Presentation on theme: "Bob McKee Chief Economist Florida Department of Revenue"— Presentation transcript:
1 Bob McKee Chief Economist Florida Department of Revenue Revenue EstimatingBob McKeeChief EconomistFlorida Department of Revenue
2 Topics Discussed Consensus Estimating Conference Process Revenue Estimating ConferencesImpact ConferencesDevelopment of Local Government Revenue Estimates
3 Consensus Estimating Conference Process Established in Florida StatutesSections to , Florida StatutesConference Consists of Principals and ParticipantsFour Principals. The Principals are professional staff of:Governor’s OfficeFlorida House of RepresentativesFlorida SenateCoordinator of the Office of Economic and Demographic ResearchParticipants – any person invited to participate in the Consensus Estimating Conference by a principalDOR is a participant
4 Consensus Estimating Conference Process Consensus means unanimous consent of the Principals.Results of the conferences are official information and are to be used by each state agency and the judicial branch in carrying out their duties under the state planning and budgeting system.All sessions and meetings of a consensus estimating conference are open to the public.Process allows for a consistent set of numbers to be used in the development of budget and policy.
6 Economic and Demographic Conferences Economic ConferencesNational Economic Estimating ConferenceFlorida Economic Estimating ConferenceDemographic ConferenceThe results of these conferences are to be used by all other consensus estimating conferences in developing official information.
7 Revenue Estimating Conferences Ad ValoremArticle V Fees and TransfersDocumentary Stamp TaxGeneral RevenueGross Receipts/Communication Services TaxHighway Safety FeesImpactIndian GamingLong Term Revenue AnalysisLotteryMonthly Revenue EstimatesPublic Education Capital OutlaySlot MachinesTobacco SettlementTobacco Tax and SurchargeTransportation RevenueUnclaimed Property / State School Trust FundNote – Underlined conferences indicate those conferences for which DOR is a participant
8 Revenue Estimating Conferences Multiple forecasts presented for Principals to considerTypically there are three forecasts consideredEach forecast uses the same economic and demographic inputsFlorida Demographic ConferenceNational Economic ConferenceFlorida Economic ConferenceExample – Ad Valorem Estimating ConferenceForecast presented by Executive Office of the Governor, Office of Economic and Demographic Research, and Department of Revenue
9 Sessions of the Consensus Estimating Conferences Governor’s Budget Preparation (Fall)Legislative Budget Deliberation (Spring)Long Range Financial Outlook Development (Summer)Special Impact Conferences – to develop official information which reflects specific changes or proposed changes relating to the area of responsibility of the conference
10 Special Impact Conferences Review proposed changes to Florida Statutes that have potential revenue implications.Starting point of analysis is current law, current administration to develop baseline against which impact of change is measured.Generally meets weekly during session.Considers both state and local revenue impacts.Addresses revenue impacts only, as opposed to costs or expenditures:For the 2013 Legislative Session, there were 22 Impact conferences held and 181 legislative proposals analyzed.
11 Consensus Estimating Conference Results and Workpapers The results and the supporting workpapers of the various conferences are available online at the website of the Office of Economic and Demographic ResearchConference archives available online from Regular Session 2000 forwardVaries depending upon conference
12 Local Government Revenue Estimates Motor FuelConstitutional Fuel TaxCounty Fuel TaxLocal Option Fuel taxesFirst 1 through 6 centsNinth CentSecond 1 through 5State Shared RevenuesHalf Cent Sales TaxOrdinary DistributionEmergency DistributionCounty Revenue SharingMunicipal Revenue SharingFiscally Constrained Counties Distribution
13 Local Government Revenue Estimates Local Option Sales SurtaxesLocal Communication Services TaxTaxable Sales of Transient Rental FacilitiesUsed to forecast Convention and Tourist Development Tax Receipts
14 Timing to Produce Local Government Revenue Estimates In order to produce local government revenue estimates, the Office of Tax Research must have:Completed Measures Affecting Revenues Report for Legislative SessionMeasures Affecting Revenue Report includes the impact of all legislation that passed in the session.Spring Revenue EstimatePopulation estimate including changes due to annexations and incorporations
15 Local Revenue Estimates Statewide Revenue Estimates are starting pointMust convert from State Fiscal Year to local fiscal year for most sourcesMotor Fuel estimates – Statewide forecast for gallonsSales tax related revenue sources – Statewide Sales Tax ForecastLocal Communication Services Tax – Estimate of statewide local optionTransient Rentals – Historic data on collections related to transient rentalsNo statewide forecast
16 Estimating Motor Fuel Taxes Formula basedConstitutional Fuel TaxCounty Fuel TaxActivity BasedLocal Option Fuel taxesFirst 1 through 6 centsNinth CentSecond 1 through 5
17 Estimating Motor Fuel Taxes Constitutional and County Fuel Taxes Statewide forecast of Gallons for Motor Fuel and Diesel Fuel2 cents per gallon for Constitutional Fuel Tax1 cent per gallon for County Fuel taxBoth Constitutional and County Fuel Tax use same distribution formulaThree part formula.𝟐𝟓 × 𝑪𝒐𝒖𝒏𝒕𝒚 𝑨𝒓𝒆𝒂 𝑺𝒕𝒂𝒕𝒆𝒘𝒊𝒅𝒆 𝒂𝒓𝒆𝒂 + .𝟐𝟓× 𝑪𝒐𝒖𝒏𝒕𝒚 𝑷𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏 𝑺𝒕𝒂𝒕𝒆𝒘𝒊𝒅𝒆 𝑷𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏 + .𝟓× 𝑻𝒂𝒙 𝒇𝒓𝒐𝒎 𝑪𝒐𝒖𝒏𝒕𝒚 𝑻𝒂𝒙 𝑺𝒕𝒂𝒕𝒆𝒘𝒊𝒅𝒆 .𝟓× 𝑻𝒂𝒙 𝒇𝒓𝒐𝒎 𝑪𝒐𝒖𝒏𝒕𝒚 𝑻𝒂𝒙 𝑺𝒕𝒂𝒕𝒆𝒘𝒊𝒅𝒆Tax from county based on certified gallons
18 Estimating Local Option Fuel Taxes InputsStatewide forecast for Motor FuelStatewide forecast for Diesel FuelLocal rate adoptedHistoric Certified Gallons by CountyPopulation GrowthLocal distribution percentagesEstablished either by interlocal agreement or default formulaSpecial treatment for Diesel FuelDiesel is imposed statewide for the first 1-6 local option and the ninth cent local optionThe second 1-5 local option does not apply to diesel
19 Estimating County Revenue Sharing InputsForecast of State Sales Tax ( 97.9% of funds)Forecast of Cigarette Tax (2.1% of funds)Population EstimatesUnincorporated and CountywidePrior year sales tax collections by countyFormula – Distribution percentage for each county is:𝑪𝒐𝒖𝒏𝒕𝒚 𝑷𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏 𝑺𝒕𝒂𝒕𝒆 𝑷𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏 + 𝑪𝒐𝒖𝒏𝒕𝒚 𝑼𝒏𝒊𝒏𝒄𝒐𝒓𝒑𝒐𝒓𝒂𝒕𝒆𝒅 𝑷𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏 𝑺𝒕𝒂𝒕𝒆𝒘𝒊𝒅𝒆 𝑼𝒏𝒊𝒏𝒄𝒐𝒓𝒑𝒐𝒓𝒂𝒕𝒆𝒅 𝑷𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏 + 𝑪𝒐𝒖𝒏𝒕𝒚 𝑺𝒂𝒍𝒆𝒔 𝑻𝒂𝒙 𝑪𝒐𝒍𝒍𝒆𝒄𝒕𝒊𝒐𝒏𝒔 𝑺𝒕𝒂𝒕𝒆𝒘𝒊𝒅𝒆 𝑺𝒂𝒍𝒆𝒔 𝑻𝒂𝒙 𝑪𝒐𝒍𝒍𝒆𝒄𝒕𝒊𝒐𝒏𝒔
20 Estimating County Revenue Sharing Guaranteed Entitlements and Growth Revenues Two GuaranteesFirst GuaranteeAmount received in State Fiscal YearSecond GuaranteeAmount received in State Fiscal YearGrowth Money – Revenues available, if any, after first and second guarantees are metSpecial Distribution for Consolidated County$6.24 x County PopulationReduces funds available before distribution percentages applied.
21 County Revenue Sharing Steps in Calculating Distributions Step 1 - Calculate Amount based on distribution formula.Step 2 - Compare distribution amount to First Guarantee amount to ensure Guarantee is met.Step 3 - If First Guarantee is met, compare distribution amount to sum of first and second Guarantee.Step 4 - If either First or Second Guarantee is not met for any county, subsequent funds are reduced to allow for the Guarantees to be met.Step 5 - Calculate available growth money. Growth money is funds available after Guarantees are met.County Revenue Sharing has historically had sufficient funds to meet the First and Second Guarantee for all counties, thus resulting in all counties receiving the amount from the distribution formula.
22 Municipal Revenue Sharing InputsStatewide Sales Tax (73.37% of Funds)Statewide Estimate for Municipal Fuel Tax on Motor Fuel (26.61% of Funds)Statewide Estimate of Alternative Fuel User Decal Fee (.02% of Funds)Population Estimates – Municipal and CountySales Tax Collections – County LevelMunicipal Taxable Value of Real and Personal PropertyGuaranteed EntitlementPrior Year Local Government Half Cent Distribution
23 Municipal Revenue Sharing Formula 𝑨𝒑𝒑𝒓𝒐𝒕𝒊𝒐𝒏𝒎𝒆𝒏𝒕 𝑭𝒂𝒄𝒕𝒐𝒓 =𝑷𝒓𝒐𝒑𝒐𝒓𝒕𝒊𝒐𝒏 𝒐𝒇 𝑨𝒅𝒋𝒖𝒔𝒕𝒆𝒅 𝑴𝒖𝒏𝒊𝒄𝒊𝒑𝒂𝒍 𝑷𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏 + 𝑷𝒓𝒐𝒑𝒐𝒓𝒕𝒊𝒐𝒏 𝒐𝒇 𝑫𝒆𝒓𝒊𝒗𝒆𝒅 𝑴𝒖𝒏𝒊𝒄𝒊𝒑𝒂𝒍 𝑺𝒂𝒍𝒆𝒔 𝑻𝒂𝒙 𝑪𝒐𝒍𝒍𝒆𝒄𝒕𝒊𝒐𝒏𝒔 + 𝑷𝒓𝒐𝒑𝒐𝒓𝒕𝒊𝒐𝒏 𝒐𝒇 𝑴𝒖𝒏𝒊𝒄𝒊𝒑𝒂𝒍𝒊𝒕𝒊𝒆𝒔 𝑹𝒆𝒍𝒂𝒕𝒊𝒗𝒆 𝑨𝒃𝒊𝒍𝒊𝒕𝒚 𝑻𝒐 𝑹𝒂𝒊𝒔𝒆 𝑹𝒆𝒗𝒆𝒏𝒖𝒆𝒔 𝟑Each of these terms have substantial sub-calculations. These are not discussed further in this presentation.
24 Steps in Calculating Municipal Revenue Sharing Step 1 – Determine statewide amount available.Step 2 – Determine the Apportionment Factor for each municipality.Step 3 - Calculate distribution amount based on apportionment factors for each city, including new cities.Step 4 - Compare Formula Amount to Guaranteed Amount.If Guaranteed Amount exceeds Formula Amount, municipality receives Guaranteed Amount.Step 5 – Compare Formula Amount to amount received in , if Formula Amount is less than amount received in , municipality receives amount received inStep 6 – If funds are remaining, a growth distribution is calculated for eligible municipalities.
25 Steps in Calculating Municipal Revenue Sharing Step 7 – Calculate Section (3) DistributionReplacement funds for reduced Local Government Half Cent Revenue Sharing Funds (2003)Step 8 – Sum Distributions to get total by MunicipalityUnlike County Revenue Sharing, there are cities that do not receive growth money due to Steps 4 and 5.This also means there are cities that receive less than their formula amount.
26 Local Government Half Cent Revenue Sharing Program InputsStatewide Sales Tax ForecastHistoric Sales Tax Collections by CountyPopulation EstimatesMunicipalUnincorporated areaCountywide
27 Local Government Half Cent Revenue Sharing Program Step 1 – Forecast state sales tax by county.Step 2 – Determine amount to be distributed to local government entities by county.Step 3 – Determine split between cities and counties using statutory formula.Step 4 - Determine Emergency Distribution amount and distribution. (Not discussed in Presentation)Step 5 - Determine Supplemental Distribution amount and distribution. (Not discussed in Presentation)
28 Half Cent – Municipal Share Municipal Formula for any given city. The result is applied to the total half cent from activity that took place in the county.𝑴𝒖𝒏𝒊𝒄𝒊𝒑𝒂𝒍 𝑷𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏 𝑪𝒐𝒖𝒏𝒕𝒚 𝑷𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏 + 𝟐 𝟑 × 𝑪𝒐𝒖𝒏𝒕𝒚 𝑰𝒏𝒄𝒐𝒓𝒑𝒐𝒓𝒂𝒕𝒆𝒅 𝑷𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏
29 Half Cent – County Share County Formula for any given county. The result is applied to the total half cent from activity that took place in the county.𝑪𝒐𝒖𝒏𝒕𝒚 𝑼𝒏𝒊𝒏𝒄𝒐𝒓𝒑𝒐𝒓𝒂𝒕𝒆𝒅 𝑷𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏 + 𝟐 𝟑 × 𝑪𝒐𝒖𝒏𝒕𝒚 𝑰𝒏𝒄𝒐𝒓𝒑𝒐𝒓𝒂𝒕𝒆𝒅 𝑷𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏 𝑪𝒐𝒖𝒏𝒕𝒚 𝑷𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏 + 𝟐 𝟑 × 𝑪𝒐𝒖𝒏𝒕𝒚 𝑰𝒏𝒄𝒐𝒓𝒑𝒐𝒓𝒂𝒕𝒆𝒅 𝑷𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏
30 Local Option Sales Surtaxes InputsEstimate of Sales Tax Collections by County (from Half Cent Estimate)Historic differences between half cent collections and local option sales tax collections by countyUsed to estimate impact of $5,000 capDefault Formula (same as half cent formula)Interlocal Agreements (if any)
31 Local Option Sales Taxes Step 1 – Take Estimate of Sales Tax Collections at county level used in Half Cent Estimate.Step 2 – Calculate implied Sales Tax Base.Step 3 – Calculate impact of $5000 cap at county level.Step 4 – Calculate countywide total for a hypothetical 1% levy.Step 5 – Apply default formula percentages for cities and counties. The default is the distribution percentages calculated for the half cent.Step 6 – Calculate Interlocal agreement percentage, if applicable. Please note – the Department calculates these based on how the interlocal agreement directs us to distribute the funds.
32 Local Option Sales Taxes Things to considerThe estimate is produced based on a hypothetical 1% levy. If your county has a local option sales tax different than 1%, the estimate can be scaled accordingly.The estimate for distribution between cities and counties is based on the half cent formula. Not all authorized sales surtaxes require the proceeds be shared with cities. Be certain that the surcharge in place in your county is shared before relying on these estimates.The amount reported as the interlocal agreement percentages is based on how the interlocal agreement directs the Department to distribute the funds.In certain counties, the interlocal agreement directs DOR to distribute 100% to the Board of County Commissioners (or the County Clerk), who then further distributes to the various entities that receive distributions.
33 Local Communication Services Tax (CST) InputsForecast for statewide Local CSTHistoric CST Collections by JurisdictionHistoric CST Local RatesPopulationMunicipalUnincorporated AreasAudit AdjustmentsCurrent CST Rate
34 Local Communication Services Tax (CST) Step 1 – Calculate Historic CST Tax Base by JurisdictionStep 2 – Calculate Historic CST Base per capitaStep 3 – Estimate CST Base per capita for forecast periodStep 4 – Apply current local rates to calculate estimated local tax revenuesStep 5 – Layer on known audit adjustments for past and coming periods
35 Local Communication Services Tax (CST) Notes on CSTOnly local tax forecast at the municipal level. All other local sources are forecast at the county or statewide level and distributed to various jurisdictions by formula.Estimate does not include revenues from Local Discretionary Surtax conversion rates.Estimate does not include revenues from CST on Direct to Home Satellite that are distributed back to local governments through the Half Cent Revenue Sharing Program or the Fiscally Constrained County Distribution.
36 Transient RentalsTax Base for Tourist and Convention Development taxesEstimate is of Tax Base rather than Tax CollectionsSteps in EstimatingStep 1 – Identify historic tax revenues by county from Transient Rental ActivityStep 2 – Convert to Tax Base by dividing by local tax rateStep 3 – Apply forecast growth rate for Tourism and Recreation category from General Revenue Estimating ConferenceStep 4 – Allocate growth to county level based on historic growth
37 Questions?Contact informationBob McKeeChief EconomistOffice of Tax ResearchFlorida Department of Revenue(850)