Colorado Legislative Council Staff

STATE and LOCAL

CONDITIONAL FISCAL NOTE

TABOR Refund Impact

State General Fund Expenditure and Cash Fund Revenue and Expenditure Impact

Local Revenue Impact


Drafting Number:

Prime Sponsor(s):

LLS 98-668

Rep. Saliman

Sen. Phillips

Date:

Bill Status:

Fiscal Analyst:

January 31 , 1998

House Finance

Scott Nachtrieb (866-4752)

 

TITLE:      CONCERNING THE DISPOSITION OF STATE REVENUES IN EXCESS OF THE CONSTITUTIONAL LIMITATION ON STATE FISCAL YEAR SPENDING FOR FIVE CONSECUTIVE STATE FISCAL YEARS, AND IN CONNECTION THEREWITH, SPECIFYING THAT SUCH TRANSFERS ARE NOT APPROPRIATIONS THAT ARE SUBJECT TO GOVERNMENTAL SPENDING LIMITS, PROVIDING A REFUND BY INCOME TAX CREDIT OF EXCESS REVENUES UP TO ONE HUNDRED MILLION DOLLARS, ALLOCATING EXCESS REVENUES FOR SCHOOL DISTRICT AND HIGHER EDUCATION CAPITAL CONSTRUCTION AND FOR TRANSPORTATION PURPOSES BASED ON SPECIFIED PERCENTAGES, AND SPECIFYING THE METHOD FOR DISTRIBUTION OF THOSE REVENUES FOR EACH PURPOSE.


Summary of Legislation


STATE FISCAL IMPACT SUMMARY

FY 1998/99

FY 1999/00

State Revenues

General Fund

School District Capital Construction Fund (transfer)

Highway Users tax Fund (transfer)

Capital Construction Fund (transfer)

  


$89,900,000

$89,900,000

$45,000,000



$74,400,000

$74,400,000

$37,300,000

State Expenditures

General Fund - (taxpayer refunds and transfers)

Other Fund


$324,800,000


$286,100,000

FTE Position Change

None

None

Local Government ImpactIncreased Capital Construction Funds for School Districts


            This bill is assessed as a conditional fiscal impact since it requires approval of a vote of the electorate at the next General Election. The bill would provide that revenues in excess of the spending limits established by TABOR, Section 20 of Article X of the State Constitution, would be distributed as follows in the next five fiscal years:

               up to $100 million would be refunded annually to taxpayers;

               forty percent of any money in excess of $100 million would be transferred to the School District Capital Construction Fund;

               twenty percent of any money in excess of $100 million would be transferred to the Higher Education Capital Construction Account of the Capital Construction Fund; and

               the remaining forty percent in excess of $100 million would be transferred to the Highway Users Tax Fund (HUTF).


            The first transfer would occur on January 1, 1999, and the remaining transfers would annually occur on November 1. The transfers would be exempt from the Arveschoug-Bird limits imposed in 24-75-201.1 C.R.S. and would be considered voter approved changes for TABOR purposes. The taxpayer refund would be a refund of sales and use taxes returned through income taxes as a tax credit. The bill would be placed on the 1998 General Election ballot upon the Governors signature and the provisions of the bill would become effective upon approval of the voters at the next General Election.


State Revenues


            The School District Capital Construction Fund would be created. Money in the fund would be appropriated annually by the General Assembly to the Department of Education. Funds would be distributed based on a formula created by the General Assembly prior to July 1, 1999, or the State Board of Education would develop a formula before November 1, 1999. The estimated revenues transferred to the fund would be $89.9 million in FY 1998-99.


            The transfers to the Higher Education Capital Construction Account in the Capital Construction Fund would be in addition to other moneys in the account. Money remaining in the account at the end of the fiscal year and interest earnings would remain in the account. The funds could only be used for capital construction projects for state supported higher education institutions. The estimated revenues transferred to the account would be $45.0 million in FY 1998-99.


             Of the revenues transferred to the HUTF, sixty percent would go the State Highway Fund, twenty-two percent would go to the counties, and the remaining eighteen percent would go to cities. The estimated revenues transferred to the HUTF would be $89.9 million in FY 1998-99. Of that amount, the State Highway Fund would receive approximately $53.4 million in FY 1998-99.


            Table I below provides an estimate of the excess revenues under TABOR for the next five fiscal years. Table II provides an estimate of the distribution of the HUTF revenues to the State Highway Fund, cities, and counties.















Table I

Projected Transfer to Specified Funds

FY 1997-98 through FY 2002-03

($ millions)

 

Percent Transferred

40.0%

20.0%

40.0%

Fiscal Year

Projected TABOR Excess Revenue

Refund to Taxpayers

Available for Transfer

School District Capital Construction

Higher Education

Capital Construction

Highway Users Tax

FY 1997-98

$324.8

N/A

N/A

N/A

N/A

N/A

FY 1998-99

286.1

100.0

$224.8

$89.9

$45.0

$89.9

FY 1999-00

276.4

100.0

186.1

74.4

37.2

74.4

FY 2000-01

280.0

100.0

176.4

70.6

35.3

72.6

FY 2001-02

228.6

100.0

180.0

72.0

36.0

72.0

FY 2002-03

203.0

100.0

128.6

51.4

25.7

51.4



Table II

HUTF Distributions of Projected Transfer

FY 1997-98 through FY 2002-03

($ millions)

 

 

60.0%

22.0%

18.0%

Fiscal Year

Highway Users Tax

State Highway Fund

County Share

City Share

FY 1998-99

$89.0

$53.4

$19.6

$16.0

FY 1999-00

74.4

44.6

16.4

13.4

FY 2000-01

70.6

42.4

15.5

12.7

FY 2001-02

72.0

43.2

15.8

13.0

FY 2002-03

51.4

30.8

11.3

9.3


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 State General Fund would have an expenditure equal to the amount of the excess revenues under TABOR. The estimated expenditures are identified in Table I above. The Highway Users Tax Fund, the School District Capital Construction Fund, and the Capital Construction Fund would have additional expenditures equal to the revenues transferred to the funds. These expenditures would not be subject to spending limits under Arveschoug-Bird (24-75-201.1, C.R.S.).


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.


Local Government Impact


            Local governments would receive additional revenues from the HUTF distributions provided in this bill. The estimated amount revenue is estimated in Table II above.


            School District Impact. Local school districts would receive additional revenues for capital construction purposes. These funds would be distributed based on some yet to be determined formula by the General Assembly or the Department of Education. The estimated amount of funds available are identified in Table I above.


Spending Authority


            This fiscal note implies that no additional spending authority would be required to implement the provisions of this bill.



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