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.



Departments Contacted

 

          Legislative Council                Education