Colorado Legislative Council Staff

STATE

FISCAL NOTE

TABOR Refund Impact

Federal & HUTF Fund Revenue and General Fund Expenditure Impact

TITLE:            CONCERNING FERMENTED MALT BEVERAGES, AND, IN CONNECTION THEREWITH, ENACTING THE "DRINKING RESPONSIBILITY ACT OF 1998" AND AUTHORIZING THE ISSUANCE OF PROVISIONAL DRINKING PERMITS TO CERTAIN PERSONS WHO ARE EIGHTEEN YEARS OF AGE OR OLDER.

Summary of Legislation

            The bill would allow a person who is at least 18 years of age and holds a valid provisional drinking permit to purchase, possess, and consume 3.2 beer. The current minimum age is 21. The Department of Revenue would issue the annual provisional drinking permits to persons between 18 and 21 years of age who are state residents, enrolled in a Colorado school, college, or university, employed in the state, and pays a fee.

* Assumes 10 percent of potential applicants will purchase a provisional drinking permit.

            The initial fee would be set at $100. Subsequent fees would be calculated so that the revenues plus any additional moneys collected from excise taxes on 3.2 beer would be sufficient to pay the administrative costs and offset any loss in federal highway funds that may be withheld for not conforming to the national uniform drinking age. The State Treasurer would deposit moneys collected from excise taxes on 3.2 beer that are in excess of the amounts collected in FY 1997-98, into the Highway Users Tax Fund (HUTF). The bill also provides that for purposes of Section 20 of Article X of the Colorado Constitution, moneys that the state would be required transfer to the HUTF as a result of this bill would be considered "federal funds".

            A provisional drinking permit holder who would be convicted of a drug- or alcohol-related driving offense, refuse to take or cooperate with the taking of a breath or blood test, or be determined to have driven with a blood alcohol content of 0.05 or greater would have their permit revoked for one year or until the permit holder becomes twenty-one for a first violation. Subsequent violations would result in indefinite permit suspension. The bill would increase the blood alcohol level required for driver’s license revocations to 0.05 or greater rather than 0.02 or greater under current law. The department would be able to accept donations from private sources to create an educational program for applicants.

State Revenue

            Federal Highway Funds. Provisions of the “Surface Transportation Act of 1982" contained in Section 6 of Public Law 98-363 penalties for states that do not comply with the uniform drinking age requirements. Should the state be determined to be out of compliance, the state may have 5 percent of its Surface Transportation Program, National Highway System, and Interstate Maintenance funds withheld in the first year and 10 percent of those funds withheld in subsequent years. In FY 1997-98, Colorado received $193.7 million in federal highway funds of which $168.9 million is included in the three categories named above. For the purposes of this fiscal note, it is assumed that there would be no increase or decrease in the states potential federal allotment of funds in the next two fiscal years. A 5 percent reduction would equate to $8.5 million dollars. An additional $493,000 of federal 410 Program money may be withheld for a total $8.9 million reduction in FY 1998-99. In FY 1999-00, the estimated loss of federal funds is estimated to be $17.4 million.

            Provisional Drinking Permit Fee. There are an estimated 197,607 persons in this state that are residents, enrolled in a Colorado college or university, or employed here that are between the ages of 18 and 20. The table below estimates the fiscal impact that may occur depending on the percentage of potential applicants that purchase the permit. The table also includes the DOR’s operating costs. Should less than 50 percent of the potential applicants purchase the permit, the amount of revenue to the HUTF would be reduced.

Table I

            3.2 Beer Excise Tax Revenue. Revenues collected on 3.2 beer were declining prior to the state raising the drinking age limit to 21. Revenues from 3.2 beer have continued to decline since the drinking age limit was adopted. In FY 1997, the state collected $603,331 in revenue from 3.2 beer. For purposes of this fiscal note, it is assumed that there would be a 10 percent increase in the revenues generated on 3.2 beer or $60,333 in additional revenue.

            The bill also allows the Department of Revenue accept gifts, grants, and donations to fund a provisional drinking education association. It is estimated that the amount of gifts, grants, and donations received would be minimal.

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

            It is assumed that the time taken to issue a provisional drinking permit is approximately the same time it would take to issue a Colorado Identification Card or 12.1 minutes. Table II provides an estimate of the workload impact to the DOR depending upon the number of potential applicants that purchase a provisional drinking permit. Should all of the 197,607 individuals purchase a permit the DOR would require 22 FTE and $691,791 in cash funds. However, if 10 percent of the potential applicants purchase a permit the DOR’s costs would be reduced to 2 FTE and $69,179 in cash funds. For purposes of this fiscal note, it is assumed that 10 percent of the eligible applicants would purchase the provisional drinking permit.

Table II

Fee Impact on Individuals, Families or Business

            Pursuant to Section 2-2-322, C.R.S., which requires legislative service agency review of legislative measures which include the creation or increase of any fee collected by a state agency, the following analysis is provided. The bill would create a $100 fee in the first year that would be adjusted depending upon the number of persons that would purchase the permit, the revenue generated from 3.2 beer, and the cost of administering the program. The FY 1999-00 section of Table I Provides and estimate of the fee that may be required. The fee may range from $92 if all potential applicants purchase the fee to $884 if only ten percent of the potential applicants purchase the permit.

Spending Authority

            This fiscal note implies that the Departmet of Revenue would require 2.0 FTE and $69,179 in General Fund spending authority for FY 1997-98 to implement this bill. 

Departments Contacted

Revenue          Transportation

FACTS AND ASSUMPTIONS

Assumptions

1.         That there may also be federal sanctions for violating the zero compliance and per se requirements that may be included in the reauthorization of the Intermodel Surface Transportation Efficiency Act of 1991.