Colorado Legislative Council Staff

STATE

FISCAL NOTE

General Fund and Cash Fund Revenue Impact


Drafting Number:

Prime Sponsor(s):

LLS 98-702

Rep. Pfiffner

Sen. Coffman

Date:

Bill Status:

Fiscal Analyst:

February 10, 1998

House Finance

Harry Zeid (866-4753)

 

TITLE:            CONCERNING CASH FUNDS.



Summary of Legislation


STATE FISCAL IMPACT SUMMARY

FY 1998/99

FY 1999/2000

State Revenues

General Fund - Transfer from Cash Funds

Other Fund - Transfer to General Fund


*

*


*

*

State Expenditures

General Fund

Other Fund


 


 

FTE Position Change

None

None

Local Government Impact — None

             *The value of the transfer to the General Fund is based on the fund balances of accounts that remained inactive during FY 1996-97.


            This bill would require that except for cash funds for which there are constitutional spending requirements, any state entity that charges fees that are credited to a cash fund must set the fee in an amount that is equal to the cost of the item or service for which the fee is being charged. The bill requires that General Fund moneys shall not be used to cover the cost of providing such items and services. Additionally, a state entity (including any state department, agency, board, commission, or any other entity of state government) shall provide items or services free of charge to indigent persons. If a fee that is less than $10 needs to be adjusted up or down, the bill would require that the fee be adjusted by at least one dollar. If a fee that is $10 or more needs to be adjusted up or down, the bill would require that the fee be adjusted by at least 10 percent.


            The bill would eliminate any cash fund where there has been no transaction and no change in net asset value plus interest for 13 or more consecutive months. Moneys in inactive cash funds would revert to the state General Fund. Any cash fund that has a balance that is amortized for ten or more years would be eliminated, and the moneys in the fund would revert to the General Fund.


            The bill would affect the revenues of the General Fund and various cash funds. Therefore, the bill is assessed as having state fiscal impact. The bill will become effective at 12:01 a.m. on the day following the ninety-day period after adjournment sine die of the General Assembly, or on the date of the official declaration of the vote of the people as proclaimed by the Governor, if a referendum petition is filed pursuant to Article V, Section 1 (3) of the State Constitution.



State Revenues


            A report prepared by the Division of Accounts and Control indicates that as of June 30, 1997, there were 332 state cash funds. A total of 220 cash funds received fee revenue from sources that are counted as state revenue for purposes of Section 20 of Article X of the Colorado Constitution (the TABOR Amendment). Fee revenue was identified as the primary source of revenue in 170 of these funds. During FY 1996-97, these 170 funds collectively received $833.7 million in revenue sources that would be subject to the TABOR spending limitation, and had a combined fund balance equal to 30.2 percent of the total revenues that are subject to the spending limit. By comparison, funds that were not primarily fee-based, collected $1,134.3 million, and had ending balances equal to 210.3 percent of TABOR revenues. It should be noted that for some funds, ending balances include both capital and non-capital assets. Thus, the aggregate reserve figures are somewhat overstated. Table 1 identifies the number of funds that were primarily fee based and the aggregate value of the year-end reserve. These funds are classified by the year-end reserve expressed as a percentage to total fee revenue subject to the TABOR spending limitation.


Table 1. Number of Funds Classified by Year-End Reserve

as a Percentage to Total Fee Revenue, FY 1996-97


Reserve as Percent of Annual Revenue


Number

of Funds

Aggregate

Reserve Value

(millions of dollars)

  10.0% or less

  10.1% - 20.0%

  20.1% - 30.0%

  30.1% - 40.0%

  40.1% - 50.0%

  50.1% - 100.0%

100.1% - 200.0%

200.1% - 500.0%

500.0% or more

30

12

13

9

10

26

20

25

25

$ 17.0

2.0

5.2

8.7

17.4

81.3

9.5

56.6

53.8

   Total

170

$ 251.5



            The bill requires the cash fund balance of any cash fund where there has been no transaction and no change in net asset value plus interest for 13 or more consecutive months to revert to the state General Fund. Based on FY 1996-97 data, there were 13 cash funds in the state with no activity during the prior 12-month period. The total fund balance of these cash funds was $184,588.


            Any cash fund that has a balance that is amortized for ten or more years would be eliminated, and the moneys in the fund would revert to the General Fund. At this time, we are unaware of any cash fund that meets this criteria.

            The bill requires that a state entity, including any state department, agency, board, commission, or any other entity of state government, shall provide items or services free of charge to indigent persons. It is assumed that this provision refers to items or services that are currently provided to indigent persons by a state entity free of charge. It is assumed that this provision would not expand the types of services that would be offered to indigent persons free of charge.



Spending Authority


            The bill requires certain fund balances to revert to the state General Fund. The fiscal note would imply that no additional appropriation or spending authority would be required for FY 1998-99 to implement the provisions of the bill.



Departments Contacted


            Legislative Council Staff                                Joint Budget Committee Staff

            Office of State Planning and Budgeting         All Departments



Omissions and Technical or Mechanical Defects

 

1.         The provision of the bill that places limitations in the way that a fee may be adjusted is in conflict with the provision that requires fees be set at an amount that is equal to the cost of the item or service for which the fee is charged.

 

2.         The provision of the bill that requires a state entity to provide items or services free of charge to indigent persons could be interpreted to mean that additional services be provided to indigent persons over the types of services that are required to be provided under current law.

 

3.         The provision of the bill that states that no state General Fund moneys be used to cover the cost of providing such items and services could be interpreted to include such services as higher education tuition.