Colorado Legislative Council Staff



General Fund Revenue Impact

Drafting Number:

Prime Sponsor(s):

LLS 98-115

Rep. Lamborn



Bill Status:

Fiscal Analyst:

January 6, 1998

House Finance

Harry Zeid (866-4753)



Summary of Legislation

            Under current law, Colorado imposes an income tax on individuals, estates, trusts, and corporations at the rate of five percent of federal taxable income, after certain adjustments have been made. This bill would refer a measure to the registered electors of the State of Colorado at the general election to be held in November, 1998, to permanently reduce the income tax rate to 4.75 percent of federal taxable income retroactive to taxable years commencing on or after January 1, 1998.

            The bill would become effective upon signature of the Governor, however, the fiscal impact of the bill is conditional upon approval by the voters at the general election in November, 1998.



FY 1998/1999

FY 1999/2000

State Revenues

General Fund - (reduction)**

Other Fund




State Expenditures

General Fund

Other Fund




FTE Position Change




Local Government ImpactNone

             *FY 1997-98 represents a one-half year impact on an accrual accounting basis.

             **This figure does not include lost interest income to the General Fund based on the reduced revenue collections.

State Revenues

            An 0.25 percent income tax rate reduction from 5.00 percent to 4.75 percent for individuals, estates, trusts, and corporations would reduce total income tax collections by five percent. The reduction in General Fund revenues on an accrual accounting basis is projected to be $77.1 million in FY 1997-98 (the current fiscal year), $172.2 million in FY 1998-99, and $182.1 million in FY 1999-00. The table below identifies the annual reductions for individuals and fiduciaries, and for corporations.

Projected General Fund Revenue Reduction

Based on Changing the State Income Tax Rate from 5.0 Percent to 4.75 Percent


FY 1997-98

FY 1998-99

FY 1999-00

Individual and Fiduciary

$ 73,300,000

$ 157,600,000

$ 166,800,000


$ 3,800,000




$ 77,100,000

$ 172,200,000

$ 182,100,000

            Any reduction in individual income tax withholding will also affect revenues from General Fund interest earnings. For example, if the withholding tables reduce General Fund receipts by $172.2 million in FY 1998-99, interest earnings on income tax withholding would be reduced by an estimated $5.17 million (based on earnings at 6.0 percent for an average of one-half year on the funds).

State Expenditures

            This fiscal note analysis presumes that no additional expenditures would be required by the Department of Revenue in order to modify income tax forms and instructions to reflect a change in the income tax rate. Based on an agreement with the Joint Budget Committee, Legislative Council Fiscal Note Staff, and the Department of Revenue, the Department of Revenue will absorb the costs of approximately 40 hours of contract programming time necessary to make these changes during the normal annual rewrite by the Department.

Election Expenditure Impacts (For Informational Purposes Only)

            A General Fund line-item in the 1998-99 Long Appropriations Bill will fund the costs of publicizing any initiative or referendum proposal in newspapers and for printing and distribution of the Blue Book to all electors. The General Assembly spent $291,267 GF for one state-wide ballot proposal on the November, 1995 ballot and $1,042,014 GF for the 12 proposals that appeared on the November, 1996 ballot.

            The 1996 General Election fixed costs for mailing the Blue Book to 1.35 million registered voters was $174,036 for postage and $3,800 for obtaining mailing addresses. These costs will be the same regardless of the number of issues on the ballot. Variable costs included; Spanish translation of $11,215; newspaper publication of $644,828; printing costs of $206,806; and other costs of $1,328. Total costs were $1,042,014 GF. Fixed costs totaled $177,837 and variable costs were $72,015 per ballot issue.

            Based on the costs incurred for the 1996 Blue Book, one ballot issue cost $249,852 to print and mail to the public. The $72,015 of incremental cost would be added for each issue to the basic mailing costs of $177,837.

Spending Authority

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

Departments Contacted