Colorado Legislative Council Staff
STATE and LOCAL
REVISED FISCAL NOTE
(replaces Fiscal Note dated February 20, 1998)
TABOR Refund Impact
State General Fund Revenue and Expenditure Impact
Local Government Revenue and Expenditure Impact
Drafting Number: Prime Sponsor(s): |
LLS 98-134 Rep. Spradley Sen. Blickensderfer |
Date: Bill Status: Fiscal Analyst: |
March 25, 1998 Senate 2nd Reading Steve Tammeus (866-2756) |
TITLE: CONCERNING REDUCTION OF PROPERTY TAXES.
Summary of Legislation
STATE FISCAL IMPACT SUMMARY |
FY 1998/99 |
FY 1999/00 |
FY 2000/01 |
State Revenues General Fund - Income Tax Other Fund |
|
$300,000 |
$600,000 |
State Expenditures General Fund - School Finance Act Other Fund |
|
$16,300,000 |
$16,500,000 |
FTE Position Change |
None |
None |
None |
Local Government Impact — The amended bill will limit the exemption to the taxes paid to school districts only. There would be no exemption for business personal property for other local governments. |
This bill as referred by the Senate Appropriations Committee (Senate Journal, March 25, 1998, page 563), effective January 1, 1999, exempts all personal property from the levy and collection of property tax by school districts for the payment of the costs of the financial base of support for the system of public schools in the state. The exemption will apply to the first $25,000 of the actual value of the personal property owned by the taxpayer in each county, except that, for any public utility, the exemption shall apply to the first $25,000 of the total actual value of personal property owned statewide.
The bill requires each school district, in determining the number of mills it will levy for the 1999-2000 budget year, to base the determination on the district’s assessed valuation for the 1999 property tax year, plus the assessed valuation of all personal property that is exempt from the levy and collection of property tax by the district. The bill will become effective upon the signature of the Governor.
The bill will affect state General Fund revenue and expenditures, local government expenditures, and school district revenue. Therefore, the bill is assessed as having a state and local fiscal impact.
State Revenues
Property taxes are deductible for business taxpayers as a business expense on state income tax returns, and for individual taxpayers who itemize deductions. The reduction of property taxes will increase the taxable incomes, and subsequent state tax liabilities, of those taxpayers benefitting from a property tax exemption. Legislative Council Staff estimates the provisions of this bill will increase state income tax revenue to the General Fund by $300,000 for FY 1999-2000 (one-half year) and by $600,000 for FY 2000-01.
TABOR Refund Impact
Section 20 of Article X of the Colorado Constitution, limits the maximum annual percentage increase in state fiscal year spending. Once total state revenue from all sources that are not specifically excluded from fiscal year spending exceeds these limits for the fiscal year, the state constitution requires that the excess shall be refunded in the next fiscal year unless voters approve a revenue change as an offset. Based on the current Legislative Council economic forecast, it is projected that the state will be in a TABOR refund position during each of the next five fiscal years. Any increase or decrease in state revenue from changes in fees, fines, licenses, or other revenue sources will affect the amount of the state revenue to be refunded.
State Expenditures
The reengrossed bill specifies that the value of the exemption would be $25,000 beginning in property tax year 1999. The school districts would also calculate what the mill levy should have been in the absence of the business personal property tax exemption.
Table 1 provides a summary of the reduction in property taxes to be paid to schools per the provisions of this bill. State aid for school districts is computed as the difference between total program costs and the amount collected from property taxes, therefore, additional state aid may be required through the School Finance Act to provide sufficient revenue to offset the reduction of property tax revenues available to school districts.
Table 1 - Fiscal Impact Summary of HB 98-1005, as amended |
|||||
|
FY 1999-00 |
FY 2000-01 |
FY 2001-02 |
FY 2002-03 |
FY 2003-04 |
Non-school local governments |
$0.0 |
$0.0 |
$0.0 |
$0.0 |
$0.0 |
School Finance Property Tax Reduction Due to $25,000 Exemption |
$16,300,000 |
$16,500,000 |
$16,900,000 |
$17,200,000 |
$17,600,000 |
Local Government Impact
The reengrossed bill will limit the exemption to the taxes paid to school districts only. There would be no exemption for business personal property for other local governments. Thus, the total amount of nonresidential assessed value on the tax rolls does not change, and the residential assessment rate does not change. Other local governments would not be affected by a change in the residential assessment rate.
The provisions of this bill may require county assessors to upgrade or modify existing computer and accounting systems in order to maintain current property tax records, calculate the amount of the exemption per taxpayer, and maintain the amount of the exemptions per taxpayer. The potential cost for each county to make these modifications is currently being evaluated.
Spending Authority
The provisions of this bill will not affect state expenditures until FY 1999-2000. This fiscal note would imply that no new state spending authority or appropriations are required for FY 1998-99 to implement the provisions of this bill.
Departments Contacted
Local Affairs Legislative Council Staff