall
not impose a statutory sales tax rate in excess of 3.775%, for a total statewide rate of 4%.
This amendment also requires the General Assembly to impose a statewide sales tax on lobbying
services at a rate of 6%.
Finally, this amendment repeals Article X, Section 26 of the constitution, which prohibits new
sales taxes on transactions not taxed as of January 1, 2015. (Section 26)
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
Department of Health and Senior Services
Department of Economic Development
Department of Mental Health
Department of Natural Resources
Missouri Department of Agriculture
Department of Corrections
Department of Public Safety:
Director’s Office
Highway Patrol
Veterans Commission
Capitol Police
Fire Safety
Gaming Commission
State Emergency Management Agency
Office of Administration L.R. No. 1282S.02I
Bill No. SJR 31
Page 24 of 24
February 11, 2025
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Missouri Department of Conservation
Department of Social Services
Department of Labor and Industrial Relations
Missouri Lottery
Department of Higher Education and Workforce Development
Office of Administration - Administrative Hearing Commission
Department of Commerce and Insurance
Office of the Governor
Missouri Ethics Commission
Missouri Department of Transportation
MODOT & Patrol Employees' Retirement System
Office of the State Public Defender
University of Missouri System
State Tax Commission
City of Kansas City
Attorney General’s Office
Petroleum Storage Tank Insurance Fund
University Of Central Missouri
Missouri Consolidated Health Care Plan
Missouri State Employee's Retirement System
State Treasurer's Office
Julie MorffJessica HarrisDirectorAssistant DirectorFebruary 11, 2025February 11, 2025