Colorado Legislative Council Staff

STATE and LOCAL

FISCAL NOTE

State General Fund Revenue Impact

Conditional Local Revenue Impact


Drafting Number:

Prime Sponsor(s):

LLS 98-272

Rep. McElhany

 

Date:

Bill Status:

Fiscal Analyst:

January 8, 1998

House Finance

Harry Zeid (866-4753)

 

TITLE:            CONCERNING THE ELIMINATION OF THE STATE SALES TAX ON TELEPHONE AND TELEGRAPH SERVICES.



Summary of Legislation


            The bill would repeal the state sales tax on telephone and telegraph services beginning July 1, 1998. The authority of local governmental entities to impose sales tax on telephone and telegraph services would be preserved. The bill would reduce state General Fund revenues, and is therefore assessed as having state fiscal impact. The bill would become effective July 1, 1998


STATE FISCAL IMPACT SUMMARY

FY 1998/99

FY 1999/2000

State Revenues

General Fund (reduction)

Other Fund

($69,321,712)

($74,520,840)

State Expenditures

General Fund

Other Fund

 

 

FTE Position Change

None

None

Local Government Impact — Statutory cities and counties would be authorized to continue to levy the sales tax on telephone and telegraph service if they choose.


State Revenues


            The bill would repeal the state sales tax on telephone and telegraph services beginning July 1, 1998. Telephone and telegraph services is represented by Standard Industrial Classification (SIC) codes 4812 (radiotelephone communications) and 4813 (all other telephone communications). Based on reported net taxable sales for this industry classification, the sales and use tax collected were $27,486,652 in FY 1989-90, and increased to $59,985,015 in FY 1996-97. Including estimates for industry growth of 7.5 percent annually, it is projected that state sales tax revenue reductions that would occur by exempting telephone and telegraph services from the imposition of state sales and use tax will be $69.32 million in FY 1998-99, and $74.52 million in FY 1999-00.


Local Government Impact


            The bill authorizes statutory cities and counties, and other local districts that impose a sales tax to, in its discretion, continue to levy the sales tax upon telephone and telegraph services, whether furnished by public or private corporations or enterprises, for all intrastate telephone and telegraph service. Therefore, the fiscal impact on local governments is conditional upon the decision of each statutory city and county regarding whether or not to continue to impose the sales tax on telephone and telegraph services.



Spending Authority


            The fiscal note would imply that no appropriations or spending authority are required to implement the provisions of the bill.



Departments Contacted


            Revenue