Bill Summary – FastDemocracy

LEGISLATIVE FISCAL OFFICE
                                                              Fiscal Note
                                                                                          Fiscal Note On:     HB   10             HLS 243ES       14
                                                                                         Bill Text Version: ENROLLED
                                                                                    Opp. Chamb. Action:
                                                                                          Proposed Amd.:
                                                                                            Sub. Bill For.:
         Date: November 27, 2024            9:00 AM                                                        Author: WRIGHT
Dept./Agy.: Revenue
     Subject: Increase Sales Tax Levy/Reduce Income Tax Rates                                              Analyst: Benjamin Vincent
TAX/SALES & USE                                EN SEE FISC NOTE RV See Note                                      Page 1 of 1
Provides for the rate of the state sales and use tax and provides for the exemptions, exclusions, credits, and rebates claimed
against sales and use taxes (Item #8)
Proposed law combines HB 10 (Re-Engrossed with Senate Committee Amendments posture) and HB 1 (Re-Engrossed with
Senate Committee Amendments posture), with minor modifications to each. Additional exemptions are added and the
effective combined rate is increased, relative to prior HB 10 posture. No other major changes relative to the prior posture of
these bills is noted or assumed in this analysis.
The bill as amended broadly applies a flat 3% IIT rate with increase standard deductions, and increases the combined state
sales tax rate to 5%, effective January 1, 2025. Additionally, proposed law sets a combined state sales tax rate of 4.75%,
effective January 1, 2030.
EXPENDITURES            2024-25                2025-26                2026-27             2027-28                 2028-29            5 -YEAR TOTAL
State Gen. Fd.                 $0                     $0                    $0                      $0                    $0                       $0
Agy. Self-Gen.         $200,000               INCREASE              INCREASE              INCREASE               INCREASE                    $200,000
Ded./Other                     $0                     $0                    $0                      $0                    $0                       $0
Federal Funds                  $0                     $0                    $0                      $0                    $0                       $0
Local Funds                    $0                     $0                    $0                      $0                    $0                       $0
Annual Total           $200,000                                                                                                              $200,000
REVENUES                2024-25               2025-26               2026-27               2027-28                 2028-29           5 -YEAR TOTAL
State Gen. Fd.       $7,000,000         $181,000,000           ($5,000,000)        ($33,000,000)           ($51,000,000)                   $99,000,000
Agy. Self-Gen.                 $0           $2,000,000                      $0                      $0                    $0                $2,000,000
Ded./Other                     $0        $79,000,000            $79,000,000          $79,000,000              $79,000,000             $316,000,000
Federal Funds                  $0                     $0                    $0                      $0                    $0                       $0
Local Funds           SEE BELOW              SEE BELOW             SEE BELOW             SEE BELOW              SEE BELOW
Annual Total
EXPENDITURE EXPLANATION
LDR anticipates a one-time additional cost of approximately $200,000 for modifications to returns, LDR software, and the
web filing application, and anticipates no need for additional positions due to proposed law. Any expenditure increases would
be financed via SGR out of current collections, ultimately reducing state general fund revenues mechanically. LFO assumes
that the $200,000 expenditure would impact FY25.
REVENUE EXPLANATION
Broad Revenue Impacts of Major Components:
Initial estimates for major components affecting tax receipts are as follows ($millions):
FY____________________________________25____26_____27_____28____29____________
Individual Income Tax Provisions                      -334     -1,150    -1,338 -1,366      -1,384
Sales Tax Rate increase to 5.0% thru FY29             +300 +1,100        +1,100 +1,100 +1,100
Business Utilities sales tax of 2%                     0        +230     +230      +230      +230
Sales Tax Base Modifications                          +41       +82      +82       +82       +82
Motor Vehicle Sales Tax & the Construction Subfund (CSF) of the Transportation Trust Fund:
Approximately $110 million of the +$1,100 million sales tax revenue impact of the proposed 1.0% levy is anticipated to be
generated by sales on motor vehicles. 60% of such revenues are dedicated to the CSF, thus $66 million of the $1,100 million
increase is included in the table above as Dedicated revenues.
Other Minor Dedications, LDR 1% SGR:
Additionally, the Dedicated and Self-generated revenue figures in the table above reflect certain minor sales tax dedications,
as well as the 1% of certain collections that LDR is permitted to retain as SGR (affecting only FY26).
Overall state revenue impacts, net of motor vehicle & general sales tax dedications, are reflected in the table above.
Impact on Local Revenues:
A detailed LFO estimate on likely local revenue impacts due to this proposal, either at the statewide level or for any
particular political subdivision, is unavailable for purposes of this analysis.
Senate           Dual Referral Rules                  House
 x   13.5.1 >= $100,000 Annual Fiscal Cost {S & H}    x    6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
                                                                                                              Alan M. Boxberger
 x   13.5.2 >= $500,000 Annual Tax or Fee                  6.8(G) >= $500,000 Tax or Fee Increase
               Change {S & H}                                                                                 Legislative Fiscal Officer
                                                                     or a Net Fee Decrease {S}
Statutes affected: 
HB10 Original: 33:4169(D)
HB10 Engrossed: 33:4169(D), 47:301(3), 47:1(A), 47:302(D), 47:303(B), 47:1(B)(5), 47:304(A), 47:305(A), 47:10(F), 47:20(A), 47:50(B), 47:72(C), 47:73(B), 47:5(B), 47:318(A), 47:321(A), 47:331(A), 47:2(C)(2), 47:4(B)(6), 47:6(B), 47:8(B), 47:13(A), 47:8(B)(1), 47:6001(A), 47:301(4), 47:1(B)(2), 47:302(F), 47:305(D)(3), 47:50(E), 47:73(A)(5), 47:306(A)(3), 47:321(E), 47:1(E), 47:331(F), 47:2(A)(2), 47:4(B)(4), 47:5(A)(1), 47:18(A)(3), 47:23(C)(1), 47:1(B), 47:340(G)(6)
HB10 Reengrossed: 33:4169(D), 47:301(3), 47:1(A), 47:302(D), 47:303(B), 47:1(B)(5), 47:304(A), 47:305(A), 47:10(F), 47:20(A), 47:50(B), 47:72(C), 47:73(B), 47:5(B), 47:318(A), 47:321(A), 47:331(A), 47:2(C)(2), 47:4(B)(6), 47:6(B), 47:8(B), 47:13(A), 47:8(B)(1), 47:6001(A), 47:301(4), 47:1(B)(2), 47:302(F), 47:305(D)(3), 47:50(E), 47:73(A)(5), 47:306(A)(3), 47:321(E), 47:1(E), 47:331(F), 47:2(A)(2), 47:4(B)(4), 47:5(A)(1), 47:18(A)(3), 47:23(C)(1), 47:1(B), 47:340(G)(6)
HB10 Enrolled: 51:1787(L), 47:32(B), 47:293(9), 47:20(A)(2), 47:21(A)(2), 47:301(4), 47:1(B)(2), 47:302(F), 47:305(D)(3), 47:50(E), 47:73(A)(5), 47:306(A)(6), 47:321(E), 47:1(F), 47:331(F), 47:2(A)(2), 47:4(B)(4), 47:5(A)(1), 47:18(A)(3), 47:23(C)(1), 47:1(B), 47:340(G)(6), 47:6006(F)
HB10 Act 11: 51:1787(L), 47:32(B), 47:293(9), 47:20(A)(2), 47:21(A)(2), 47:301(4), 47:1(B)(2), 47:302(F), 47:305(D)(3), 47:50(E), 47:73(A)(5), 47:306(A)(6), 47:321(E), 47:1(F), 47:331(F), 47:2(A)(2), 47:4(B)(4), 47:5(A)(1), 47:18(A)(3), 47:23(C)(1), 47:1(B), 47:340(G)(6), 47:6006(F)