First Regular Session

Sixty-first General Assembly

LLS NO. 97­0128.01 JAP HOUSE BILL 97­1086

STATE OF COLORADO

BY REPRESENTATIVES Schwarz and Reeser;

also SENATORS Blickensderfer, Chlouber, and Rizzuto.

REREVISED

FINANCE

A BILL FOR AN ACT

CONCERNING REDUCTION OF PROPERTY TAXES.

Bill Summary

(Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments which may be subsequently adopted.)

Explains that it is the general assembly's intent, in creating a partial tax exemption for business personal property, to benefit all Colorado citizens through the resulting increase in business spending and investment and through the resulting reduction in assessed valuation for residential real property that is required to ensure that the aggregate statewide valuation for assessment attributable to residential real property remains the same as in preceding years.

For property tax years beginning on or after January 1, 1998, exempts from the levy and collection of property tax a stated amount of actual value of personal property listed on a personal property schedule.

For property tax years beginning on or after January 1, 1998, but prior to January 1, 2006, requires the state treasurer to transmit a specified amount of moneys for losses in property tax revenue to each local government in which the total assessed value of all taxable property within its taxing jurisdiction decreases below the total assessed value of all taxable property for such government for the 1997 property tax year. Creates the property tax exemption backfill fund and, for fiscal years beginning on or after January 1, 1998, but prior to January 1, 2006, requires the general assembly to appropriate a specified amount to the fund for reimbursement to local governments. By March 1, 1998, and each year thereafter until 2005, requires the property tax administrator to prepare a report specifying the amount to be transmitted to each local government and to submit the report to the state treasurer and the general assembly.

Repeals the exemption for business personal property in the amount of $2,500 or less, effective January 1, 1998.

Be it enacted by the General Assembly of the State of Colorado:

SECTION 1.  Legislative declaration. The general assembly hereby finds that the partial tax exemption created in this act for business personal property and the resulting decrease in the amount of property tax paid on business personal property will benefit not just business owners, but all citizens of the state, because reducing a business' property tax liability will enable the business to invest or spend the amount of the property tax reduction, thereby stimulating economic growth. The general assembly further finds that the business personal property tax exemption created in this act will result in a decrease in the statewide assessed valuation for nonresidential property and, through the operation of section 3 of article X of the state constitution, which requires that the percentage of aggregate statewide valuation for assessment attributable to residential real property remain constant over time, a decrease in the statewide assessed valuation for residential real property. In most cases, this decrease in assessed valuation for residential real property will result in a decrease in the amount of property tax paid by homeowners. Therefore, the general assembly hereby declares that passage of a partial tax exemption for business personal property is both necessary and beneficial for the people of the state of Colorado.

SECTION 2.  Article 3 of title 39, Colorado Revised Statutes, 1994 Repl. Vol., as amended, is amended BY THE ADDITION OF A NEW SECTION to read:

39­3­119.7.  Personal property ­ exemption ­ fund created ­ report. (1)  FOR THE PROPERTY TAX YEAR COMMENCING ON JANUARY 1, 1998, THE FIRST TWENTY­FIVE HUNDRED DOLLARS IN ACTUAL VALUE OF PERSONAL PROPERTY LISTED ON A PERSONAL PROPERTY SCHEDULE AND NOT OTHERWISE EXEMPT FROM PROPERTY TAX SHALL BE EXEMPT FROM THE LEVY AND COLLECTION OF PROPERTY TAX.

(2)  FOR THE PROPERTY TAX YEAR COMMENCING ON JANUARY 1, 1999, THE FIRST FOUR THOUSAND DOLLARS IN ACTUAL VALUE OF PERSONAL PROPERTY LISTED ON A PERSONAL PROPERTY SCHEDULE AND NOT OTHERWISE EXEMPT FROM PROPERTY TAX SHALL BE EXEMPT FROM THE LEVY AND COLLECTION OF PROPERTY TAX.

(3)  FOR THE PROPERTY TAX YEAR COMMENCING ON JANUARY 1, 2000, THE FIRST SIX THOUSAND DOLLARS IN ACTUAL VALUE OF PERSONAL PROPERTY LISTED ON A PERSONAL PROPERTY SCHEDULE AND NOT OTHERWISE EXEMPT FROM PROPERTY TAX SHALL BE EXEMPT FROM THE LEVY AND COLLECTION OF PROPERTY TAX.

(4)  FOR PROPERTY TAX YEARS COMMENCING ON JANUARY 1, 2001, THE FIRST EIGHT THOUSAND DOLLARS IN ACTUAL VALUE OF PERSONAL PROPERTY LISTED ON A PERSONAL PROPERTY SCHEDULE AND NOT OTHERWISE EXEMPT FROM PROPERTY TAX SHALL BE EXEMPT FROM THE LEVY AND COLLECTION OF PROPERTY TAX.

(5)  FOR PROPERTY TAX YEARS COMMENCING ON OR AFTER JANUARY 1, 2002, THE FIRST TEN THOUSAND DOLLARS IN ACTUAL VALUE OF PERSONAL PROPERTY LISTED ON A PERSONAL PROPERTY SCHEDULE AND NOT OTHERWISE EXEMPT FROM PROPERTY TAX SHALL BE EXEMPT FROM THE LEVY AND COLLECTION OF PROPERTY TAX.

(6) (a)  FOR PROPERTY TAX YEARS COMMENCING ON OR AFTER JANUARY 1, 1998, BUT PRIOR TO JANUARY 1, 2006, IN EACH LOCAL GOVERNMENT FOR WHICH THE TOTAL ASSESSED VALUE OF ALL TAXABLE PROPERTY WITHIN THE TAXING JURISDICTION OF THE LOCAL GOVERNMENT DECREASES BELOW THE TOTAL ASSESSED VALUE OF ALL TAXABLE PROPERTY WITHIN THE TAXING JURISDICTION FOR THE PROPERTY TAX YEAR COMMENCING JANUARY 1, 1997, THE STATE TREASURER SHALL DISTRIBUTE TO SAID LOCAL GOVERNMENT AN AMOUNT EQUAL TO THE DIRECT AND INDIRECT LOSS IN PROPERTY TAX REVENUE RECEIVED FROM PROPERTY TAXES THAT HAD BEEN PREVIOUSLY LEVIED OR HAD RECEIVED VOTER APPROVAL TO BE LEVIED PRIOR TO THE EFFECTIVE DATE OF THIS SECTION, WHICH DIRECT LOSSES ARE INCURRED AS A RESULT OF THE EXEMPTION ESTABLISHED IN SUBSECTIONS (1) TO (5) OF THIS SECTION AND WHICH INDIRECT LOSSES ARE A RESULT OF AN ADJUSTMENT IN THE RATIO OF VALUATION FOR ASSESSMENT FOR RESIDENTIAL REAL PROPERTY PURSUANT TO SECTION 3 OF ARTICLE X OF THE STATE CONSTITUTION DUE TO THE EXEMPTION ESTABLISHED IN SUBSECTIONS (1) TO (5) OF THIS SECTION.

(b)  FOR FISCAL YEARS COMMENCING ON OR AFTER JANUARY 1, 1998, BUT PRIOR TO JANUARY 1, 2006, THE GENERAL ASSEMBLY SHALL APPROPRIATE FROM THE GENERAL FUND TO THE PROPERTY TAX EXEMPTION BACKFILL FUND, WHICH FUND IS HEREBY ESTABLISHED IN THE STATE TREASURY, AN AMOUNT EQUAL TO THE TOTAL AMOUNT NEEDED TO REIMBURSE ALL LOCAL GOVERNMENTS PURSUANT TO PARAGRAPH (a) OF THIS SUBSECTION (6) FOR THE PROPERTY TAX YEAR ENDING DURING THE STATE'S FISCAL YEAR. THE PROPERTY TAX ADMINISTRATOR SHALL PREPARE A REPORT ON OR BEFORE MARCH 1, 1998, AND ON OR BEFORE EACH MARCH 1 THEREAFTER THROUGH MARCH 1, 2005, SETTING FORTH THE AMOUNT TO BE TRANSMITTED TO EACH LOCAL GOVERNMENT PURSUANT TO PARAGRAPH (a) OF THIS SUBSECTION (6) AND SHALL PROVIDE THE REPORT TO THE STATE TREASURER AND THE GENERAL ASSEMBLY. THE STATE TREASURER SHALL ANNUALLY DISTRIBUTE THE MONEYS IN THE PROPERTY TAX EXEMPTION BACKFILL FUND AS PROVIDED IN THE REPORT.

(c)  FOR PURPOSES OF THIS SUBSECTION (6), "LOCAL GOVERNMENT" SHALL NOT INCLUDE SCHOOL DISTRICTS.

SECTION 3.  39­3­119.5, Colorado Revised Statutes, 1994 Repl. Vol., as amended, is amended to read:

39­3­119.5.  Personal property ­ exemption ­ repeal. (1)  For property tax years commencing on and after January 1, 1997, personal property not otherwise exempt from property tax shall be exempt from the levy and collection of property tax if the personal property would otherwise be listed on a single personal property schedule and the actual value of such personal property is two thousand five hundred dollars or less.

(2)  THIS SECTION IS REPEALED, EFFECTIVE JANUARY 1, 1998.

SECTION 4.  Article 3 of title 2, Colorado Revised Statutes, 1980 Repl. Vol., as amended, is amended BY THE ADDITION OF A NEW PART to read:

PART 15

2­3­1501.  State­local forum ­ duties relating to fiscal policy research. (1)  THE GENERAL ASSEMBLY HEREBY FINDS THAT THE ENACTMENT OF TAX POLICY CHANGES ON A STATEWIDE BASIS MAY HAVE UNINTENDED ADVERSE CONSEQUENCES FOR LOCAL GOVERNMENTS. THE GENERAL ASSEMBLY THEREFORE INSTRUCTS THE STATE­LOCAL FORUM, AS ESTABLISHED BY SENATE JOINT RESOLUTION 93­10 AND MODIFIED BY HOUSE JOINT RESOLUTION 95­1007, REFERRED TO IN THIS PART 15 AS THE "STATE­LOCAL FORUM", TO CONDUCT INTERGOVERNMENTAL FISCAL POLICY RESEARCH IN ORDER TO MAKE RECOMMENDATIONS TO THE GENERAL ASSEMBLY CONCERNING THE EFFECTS ON LOCAL GOVERNMENTS OF STATEWIDE TAX POLICY CHANGES.

(2)  SUBJECT TO THE PROVISIONS OF SECTION 2­3­1503, THE STATE­LOCAL FORUM SHALL PERFORM THE FOLLOWING FUNCTIONS RELATING TO INTERGOVERNMENTAL FISCAL POLICY RESEARCH:

(a)  GATHER INFORMATION FROM STUDIES THAT HAVE BEEN DONE ON STATE AND LOCAL FISCAL ISSUES;

(b)  ANALYZE AND STUDY VARIOUS STATE AND LOCAL FISCAL ISSUES, WHICH INCLUDE, BUT ARE NOT LIMITED TO:

(I)  EROSION OF THE STATE AND LOCAL TAX BASES;

(II)  THE FISCAL EFFECTS OF SECTION 20 OF ARTICLE X OF THE COLORADO CONSTITUTION;

(III)  THE FISCAL EFFECTS OF SECTION 3 OF ARTICLE X OF THE COLORADO CONSTITUTION;

(IV)  EFFICIENCY CONSIDERATIONS;

(V)  THE ROLES, FAIRNESS, AND STABILITY OF EACH OF THE TAXES UTILIZED TO FINANCE THE OPERATIONS OF STATE AND LOCAL GOVERNMENTS;

(VI)  THE CAPACITY OF THE CURRENT TAX STRUCTURE TO ADEQUATELY FINANCE THE SERVICES OF STATE AND LOCAL GOVERNMENTS;

(VII)  THE EQUITY OF STATE AND LOCAL GOVERNMENT TAX BURDEN;

(VIII)  THE IMPACT OF PROPOSED FEDERAL TAX AND REVENUE LAW CHANGES;

(IX)  THE MANNER IN WHICH STATE AND LOCAL TAXES RESPOND TO THE ECONOMY; AND

(X)  TAX RELIEF;

(c)  DEVELOP AND PROPOSE SOLUTIONS TO ANY PROBLEMS FOUND IN THE ANALYSIS AND STUDY OF THE ISSUES DESCRIBED IN PARAGRAPH (b) OF THIS SUBSECTION (2);

(d)  UPON THE REQUEST OF THE GENERAL ASSEMBLY, THE GOVERNOR, OR A GOVERNING BODY OF A LOCAL GOVERNMENT AND WITHIN RESOURCES AVAILABLE FOR SUCH PURPOSES, ANALYZE THE FISCAL EFFECTS ON STATE AND LOCAL GOVERNMENTS OF ANY STATE OR LOCAL PROPOSAL, LAW, OR CONSTITUTIONAL AMENDMENT. IF SUCH REQUESTS EXCEED THE RESOURCES AVAILABLE TO PERFORM SUCH ANALYSES, THE STATE­LOCAL FORUM SHALL PRIORITIZE THE REQUESTS AND SHALL DETERMINE WHICH ANALYSES SHALL BE PERFORMED WITHIN A REASONABLE PERIOD OF TIME.

(e)  PROVIDE A DATA CENTER AND CLEARINGHOUSE FOR FISCAL INFORMATION ON INTERGOVERNMENTAL ISSUES; AND

(f)  OVERSEE THE ACTIVITIES OF THE LEGISLATIVE COUNCIL STAFF DESIGNATED BY THE DIRECTOR OF RESEARCH OF THE LEGISLATIVE COUNCIL TO ASSIST THE STATE­LOCAL FORUM IN THE PERFORMANCE OF ITS FUNCTIONS DESCRIBED IN THIS SECTION.

2­3­1502.  Staff assistance. (1)  SUBJECT TO THE PROVISIONS OF SECTION 2­3­1503, UNDER THE POWERS CONFERRED TO THE DIRECTOR OF RESEARCH OF THE LEGISLATIVE COUNCIL IN PART 3 OF THIS ARTICLE, THE DIRECTOR OF RESEARCH, UPON CONSULTATION WITH THE STATE­LOCAL FORUM, SHALL APPOINT AND DETERMINE THE SALARY OF THE PROFESSIONAL, TECHNICAL, OR CLERICAL STAFF OR OTHER EMPLOYEES NECESSARY TO ASSIST THE STATE­LOCAL FORUM IN CARRYING OUT ITS FUNCTIONS RELATING TO FISCAL RESEARCH AS DESCRIBED IN SECTION 2­3­1501. ANY APPOINTMENT MADE BY THE DIRECTOR OF RESEARCH PURSUANT TO THIS SUBSECTION (1) SHALL BE SUBJECT TO THE APPROVAL OF THE LEGISLATIVE COUNCIL.

(2)  IN ADDITION TO THE STAFF APPOINTED UNDER SUBSECTION (1) OF THIS SECTION, THE STATE­LOCAL FORUM MAY REQUEST ADDITIONAL STAFF ASSISTANCE FROM THE LEGISLATIVE COUNCIL, THE JOINT BUDGET COMMITTEE, THE OFFICE OF STATE PLANNING AND BUDGETING, OR ANY OTHER STATE DEPARTMENT OR AGENCY AS NECESSARY IN CARRYING OUT ANY OF THE POWERS AND DUTIES OF THE STATE­LOCAL FORUM UNDER THIS PART 15. THE LEGISLATIVE COUNCIL SHALL PROVIDE NECESSARY SECRETARIAL AND CLERICAL ASSISTANCE TO THE STATE­LOCAL FORUM.

2­3­1503.  Funding for fiscal policy research. (1)  BY OCTOBER 1, 1997, THE EXECUTIVE COMMITTEE OF THE LEGISLATIVE COUNCIL SHALL ADOPT A PLAN TO PAY FOR THE PERSONNEL COSTS ASSOCIATED WITH THE DUTIES OF THE STATE­LOCAL FORUM RELATING TO FISCAL POLICY RESEARCH PURSUANT TO SECTIONS 2­3­1501 AND 2­3­1502 WITHIN THE LEGISLATIVE APPROPRIATION TO THE GENERAL ASSEMBLY FOR THE 1997­98 FISCAL YEAR. THE EXECUTIVE COMMITTEE OF THE LEGISLATIVE COUNCIL SHALL ALSO IDENTIFY IN SUCH PLAN ANY PERMANENT SOURCES OF FUNDING FOR SUCH COSTS. UPON A DETERMINATION THAT SUFFICIENT FUNDS ARE AVAILABLE WITHIN BUDGET LINE ITEMS IN THE LEGISLATIVE APPROPRIATION TO THE GENERAL ASSEMBLY FOR THE 1997­98 FISCAL YEAR, SUCH PLAN SHALL BE IMPLEMENTED BY A BUDGET AMENDMENT ADOPTED BY THE EXECUTIVE COMMITTEE OF THE LEGISLATIVE COUNCIL FOR SUCH FISCAL YEAR.

(2)  THE LEGISLATIVE COUNCIL STAFF SHALL ABSORB WITHIN EXISTING APPROPRIATIONS ANY OPERATING AND CAPITAL OUTLAY COSTS ASSOCIATED WITH THE DUTIES OF THE STATE­LOCAL FORUM RELATING TO FISCAL POLICY RESEARCH UNDER SECTIONS 2­3­1501 AND 2­3­1502.

2­3­1504.  Access to information ­ confidentiality required. (1) (a)  EXCEPT AS PROVIDED IN PARAGRAPH (b) OF THIS SUBSECTION (1), EACH OFFICER, BOARD, COMMISSION, COUNCIL, DEPARTMENT, AGENCY, OR OTHER ORGANIZATION OF STATE OR LOCAL GOVERNMENT SHALL MAKE AVAILABLE ALL FACTS, RECORDS, INFORMATION, AND DATA REQUESTED BY THE STATE­LOCAL FORUM AND SHALL COOPERATE WITH THE STATE­LOCAL FORUM IN CARRYING OUT ITS POWERS AND DUTIES UNDER THIS PART 15, NOTWITHSTANDING ANY OTHER PROVISION OF LAW REQUIRING THE CONFIDENTIALITY OF SUCH INFORMATION.

(b) (I)  THE DEPARTMENT OF REVENUE SHALL COOPERATE WITH THE STATE­LOCAL FORUM IN CARRYING OUT ITS POWERS AND DUTIES UNDER THIS PART 15 BY PROVIDING SUMMARY INFORMATION. FOR ALL TAX INFORMATION, EXCEPT INCOME TAX INFORMATION, THE DIRECTOR OF THE DEPARTMENT OF REVENUE, AT THE DIRECTOR'S DISCRETION, MAY APPOINT INDIVIDUAL STAFF OF THE STATE­LOCAL FORUM AS THE DIRECTOR'S AGENT FOR PURPOSES OF ACCESS TO CONFIDENTIAL TAX INFORMATION. SUCH AGENT SHALL ONLY RELEASE SUCH INFORMATION TO THE STATE­LOCAL FORUM IN SUMMARY FORM AS REQUIRED BY SECTION 39­21­113 (5), C.R.S., AND SUCH AGENT SHALL BE SUBJECT TO ANY STATUTE OR RULE THAT APPLIES TO AN EMPLOYEE OF THE DEPARTMENT OF REVENUE.

(II)  LOCAL GOVERNMENTS SHALL COOPERATE WITH THE STATE­LOCAL FORUM IN CARRYING OUT ITS POWERS AND DUTIES UNDER THIS PART 15 BY PROVIDING SUMMARY TAX INFORMATION THAT DOES NOT VIOLATE ANY APPLICABLE LOCAL GOVERNMENT LAWS GOVERNING CONFIDENTIAL INDIVIDUAL TAX RETURNS OR REPORTS.

(2)  NO MEMBER OF THE STATE­LOCAL FORUM AND NO EMPLOYEE OF THE LEGISLATIVE COUNCIL OR OF ANY OTHER STATE AGENCY PERFORMING WORK ON BEHALF OF THE STATE­LOCAL FORUM SHALL REVEAL TO ANY PERSON OUTSIDE OF THE LEGISLATIVE COUNCIL THE CONTENTS OR NATURE OF ANY FACTS, RECORDS, INFORMATION, AND DATA REQUESTED BY OR ON BEHALF OF THE STATE­LOCAL FORUM THAT ARE SUBJECT TO ANY CONFIDENTIALITY REQUIREMENTS UNDER LAW. IN ADDITION, ANY FISCAL DATA RELATING TO TAXPAYER INFORMATION SHALL BE SUBJECT TO ANY CONFIDENTIALITY REQUIREMENTS AS PROVIDED BY LAW AND SHALL BE PRESENTED IN SUCH A MANNER THAT THE SOURCE CANNOT BE IDENTIFIED. ANY EMPLOYEE FAILING TO ABIDE BY THE REQUIREMENTS SET FORTH IN THIS SECTION SHALL BE SUBJECT TO DISCIPLINARY ACTION, INCLUDING TERMINATION FROM HIS OR HER POSITION OF EMPLOYMENT.

2­3­1505.  Reports.  THE STATE­LOCAL FORUM SHALL PREPARE AN ANNUAL REPORT BY NOVEMBER 30, 1998, AND EACH YEAR THEREAFTER, WHICH REPORT SHALL CONTAIN A SUMMARY OF THE ACTIVITIES OF THE STATE­LOCAL FORUM DURING THE PREVIOUS YEAR. COPIES OF THE ANNUAL REPORT SHALL BE SUBMITTED TO THE GOVERNOR, THE EXECUTIVE COMMITTEE OF THE LEGISLATIVE COUNCIL, AND THE MEMBER ASSOCIATIONS FOR THE COUNTIES, MUNICIPALITIES, SPECIAL DISTRICTS, AND SCHOOL BOARDS.

SECTION 5.  2­3­304, Colorado Revised Statutes, 1980 Repl. Vol., as amended, is amended BY THE ADDITION OF A NEW SUBSECTION to read:

2­3­304.  Director of research ­ assistants. (7)  SUBJECT TO THE PROVISIONS OF SECTION 2­3­1503, THE LEGISLATIVE COUNCIL STAFF SHALL ASSIST THE COLORADO STATE­LOCAL FORUM, AN ADVISORY COMMISSION ON INTERGOVERNMENTAL RELATIONS, IN CARRYING OUT ITS FUNCTIONS UNDER PART 15 OF THIS ARTICLE.

SECTION 6.  Effective date. This act shall take effect at 12:01 a.m. on the day following the expiration of the ninety­day 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.