Colorado Legislative Council Staff

STATE

FISCAL NOTE

General Fund Revenue Impact

Cash Fund Revenue and Expenditure Impact

Drafting Number:

Prime Sponsor(s):

LLS 98-716

Rep. Miller

Date:

Bill Status:

Fiscal Analyst:

February 5, 1998

House Finance

Steve Tammeus (866-2756)

 

TITLE:            CONCERNING THE PROMOTION OF TOURIST-RELATED ACTIVITIES IN COLORADO, AND, IN CONNECTION THEREWITH, TRANSFERRING A PORTION OF STATE SALES AND USE TAX REVENUES TO THE TOURISM PROMOTION FUND AND REFUNDING A PORTION OF INCREASED STATE SALE AND USE TAX REVENUES TO QUALIFIED INDIVIDUALS.


Summary of Legislation


STATE FISCAL IMPACT SUMMARY

FY 1998/99

FY 1999/00

FY 2000/01

State Revenues

General Fund

Colorado Tourism Promotion Fund


($12,000,000)

$12,000,000


($5,699,000)

$5,699,000


($5,893,000)

$5,893,000

State Expenditures

General Fund

Colorado Tourism Promotion Fund



$12,000,000



$5,699,000



$5,893,000

FTE Position Change

5.0 FTE

3.0 FTE

3.0 FTE

Local Government Impact — None


             Effective July 1, 1998, the first $12 million of sales and use tax shall be credited to the Colorado Tourism Promotion Fund administered by the Colorado Tourism Board under the Department of Local Affairs.


            The bill requires the Department of Revenue for FY 1999-00, FY 2000-01, and FY 2001-02 to calculate the amount of any increase in state sales and use tax receipts derived from the retail sale and use of tourist-related goods and services. The bill requires the first $12 million of the increase, or the amount of the increase, whichever is less, to be credited to the fund. The bill prescribes a method for calculating the amount of the increase, if any.


            The bill specifies that, effective FY 2002-03, the first $12 million of any increase in the amount of sales and use tax derived from the sale and use of tourist-related goods and services, or the amount of the increase, whichever is less, shall be credited to the fund; and any remaining amount shall be refunded as an income tax credit to qualified individuals. The bill requires the department to calculate the amount of the increase and provides a method for calculating the amount of the increase, if any.


            The bill requires the department to determine the amount of the income tax credit, if any, for each individual. If the amount of the individual’s state income tax credit exceeds the individual’s state income tax obligation, the excess amount of the credit shall be refunded to the individual. The bill states that any person who claims but is not eligible to claim the credit to be subject to criminal penalties. The bill will become effective upon the signature of the Governor.


            The provisions of this bill will affect state revenue and expenditures. Therefore, the bill is assessed as having a state fiscal impact.


State Revenues


            The revenue forecasts shown in Table 1 are based upon the assumption that the sales and use taxes collected from food and drink establishment, and lodging establishments through FY 2000-01 are based upon annual inflation as forecasted by Legislative Council Staff, and are not based upon forecasted increases in tourism as a result of the provisions of this bill. Table 1 also shows the amount to be credited to the Colorado Tourism Promotion Fund per the provisions of the bill.


Table 1 - Tourism Related Sales Tax Revenue Forecasts

(* Actual $)


Fiscal Year


Food and Drink


Lodging


Total


Increase

Credit to Colorado Tourism Promotion Fund

FY 1995-96*

$118,242,000

40,312,000

$158,554,000

NA

NA

FY 1996-97*

$124,384,000

43,236,000

$167,620,000

$9,066,000

NA

FY 1997-98

$128,613,000

44,706,000

$173,319,000

$5,699,000

NA

FY 1998-99

$132,986,000

46,226,000

$179,212,000

$5,893,000

$12,000,000

FY 1999-00

$138,172,000

48,029,000

$186,201,000

$6,989,000

$5,699,000

FY 2000-01

$143,423,000

49,854,000

$193,277,000

$7,076,000

$5,893,000


State Expenditures


            The Department of Revenue indicates the costs to administer the general provisions of this bill are considered to be insignificant and will be absorbed within existing resources. However, effective FY 2002-03, if the amount of the increase is more than $12 million, the bill requires the amount above $12 million to be refunded to the taxpayers in the form of a state income tax credit and/or refund. The department estimates the cost of administering the credit and/or refund to be 2.24 FTE and $329,152.


            The Department of Local Affairs would be required to implement the tourism policy and budget developed by the tourism board. The department’s responsibilities include vendor procurement, contract administration, advertising, public relations, promotions, financial analysis, project management, and policy coordination. Table 2 provides a summary of the annual expenditures the department will incur to administer the provisions of the bill.


Table 2 - Colorado Tourism Board

Colorado Tourism Promotion Fund

 

FY 1998-99

FY 1999-2000

Personal Services

Prog Admin I (grade 107, step 1)

Admin Asst II (grade 68, step 1)

Admin Prog Spec II (grade 91, step 1)

Acct I (grade 86, step 1)

Subtotal

PERA/Medicare

Total


1.0 FTE - $53,028

1.0 FTE - 20,544

2.0 FTE - 71,784

1.0 FTE -31,860

$159,216

20,618

179,834


1.0 FTE - $53,028

1.0 FTE - 20,544

1.0 FTE - 35,892

0

$109,464

14,176

123,640

Operating Expenses

123,950

123,950

Travel Expenses

48,000

48,000

Board Expenses

6,000

6,000

Tourism Promotion

11,621,166

5,397,410

Computer and Furniture

21,500

0

Total Expenses

5.0 FTE - $12,000,000

3.0 FTE - $5,699,000


Spending Authority


            This fiscal note would imply that the Department of Local Affairs will require a General Fund appropriation of 5.0 FTE and $12,000,000 for FY 1998-99 to the Colorado Tourism Promotion Fund for allocation to the Colorado Tourism Board.


Departments Contacted


            Local Affairs              Revenue          State Treasurer