Colorado Legislative Council Staff
STATE and LOCAL
FISCAL NOTE
TABOR Refund Impact
General Fund Expenditure Impact
Cash Fund Revenue and Expenditure Impact
Local Government Revenue Impact
Drafting Number: Prime Sponsor(s): |
LLS 98-326 Rep. Adkins |
Date: Bill Status: Fiscal Analyst: |
January 31, 1998 House Finance Harry Zeid (866-4753) |
TITLE: CONCERNING THE REFUND OF STATE REVENUES IN EXCESS OF THE CONSTITUTIONAL LIMITATION ON STATE FISCAL YEAR SPENDING FOR ANY GIVEN FISCAL YEAR THROUGH THE TEMPORARY REDUCTION OF SCHOOL DISTRICTS’ PROPERTY TAX RATE LEVIED FOR THE OPERATION OF PUBLIC SCHOOLS.
Summary of Legislation
STATE FISCAL IMPACT SUMMARY |
FY 1998/99 |
FY 1999/2000 |
State Revenues General Fund Public School Finance, Total Program |
$324,800,000 |
$286,100,000 |
State Expenditures General Fund Public School Finance, Total Program |
$324,800,000 $324,800,000 |
$286,100,000 $286,100,000 |
FTE Position Change |
None |
None |
Local Government Impact — School district property taxes would be reduced by the amount of the state’s excess revenues. This reduction would be made up through an increase in the state’s contribution for Total Program. |
In any year in which state revenues are in excess of the fiscal year spending limitation imposed by Section 20 (7)(a) of Article X of the State Constitution, this bill would allow school districts to temporarily reduce their mill levies that would otherwise be levied for the operation of public schools by the number of mills that would generate the amount of the school district’s share of the state excess revenues. The Department of Education would calculate each school district’s share of state excess revenues by dividing the amount of the state excess revenues by the total pupil enrollment for all school districts, multiplied by the pupil enrollment for each school district. On or before November 1 of any excess revenue budget year, the Department of Revenue would notify each school district of the amount of the school district’s share of state excess revenues.
The General Assembly would appropriate the entire amount of the state’s excess revenues that is required to be refunded to fund the state’s share of School Finance Total Program for all school districts. This would be in addition to, and not a substitute for, moneys otherwise appropriated by the General Assembly to fund the state’s share of Total Program.
The bill would affect the expenditure of state excess revenues, and reduce school district property tax collections. Therefore, the bill is assessed as having state and local fiscal impact. The bill would become effective upon signature of the Governor.
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 bill would authorize the General Assembly to appropriate the entire amount of the state’s excess revenues that is required to be refunded to fund the state’s share of School Finance Total Program for all school districts. This would be in addition to, and not a substitute for, moneys otherwise appropriated by the General Assembly to fund the state’s share of Total Program. The projected excess TABOR revenue for FY 1997-98 would be appropriated for Total Program in FY 1998-99. Projected TABOR excess revenues based on the Colorado Legislative Council staff December 1997 economic forecast for FY 1997-98 through FY 2002-03 is identified in Table 1. below.
Table 1. Projected TABOR Excess Revenue
FY 1997-98 through FY 2002-03 (in millions of dollars)
Fiscal Year |
Projected TABOR Excess Revenue |
School Finance Total Program Funding Increase |
FY 1997-98 FY 1998-99 FY 1999-00 FY 2000-01 FY 2001-02 FY 2002-03 |
$324.8 286.1 276.4 280.0 228.6 203.0 |
n/a $324.8 286.1 276.1 280.0 228.6 |
School District Impact
The bill would increase the state’s share of Public School Finance, Total Program by $324.8 million in FY 1998-99. Property tax revenues at the school district level would be reduced by the same amount. Based on an analysis of projected school enrollment and assessed valuation by school district, the bill would result in an average statewide reduction in school district property taxes for operating purposes by 25.4 percent in 1998. The average excess revenue per student is $485. The average school district mill levy reduction that would occur from 1998 through 2003 is shown in Table 2 below.
Table 2. Statewide Average Mill Levy Reduction
1997 through 2002 (in millions of dollars)
Property Tax Year |
Assessed Value* |
Statewide Average Mill Levy Reduction |
1998 1999 2000 2001 2002 2003 |
$38,529 39,560 43,071 44,064 46,602 47,390 |
8.430 7.232 6.417 6.354 4.905 4.284 |
*The assessed value shown is for the year prior to the mill levy
reduction.
Spending Authority
The provisions of the bill would imply an increase in the FY 1998-99 appropriation for the Department of Education, Public School Finance, Total Program of $324,800,000.
Omissions and Technical or Mechanical Defects
It should be noted that the distribution of specific ownership taxes may be affected by the bill since the distribution of specific ownership tax revenues are based on the proportionate share of each local government’s total property tax revenues. A reduction in school district property tax revenues would reduce school district specific ownership tax receipts, and increase the specific ownership tax receipts to other local governments accordingly. This issue is believed to be technical in nature that can be rectified through an amendment to the bill.
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