Colorado Legislative Council Staff

STATE

FISCAL NOTE

TABOR Refund Impact

State General Fund Revenue Impact


Drafting Number:

Prime Sponsor(s):

LLS 98-809

Rep. Hefley

Date:

Bill Status:

Fiscal Analyst:

February 16, 1998

House Finance

Harry Zeid (866-4753)

 

TITLE:          CONCERNING A STATE INCOME TAX CREDIT FOR THE EXPENSES OF AN EMPLOYER INCURRED IN PROVIDING ENGLISH LANGUAGE TRAINING FOR THE EMPLOYER’S EMPLOYEES.


Summary of Legislation


STATE FISCAL IMPACT SUMMARY

FY 1998/99

FY 1999/2000

FY 2000/2001

State Revenues

General Fund

Other Fund


General Fund Revenue Reduction

State Expenditures

General Fund

Other Fund


 


 

 

FTE Position Change

None

None

None

Local Government Impact — None Identified

             *The tax credit would be effective for income tax years commencing on and after January 1, 1998. Therefore, on an accrual accounting basis, there would be a six-month impact in FY 1997-98.


            Effective for income tax years commencing on and after January 1, 1998, this bill would allow an income tax credit equal to 50 percent of an employer’s annual investment in qualified language training expenses for the employer’s employees. Qualified language training expenses would include training individuals with limited English proficiency to read, write, speak, and understand the English language; and remedial training of individuals with limited English proficiency in English language and literacy. The amount of the credit allowed could not exceed the employer’s actual income tax liability for any taxable year. Any excess may be a tax credit carryover for up to three income tax years.


            The income tax credit would reduce General Fund revenues at the state level. Therefore, the bill is assessed as having state revenue fiscal impact. The bill would become effective upon signature of the Governor.


State Revenues


            The number of employers that would claim the tax credit for investing in training employees to read, write, speak, and understand the English language is unknown. Similarly, the value of the tax credit that might be annually claimed is unknown. Therefore, the value of the General Fund revenue reduction that would occur as a result of the tax credits has not been estimated.



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


            This fiscal note presumes that no additional expenditures would be required by the Department of Revenue in order to include the income tax credit on the individual and corporate income tax forms. Based on an agreement with the Joint Budget Committee, Legislative Council Fiscal Note Staff, and the Department of Revenue, the Department of Revenue will absorb the costs of approximately 520 hours of programming time necessary to make these changes during the normal annual rewrite by the Department.



Spending Authority


            This fiscal note would imply that no new spending authority or appropriations are required for FY 1998-99 to implement the provisions of the bill.



Departments Contacted


            Revenue