Missouri Conservation Sales Tax. David H. Thorne, Ph.D., Policy Supervisor Missouri Department of Conservation
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1 Missouri Conservation Sales Tax David H. Thorne, Ph.D., Policy Supervisor Missouri Department of Conservation February 29, 2016 Prepared for Conference Call with Oregon Task Force on Fish, Wildlife, and Related Outdoor Recreation and Education 1. Background a. The Missouri Conservation Sales Tax has been in place since July 1, It was established by vote in November, 1976, after being placed on the ballot by citizen petition. b. The Missouri Conservation Commission and authority was established in 1936, also by citizen petition and ballot vote. The Missouri Department of Conservation began in c. For funding, the timeline included concern over funding and breadth of program in the late 1960s, with a program evaluation in 1970 by A. Starker Leopold (School of Forestry and Conservation, University of California, Berkeley), Irving K. Fox (Water Resources Center, University of Wisconsin, Madison), and Charles H. Callison (Executive Vice President, National Audubon Society, New York). i. The report included four broad goals for the Department: 1. To maintain in the lands and waters of Missouri a rich and diverse environment. 2. To provide a complete spectrum of recreational opportunities relating to fish and wildlife. 3. To foster realization of maximum social values from the forests and wildlands of the state. 4. To provide for scientific and educational use of wildlife and wildlands. ii. The Department provided a response in 1970 that included general discussion of actions. d. Two studies had been previously completed, by independent experts on potential revenue sources. A 1970 analysis by Arthur Betts, Fiscal
2 Discussion Outline for Conservation Sales Tax History and Insights Page 2 Consultant, and potential revenue sources by the School of Business at the University of Missouri in Those studies looked at potential options and the amount of revenue projected to be available from different sources. Including a soft-drink tax, other taxes, bonds, user fees, and mineral extraction taxes. e. Petitions were carried in for a soft drink tax. Which was ruled invalid without the enacting clause on the petition; this was a procedural detail yet eliminated the ballot opportunity at the time. f. After the failed petition attempt in 1972, citizens regrouped and considered additional alternatives. g. The Conservation Federation carried new petitions for an 1/8 of 1 cent sales tax in Department established the New Design for Conservation, published in 1975, which included 22 specific items including expected annual costs. A ballot initiative was placed on ballot for November, 1976 to amend the Missouri Constitution. h. For the new effort, This petition represents an important citizen effort to insure tomorrow s conservation program. i. The New Design for Conservation proposed 22 items, some with maps of proposed locations, including Conservation Lands, Upland Wildlife, Wetland Wildlife, Natural Areas and Rare and Endangered Species, State Forests, Stream Access, Lake Development, Springs and Spring Branches, Hatchery Operation, Public Services, Wildlife Management Services, Aquatic Management Services, Forest Management Services, Law Enforcement, Information Program, Conservation Education Services (including a system of Conservation Interpretive Centers ), Management and Research, Enhancement of Great Rivers Borders, Wildlife Research, Forest Research, Aquatic Research, and Forest Fire Control. 2. How it works. a. There is a 1/8 of 1 cent sales tax on all taxable items, including food. b. The Missouri general revenue tax rate is percent on taxed goods and services plus the local tax rates which vary. (This includes 3 percent general revenue, 1 percent for education, 1/8 percent for Conservation Sales Tax, and 1/10 percent for Parks and Soils Tax). c. Tax rate on food is only the Education, Conservation, Parks and Soils, and local tax rate (which varies).
3 Discussion Outline for Conservation Sales Tax History and Insights Page 3 d. Language was added in 1980 through a general election vote to pay inlieu taxes on all lands acquired since July 1, e. The sales tax generates over $100 million each year since f. Only one time since 1977, has there been a trend of declining revenue. In , there were three years with declining revenue. The Department went through a voluntary payroll reduction scoping effort and held vacant 174 positions after a retirement incentive that had about 134 participate. Tasks and positions were eliminated, rather than identifying individuals. For individuals in terminated positions, they were allowed up to 18 months to find a new position in the Department. Fewer than 20 positions were terminated after 18 months. g. Currently, it is unclear about the impact of Internet sales on any reduction in the sales tax revenue. There is likely an impact from Internet sales on the annual revenue provided from the sales tax. h. In FY2015, Conservation Sales Tax was about 60 percent of revenue ($110.5 million). Followed by Permit Revenues at 18 percent (33.1 million) and Federal Reimbursements at 15 percent ($26.9 million). Other revenue is about 7 percent that includes sales and rentals ($8.7 million) and other sources ($3.8 million). i. Currently the Conservation Commission maintains a reserve of about 60 days of operating expenses, or about $35 million. j. The Department receives no general revenue from the state. k. The Department of Conservation budget is less than one percent of overall state government budget. 3. Broad obligations a. From the Missouri Constitution, Article IV, Section 40(a): The control, management, restoration, conservation and regulation of the bird, fish, game, forestry and all wildlife resources of the state, including hatcheries, sanctuaries, refuges, reservations and all other property owned, acquired or used for such purposes shall be vested in a conservation commission b. The language in the Missouri Constitution, from the ballot initiative, followed language from the 1930 North American Game Policy, with two essentials, a policy-making body; and a chief executive appointed and responsible to it.
4 Discussion Outline for Conservation Sales Tax History and Insights Page 4 4. Citizen support a. Since 1936, there has been a high level of interest in conservation and the outdoors in Missouri. In the most recent survey in 2013, over 95 percent indicated interest in fish, forests, and wildlife. b. There is a high-level of support for protecting outdoor places, even if they don t plan to visit the area (89 percent). c. There is a high-level of support for land acquisition (71 percent). d. And a high level of trust for the name of the Department (76 percent). 5. Missouri Parks and Soils Tax for comparison. a. The Missouri Parks and Soils Tax was established in 1984, and has been renewed four times. b. The Parks and Soils Tax was last renewed in 2006 with just over 70 percent approval. The tax requires renewal every 10 years. c. The Parks and Soils Tax provides a 1/10th of 1 cent for State Parks, Historic Sites, and Soil and Water Conservation. 6. Insights and observations for other groups exploring funding options. a. One key to success is citizen support and initiative. Both the creation of the Department in the Missouri Constitution and the funding initiative were the result of citizen efforts and petitions to place the vote in a statewide election. b. The Department commits effort and resources to be connected with Missourians. The Department distributes a free monthly magazine, since 1938, to Missouri residents that request it; current subscriptions are over 550,000; and there is also a youth-oriented Xplor magazine that has a online component and has over 175,000 subscribers. c. Department staff rely on what Missourians have to say about conservation. For example, in Fiscal Year 2015, there were 129 efforts that included comments or survey responses from over 75,000 people. This included surveys, open houses, public meetings, comment periods on all Area Plans, and comments on regulations. The Department has
5 Discussion Outline for Conservation Sales Tax History and Insights Page 5 outreach staff for AskMDC to answer questions, including through social media, which includes Facebook, Twitter, and YouTube. A service called GovDelivery is used to send out information by and text messages to those that request it. d. Another key is support across all areas of Missouri. In both 1936, and particularly in 1976, urban and suburban areas had high levels of support for conservation. e. The sales tax initiative passed with 50.8 percent voting "yes." (Note for demographic background, that in 1976, the population estimate for Missouri was 4.8 million (4,823,715); the population has increased by about 25 percent since 1976; in the 70s, the number of registered voters was around 2.9 million; the number of individuals that voted was 1,774,956; the number that voted yes for the sales tax was 901,535; the number of individuals voting in the 1976 election represented 53 percent of the total number of voting age, and those voting in the election represented over 60 percent of those registered to vote). f. For the Conservation Sales Tax in 1976, only 25 counties and the city of St. Louis had more than 50 percent voting "yes." Those counties are where most of the Missouri population lives. Today, the urban counties, similar to those counties voting "yes," represent 73 percent of the Missouri population. g. The answer to concerns from dedicated anglers and hunters about expanding programming that might reduce funding for their interests, is that investments in their interests will also increase with broadened programming and increased funding. A broad coalition is the most powerful and successful. Consider the marketing approach of meeting demands, where demands are what customers are willing to pay for to meet their wants and needs. h. Overall success of the funding initiative was also the result of linking specific outcomes with how the money would be spent. This is similar to effective strategic planning with a vision or picture of success, SMART goals, and stated measures to evaluate success to determine progress and accomplishments. The Department s ongoing conservation priorities as part of the strategic plan continue to be part of the Department s communications with citizens. i. Funding alternatives should be evaluated by criteria that include how much money will be generated and for how long; if there is organized opposition; and by how well the funding is spread out across the citizenry. All benefit from the public trust of conservation and it is reasonable to ask all to contribute.
6 Discussion Outline for Conservation Sales Tax History and Insights Page 6 j. The Design for Conservation was both an effective strategic plan and the foundation for a marketing and communication campaign. k. A consistent message from outside consultants since 1976 has been to have effective brand awareness of the Department and for conservation efforts in the state. By developing emotional connections with the Department s conservation efforts and increasing awareness that it is the Department of Conservation and staff that make a difference, this will help continue support for conservation outcomes. 7. Questions and answers.
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