Second Regular Session Sixty-sixth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 08-0268.01 Ed DeCecco HOUSE BILL 08-1081 HOUSE SPONSORSHIP Lundberg, SENATE SPONSORSHIP (None), House Committees Senate Committees Finance A BILL FOR AN ACT Concerning property tax credits to support education in the state. Bill Summary (Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments that may be subsequently adopted.) Creates 3 property tax credits (education-related credits), which are as follows: A credit for tuition payments to an independent or parochial school or other educational expenses for a student who previously attended a public school. A credit for contributions to a school tuition organization. A credit for tuition payments to an independent or parochial school or other educational expenses that does not require a student to have previously attended a public school. Establishes who may claim an education-related credit. Prohibits a credit from being refunded or carried forward to a subsequent property tax year. Requires an affidavit, which must include certain information, to be submitted in order to claim the credit. Permits the credit to be transferred and establishes procedures related thereto. Requires the state treasurer to transfer a specified amount of moneys, which are based on the number of the credits claimed for tuition paid to an independent or parochial school or other educational expenses for each student who previously attended a public school, from the state general fund to both the school tuition organization tax credit cash fund and the private school education tax credit cash fund. Establishes a mechanism for a county treasurer to be reimbursed for the revenue lost due to education-related credits by the state treasurer from these funds, as well as the general fund, depending on the education-related credit that is claimed. Specifies that the tax credits granted by the act shall not affect a school district's share of its total program for purposes of the "Public School Finance Act of 1994". Defines terms. Makes legislative findings and declarations. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Title 39, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW ARTICLE to read: ARTICLE 3.3 Property Tax Credits Related to Education 39-3.3-101. Legislative declaration. (1) The general assembly hereby finds and declares that: (a) Nongovernmental schools play an important role in achieving Colorado's educational goal of enhancing educational opportunities for all children. (b) All Coloradans support public education through sales and income taxes. Public education is also supported by property taxes paid by homeowners and indirectly paid by renters as a portion of their rent. (c) As a result of section 17 of article IX of the state constitution, which was approved by voters in the 2000 general election, public education in this state will be adequately funded. It is therefore good public policy to make educational choices available to more families without improperly involving the state in the direct support of parochial schools. (d) If a student leaves a public school in order to attend an independent or parochial school or a home-based educational program, it saves both the public school district and the state money that would have been needed to pay for the student's public school education. The state can use these savings to offer property tax credits that will help increase choice in education. (e) Since no state money goes directly to parochial schools, this system avoids the state impermissibly supporting or influencing parochial education. 39-3.3-102. Definitions. As used in this article, unless the context otherwise requires: (1) "Affidavit" means the affidavit described in section 39-3.3-106, C.R.S. (2) "Education-related credit" means a property tax credit created by section 39-3.3-103, 39-3.3-104, or 39-3.3-105. (3) "Parent" includes a legal guardian or any other person who has physical custody of a child. (4) "Qualified student" means a student who, during a state fiscal year commencing on or after July 1, 2008, attends an independent or parochial school in the state or participates in a home-based educational program and who, during the entire prior state fiscal year: (a) Was enrolled in a public school; or (b) Had not yet attained the age of six years. (5) "Renter" means a person who occupies a residential property as that person's principal residence during the property tax year for which a credit provided under this article is claimed and who has a leasehold interest in the residential property. (6) "School tuition organization" means a charitable organization in this state that is exempt from federal taxation under section 501 (c) (3) of the federal "Internal Revenue Code of 1986", as amended, allocates ninety percent or more of its annual revenue for educational scholarships or tuition grants to children to allow them to attend any independent or parochial school of their parents' or guardians' choice, and does not limit the availability of such scholarships or grants to the students of only one school. 39-3.3-103. Property tax credit for tuition and educational expenses for qualified student. (1) (a) For any property tax year commencing on or after January 1, 2008, the parent of a qualified student shall be entitled to a property tax credit for tuition or other educational expenses paid by the parent during the property tax year for the qualified student. The parent may claim or transfer the credit pursuant to section 39-3.3-106. (b) For a qualified student who was previously a full-time student in a public school, the amount of the credit created by this section shall be equal to one thousand dollars. For a qualified student who was previously a part-time student in a public school, the amount of the credit shall be equal to five hundred dollars. (c) For each property tax year after a parent is entitled to claim the credit created in paragraph (a) of this subsection (1), a parent shall be entitled to a property tax credit for tuition or other educational expenses paid by the parent during the property tax year for each student who previously met the definition of a qualified student, so long as the student is a resident of Colorado and continues to be enrolled at an independent or parochial school or in a home-based educational program and until such time that the student graduates high school. The limits set forth in paragraph (b) of this subsection (1) that applied when the student was a qualified student shall apply for a credit claimed pursuant to this paragraph (c). (2) The credit created by this section may not be refunded or carried forward to a subsequent property tax year. 39-3.3-104. School tuition organization tax credit cash fund - creation - property tax credit for contributions to school tuition organization. (1) The general assembly shall appropriate and the state treasurer shall transfer an amount equal to one-half of the total amount that the state treasurer reimburses the county treasurers pursuant to section 39-3.3-107 (2) (a) from the state general fund to the school tuition organization tax credit cash fund, which is hereby created in the state treasury. The treasurer shall make the transfer simultaneous with the reimbursement. The moneys in the fund shall be continuously appropriated to the state treasurer for the purpose of reimbursing a county treasurer for a decline in revenue that is a result of the property tax credit created by this section. Any moneys in the fund not expended for this purpose may be invested by the state treasurer as provided by law. All interest and income derived from the investment and deposit of moneys in the fund shall be credited to the fund. Any unexpended and unencumbered moneys remaining in the fund at the end of a fiscal year shall remain in the fund and shall not be credited or transferred to the general fund or any other fund. (2) (a) For any property tax year commencing on or after January 1, 2010, an individual shall be entitled to a property tax credit for voluntary cash contributions made by the individual to a school tuition organization during the property tax year, but only to the extent that the individual does not otherwise deduct the contributions from his or her federal taxable income. (b) The amount of the credit created by this section shall be equal to the actual voluntary cash contribution made to a school tuition organization, one thousand dollars, or the amount determined by the state treasurer pursuant to subsection (3) of this section. (3) In order to claim or transfer the credit created by this section, an individual shall mail a notice of intent to claim or transfer the credit to the state treasurer, which shall be postmarked no later than December 31 of the year in which the voluntary cash contribution was made to a school tuition organization. In the notice, the individual shall identify a return mailing address and specify that the individual seeks to claim or transfer the property tax credit created by this section. On January 15, 2010, and each January 15 thereafter, the state treasurer shall calculate the amount equal to the total moneys in the school tuition organization tax credit cash fund as of that date divided by the number of individuals who filed a notice of intent to claim or transfer the property tax credit in the prior calendar year. If the calculated amount is less than one thousand dollars, then this lesser amount shall be the maximum amount of the credit that may be claimed or transferred for that property tax year. On or before February 1, 2010, and each February 1 thereafter, the state treasurer shall mail a letter to each individual at the address included in the notice of intent to notify the individual of the maximum amount of the credit for that property tax year. The state treasurer shall post the maximum amount on a web site he or she maintains. (4) The credit created by this section may not be refunded or carried forward to a subsequent property tax year. 39-3.3-105. Private school education tax credit cash fund - creation - property tax credit for tuition and educational expenses for other students. (1) The general assembly shall appropriate and the state treasurer shall transfer an amount equal to one-half of the total amount that the state treasurer reimburses the county treasurers pursuant to section 39-3.3-107 (2) (a) from the state general fund to the private school education tax credit cash fund, which is hereby created in the state treasury. The treasurer shall make the transfer simultaneous with the reimbursement. The moneys in the fund shall be continuously appropriated to the state treasurer for the purpose of reimbursing a county treasurer for a decline in revenue that is a result of the property tax credit created by this section. Any moneys in the fund not expended for this purpose may be invested by the state treasurer as provided by law. All interest and income derived from the investment and deposit of moneys in the fund shall be credited to the fund. Any unexpended and unencumbered moneys remaining in the fund at the end of a fiscal year shall remain in the fund and shall not be credited or transferred to the general fund or any other fund. (2) (a) For any property tax year commencing on or after January 1, 2010, a parent shall be entitled to a property tax credit for tuition or other educational expenses paid by the parent during the property tax year for each child who attends an independent or parochial school or participates in a home-based educational program. The parent may claim or transfer the credit pursuant to section 39-3.3-106. (b) The amount of the credit created by this section shall be equal to the lesser of one thousand dollars or the amount determined by the state treasurer pursuant to subsection (3) of this section. (3) In order to claim or transfer the credit created by this section, a parent is required to mail to the state treasurer a notice of intent to claim or transfer the credit, which shall be postmarked no later than December 31 of the year in which the educational expenses were paid by the parent. In the notice, the parent shall identify a return mailing address and specify that the parent seeks to claim or transfer the property tax credit created by this section. On January 15, 2010, and each January 15 thereafter, the state treasurer shall calculate the amount equal to the total moneys in the private school education tax credit cash fund as of that date divided by the number of parents who filed a notice of intent to claim or transfer the credit in the prior calendar year. If the calculated amount is less than one thousand dollars, then this lesser amount shall be the maximum amount of the credit that may be claimed or transferred for that property tax year. On or before February 1, 2010, and each February 1 thereafter, the state treasurer shall mail a letter to each parent at the address included in the notice of intent to notify the parent of the maximum amount of the credit for that property tax year. The state treasurer shall post the maximum amount on a web site he or she maintains. (4) A parent may not use the same tuition payments or other educational expenses for purposes of claiming the credit pursuant to this section and the credit claimed pursuant to section 39-3.3-103. (5) The credit created by this section may not be refunded or carried forward to a subsequent property tax year. 39-3.3-106. Claiming property tax credit - affidavit - transfers of credit. (1) (a) In order to claim or transfer an education-related credit, a parent or individual shall prepare a signed affidavit containing the following: (I) The name, address, and phone number of the parent or individual; and (II) The amount of the credit claimed. (b) In addition to the information required pursuant to paragraph (a) of this subsection (1), an affidavit related to the credit created in section 39-3.3-103 shall contain the following information: (I) The name of the school district in which the qualified student was enrolled prior to transferring to an independent or parochial school or participating in a home-based educational program; (II) The name of the independent or parochial school that the qualified student attends, or if the student is in a home-based educational program, the school district that the parent sent a notice pursuant to section 22-33-104.5 (3) (e), C.R.S.; and (III) Whether the qualified student was a full-time or part-time student during his or her last year in public school. (c) In addition to the information required pursuant to paragraph (a) of this subsection (1), an affidavit related to the credit created in section 39-3.3-104 shall contain the following: (I) The name of the school tuition organization to which the made a voluntary cash contribution; (II) The amount of the voluntary cash contribution; and (III) A copy of the letter sent by the state treasurer to the individual pursuant to section 39-3.3-104 (3), which shall be attached to the affidavit and become part thereof. (d) In addition to the information required pursuant to paragraph (a) of this subsection (1), an affidavit related to the credit created in section 39-3.3-105 shall contain the following: (I) The name of the independent or parochial school that the qualified student attends, or if the student is in a home-based educational program, the school district that the parent sent a notice pursuant to section 22-33-104.5 (3) (e), C.R.S.; and (II) A copy of the letter sent by the state treasurer to the individual pursuant to section 39-3.3-105 (3), which shall be attached to the affidavit and become part thereof. (2) A parent or individual who prepares an affidavit may submit the affidavit as partial or full payment of property taxes on real property owned by the parent or individual that are levied by all local governments in which the property is located in the property tax year for which the credit is claimed. (3) (a) An education-related credit may be sold or otherwise transferred; except that the cash value of the return consideration shall not be less than ninety percent of the amount of the value of the credit. The transfer shall include the assignment of the affidavit. The credit may be transferred more than once, but only the taxpayer who submits the assigned affidavit shall be eligible to claim the credit. (b) If an education-related credit is transferred to a person who holds money in escrow for the payment of property taxes for a taxpayer, the person shall refund to the taxpayer the amount of the credit claimed in the affidavit, up to the amount of the property taxes, within thirty days of paying the taxes. (c) The provisions of this subsection (3) shall apply to both property owners and renters. (4) In order to claim an education-related credit, the affidavit must be received by a county treasurer no later than April 1 of the year following the property tax year for which the credit is claimed. (5) The county treasurer shall apply the education-related credit against the property tax liability of the taxpayer claiming the credit within ten days after receiving a valid affidavit. 39-3.3-107. Reimbursement for local governments - apportionment of taxes. (1) On or before April 15 of the year following the property tax year for which an education-related credit is claimed, the county treasurer who applies the credit against a taxpayer's property tax liability pursuant to section 39-3.3-106 (5) shall send the affidavit to the state treasurer for reimbursement of the credit. A county treasurer shall submit an education-related credit in a manner specified by the state treasurer that permits the state treasurer to clearly identify whether the education-related credit was claimed pursuant to section 39-3.3-103, 39-3.3-104, or 39-3.3-105. (2) The state treasurer shall reimburse a county treasurer as required pursuant to subsection (1) of this section from the following funds: (a) From the state general fund for a credit created by section 39-3.3-103, to the extent that such money is appropriated by the general assembly for such purpose; (b) From the school tuition organization tax credit cash fund for a credit created by section 39-3.3-104; and (c) From the private school education tax credit cash fund for a credit created by section 39-3.3-105. (3) If the amount of the education-related credit claimed by a taxpayer is less than the total amount of the property taxes owed by the taxpayer, the county treasurer shall reduce the total taxes by the credit and apportion, credit, or distribute the difference in the manner set forth in section 39-10-107. Upon receipt of reimbursement from the state treasurer, the county treasurer shall apportion, credit, or distribute the reimbursement in the same manner. 39-3.3-108. Effect on "Public School Finance Act of 1994". For purposes of section 22-54-106 (1) (a) (I), C.R.S., a tax credit claimed pursuant to this article by a taxpayer on property located in a school district shall not reduce the amount of property tax revenue that the school district is entitled to receive from the property tax levy. SECTION 2. 24-75-402 (5), Colorado Revised Statutes, is amended BY THE ADDITION OF THE FOLLOWING NEW PARAGRAPHS to read: 24-75-402. Cash funds - limit on uncommitted reserves - reduction in amount of fees - exclusions. (5) Notwithstanding any provision of this section to the contrary, the following cash funds are excluded from the limitations specified in this section: (t) The school tuition organization tax credit cash fund created in section 39-3.3-104, C.R.S.; and (u) The private school education tax credit cash fund created in section 39-3.3-105, C.R.S. SECTION 3. Effective date. This act shall take effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly that is allowed for submitting a referendum petition pursuant to article V, section 1 (3) of the state constitution; except that, if a referendum petition is filed against this act or an item, section, or part of this act within such period, then the act, item, section, or part, if approved by the people, shall take effect on the date of the official declaration of the vote thereon by proclamation of the governor.