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Bob McKee Chief Economist Florida Department of Revenue

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Presentation on theme: "Bob McKee Chief Economist Florida Department of Revenue"— Presentation transcript:

1 Bob McKee Chief Economist Florida Department of Revenue
Revenue Estimating Bob McKee Chief Economist Florida Department of Revenue

2 Topics Discussed Consensus Estimating Conference Process
Revenue Estimating Conferences Impact Conferences Development of Local Government Revenue Estimates

3 Consensus Estimating Conference Process
Established in Florida Statutes Sections to , Florida Statutes Conference Consists of Principals and Participants Four Principals. The Principals are professional staff of: Governor’s Office Florida House of Representatives Florida Senate Coordinator of the Office of Economic and Demographic Research Participants – any person invited to participate in the Consensus Estimating Conference by a principal DOR 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.

5 Conferences Economic Estimating Conference
Demographic Estimating Conference Revenue Estimating Conference Education Estimating Conference Criminal Justice Estimating Conference Occupational Forecasting Conference Early Learning Programs Estimating Conference Self-Insurance Estimating Conference Florida Retirement System Actuarial Assumption Conference Social Services Estimating Conference

6 Economic and Demographic Conferences
Economic Conferences National Economic Estimating Conference Florida Economic Estimating Conference Demographic Conference The results of these conferences are to be used by all other consensus estimating conferences in developing official information.

7 Revenue Estimating Conferences
Ad Valorem Article V Fees and Transfers Documentary Stamp Tax General Revenue Gross Receipts/Communication Services Tax Highway Safety Fees Impact Indian Gaming Long Term Revenue Analysis Lottery Monthly Revenue Estimates Public Education Capital Outlay Slot Machines Tobacco Settlement Tobacco Tax and Surcharge Transportation Revenue Unclaimed Property / State School Trust Fund Note – Underlined conferences indicate those conferences for which DOR is a participant

8 Revenue Estimating Conferences
Multiple forecasts presented for Principals to consider Typically there are three forecasts considered Each forecast uses the same economic and demographic inputs Florida Demographic Conference National Economic Conference Florida Economic Conference Example – Ad Valorem Estimating Conference Forecast 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 Research Conference archives available online from Regular Session 2000 forward Varies depending upon conference

12 Local Government Revenue Estimates
Motor Fuel Constitutional Fuel Tax County Fuel Tax Local Option Fuel taxes First 1 through 6 cents Ninth Cent Second 1 through 5 State Shared Revenues Half Cent Sales Tax Ordinary Distribution Emergency Distribution County Revenue Sharing Municipal Revenue Sharing Fiscally Constrained Counties Distribution

13 Local Government Revenue Estimates
Local Option Sales Surtaxes Local Communication Services Tax Taxable Sales of Transient Rental Facilities Used 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 Session Measures Affecting Revenue Report includes the impact of all legislation that passed in the session. Spring Revenue Estimate Population estimate including changes due to annexations and incorporations

15 Local Revenue Estimates
Statewide Revenue Estimates are starting point Must convert from State Fiscal Year to local fiscal year for most sources Motor Fuel estimates – Statewide forecast for gallons Sales tax related revenue sources – Statewide Sales Tax Forecast Local Communication Services Tax – Estimate of statewide local option Transient Rentals – Historic data on collections related to transient rentals No statewide forecast

16 Estimating Motor Fuel Taxes
Formula based Constitutional Fuel Tax County Fuel Tax Activity Based Local Option Fuel taxes First 1 through 6 cents Ninth Cent Second 1 through 5

17 Estimating Motor Fuel Taxes Constitutional and County Fuel Taxes
Statewide forecast of Gallons for Motor Fuel and Diesel Fuel 2 cents per gallon for Constitutional Fuel Tax 1 cent per gallon for County Fuel tax Both Constitutional and County Fuel Tax use same distribution formula Three part formula .𝟐𝟓 × 𝑪𝒐𝒖𝒏𝒕𝒚 𝑨𝒓𝒆𝒂 𝑺𝒕𝒂𝒕𝒆𝒘𝒊𝒅𝒆 𝒂𝒓𝒆𝒂 + .𝟐𝟓× 𝑪𝒐𝒖𝒏𝒕𝒚 𝑷𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏 𝑺𝒕𝒂𝒕𝒆𝒘𝒊𝒅𝒆 𝑷𝒐𝒑𝒖𝒍𝒂𝒕𝒊𝒐𝒏 + .𝟓× 𝑻𝒂𝒙 𝒇𝒓𝒐𝒎 𝑪𝒐𝒖𝒏𝒕𝒚 𝑻𝒂𝒙 𝑺𝒕𝒂𝒕𝒆𝒘𝒊𝒅𝒆 .𝟓× 𝑻𝒂𝒙 𝒇𝒓𝒐𝒎 𝑪𝒐𝒖𝒏𝒕𝒚 𝑻𝒂𝒙 𝑺𝒕𝒂𝒕𝒆𝒘𝒊𝒅𝒆 Tax from county based on certified gallons

18 Estimating Local Option Fuel Taxes
Inputs Statewide forecast for Motor Fuel Statewide forecast for Diesel Fuel Local rate adopted Historic Certified Gallons by County Population Growth Local distribution percentages Established either by interlocal agreement or default formula Special treatment for Diesel Fuel Diesel is imposed statewide for the first 1-6 local option and the ninth cent local option The second 1-5 local option does not apply to diesel

19 Estimating County Revenue Sharing
Inputs Forecast of State Sales Tax ( 97.9% of funds) Forecast of Cigarette Tax (2.1% of funds) Population Estimates Unincorporated and Countywide Prior year sales tax collections by county Formula – 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 Guarantees First Guarantee Amount received in State Fiscal Year Second Guarantee Amount received in State Fiscal Year Growth Money – Revenues available, if any, after first and second guarantees are met Special Distribution for Consolidated County $6.24 x County Population Reduces 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
Inputs Statewide 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 County Sales Tax Collections – County Level Municipal Taxable Value of Real and Personal Property Guaranteed Entitlement Prior 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 𝟑 Each 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 in Step 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) Distribution Replacement funds for reduced Local Government Half Cent Revenue Sharing Funds (2003) Step 8 – Sum Distributions to get total by Municipality Unlike 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
Inputs Statewide Sales Tax Forecast Historic Sales Tax Collections by County Population Estimates Municipal Unincorporated area Countywide

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
Inputs Estimate of Sales Tax Collections by County (from Half Cent Estimate) Historic differences between half cent collections and local option sales tax collections by county Used to estimate impact of $5,000 cap Default 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 consider The 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)
Inputs Forecast for statewide Local CST Historic CST Collections by Jurisdiction Historic CST Local Rates Population Municipal Unincorporated Areas Audit Adjustments Current CST Rate

34 Local Communication Services Tax (CST)
Step 1 – Calculate Historic CST Tax Base by Jurisdiction Step 2 – Calculate Historic CST Base per capita Step 3 – Estimate CST Base per capita for forecast period Step 4 – Apply current local rates to calculate estimated local tax revenues Step 5 – Layer on known audit adjustments for past and coming periods

35 Local Communication Services Tax (CST)
Notes on CST Only 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 Rentals Tax Base for Tourist and Convention Development taxes Estimate is of Tax Base rather than Tax Collections Steps in Estimating Step 1 – Identify historic tax revenues by county from Transient Rental Activity Step 2 – Convert to Tax Base by dividing by local tax rate Step 3 – Apply forecast growth rate for Tourism and Recreation category from General Revenue Estimating Conference Step 4 – Allocate growth to county level based on historic growth

37 Questions? Contact information Bob McKee Chief Economist Office of Tax Research Florida Department of Revenue (850)

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