Colorado Legislative Council Staff



(Replaces Fiscal Note dated March 10, 1998)

TABOR Refund Impact

General and Cash Fund Revenue and Expenditure Impact

Drafting Number:

Prime Sponsor(s):

LLS 98-839

Rep. Faatz

Sen. Lacy


Bill Status:

Fiscal Analyst:

March 30, 1998

House Appropriations

Scott Nachtrieb (866-4752)



Summary of Legislation

            The bill, as amended by the House Finance Committee, March 20, 1998, would make it a civil penalty for a retailer to sell tobacco products to persons under the age of 18. A retailer would have an affirmative defense if the minor used a false identification showing that the minor was over the age of 18. In addition, the current criminal offense for violating the prohibition against selling tobacco in vending machines and the requirement that a sign be posted in all businesses selling tobacco informing customers of the penalty for the purchase or attempted purchase of tobacco by minors would be changed to a civil penalty. The bill also specifies that an attempt to purchase tobacco by a minor is a class 2 petty offense except when acting at the direction of a governmental agency authorized to conduct compliance checks.


FY 1998/99

FY 1999/2000

State Revenues

General Fund

Tobacco Use Prevention Fund

Federal Funds

Fines less than $10,000



Fines less than $10,000



State Expenditures

General Fund

Tobacco Use Prevention Fund (Grant program)

Cash Exempt Funds (Department of Law)**







FTE Position Change

2.5 FTE

2.5 FTE

Local Government Impact — None

* See State Revenues Section for impact legislation may have on federal funds to the Department of Human Services.

** Department of Law’s expenditure is included in the Department of Revenue’s General Fund expenditure total.

            The state enforcement of this program is the result of a federal mandate. Therefore, the expenditures of this program would be exempt from the six percent General Fund expenditure limitation (Arveschoug limit).

            The Liquor Enforcement Division in the Department of Revenue would be the lead state enforcement agency. The division would coordinate inspections to prevent duplicative inspections by different state governmental agencies. A hearing and appeals process would be established for alleged violations relating to the sale of tobacco products to minors. Fines collected from convictions under the law would be paid to the Tobacco Use Prevention Fund created in the bill. The Department of Human Services would award grants to programs training retail employees about laws relating to the sale of tobacco or to programs designed to prevent the use of tobacco by minors. The new provisions would be repealed July 1, 2001. This bill would become effective July 1, 1998 and apply to violations on or after that date.

State Revenues

            The bill would create a new civil offense for retailers convicted of selling tobacco products to minors and makes two current class 2 petty offenses related to the sale of tobacco products subject to the same civil procedures and penalties. Retailers would receive a written warning for the first violation in each year. Subsequent violations in a year would be subject to a hearing before a hearing officer and a fine. The amount of the fine imposed would increase with each subsequent offense a retailer would receive in a year. The amount of fine revenue that would be collected has been estimated to be $22,000. The fine revenue from convictions of the civil penalties would be deposited into the Tobacco Use Prevention Fund. Changing the class 2 petty offenses to civil penalties and removing the fines imposed from the General Fund would have an insignificant impact on fine revenue to the General Fund. It is assumed that most of these class 2 petty offenses would have been filed in a municipal court under current law and the fine revenue would have been retained by the municipality.

            The bill would also increase the class 2 petty offense fine from $50 to $100 for a minor who attempts to, or purchases tobacco products and for clerks that sell or attempt to sell tobacco products to minors. The doubling of the fine revenue for these offenses would increase revenue to the state General Fund when the offense is filed in county court. It is estimated that the amount of the fines collected annually would be less than $10,000.

            *It is assumed that the provisions of this bill would assist the state in meeting “Federal Synar” regulations which prohibit the sale and distribution of tobacco products to minors and requires state enforcement of the prohibition. Failure to meet the federal regulations would result in a 40 percent reduction in federal Substance Abuse Block Grants. A 40 percent reduction would be a $7.7 million loss in federal funds to the Department of Human Services.

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 Department of Revenue would require 2.5 FTE and $140,806 GF in FY 1998-99 and 2.5 FTE and $130,228 GF in FY 1999-00. The FTE would be for 2 Criminal Investigators to conduct investigations and enforce the tobacco statutes. An additional 0.5 FTE Administrative Assistant would be required to support the state enforcement program. Personal services would be $107,344 GF, operating costs would be $2,510 GF, computer costs would be $6,150 GF, capital outlay costs would be $4,428 GF, travel costs would be $13,008 GF, and $7,366 would be for legal services in FY 1998-99. For FY 1999-00, personal services would be $107,344 GF, operating costs would be $2,510 GF, travel costs would be $13,008 GF, and $7,366 would be for legal services from the Department of Law in FY 1998-99.

            The Department of Law would require $7,366 in cash exempt funds for 150 hours of legal services for hearings and civil actions taken against violators that refuse to pay a fine.

            The Department of Human Services currently receives and would continue to expend approximately $28,250 in federal Substance Abuse Block Grant funding for enforcement of the tobacco laws. Approximately $6,250 of that is currently spent to pay persons for assistance with sting operations. Approximately $20,000 would be used to contract with the private sector to provide analysis, coordination, and completion of the report required by the General Assembly. The remaining $2,000 would be used to verify license compliance. The department would also require an additional $22,000 in Tobacco Use Prevention Funds to provide grants to retailers to provide training.

Expenditures Not Included

            Pursuant to the Joint Budget Committee’s budget policies, the following expenditures have not been included in this fiscal note:


               health and life insurance costs; and $5,440

               short-term disability costs; $199

Local Government Impact

            Local government enforcement would not change as a result of this bill. Municipalities which would adopt criminal ordinances similar to the criminal law changes in this bill would receive additional revenues from convictions for these offenses.

Spending Authority

            This fiscal note implies that the Department of Revenue would require 2.5 FTE and $140,806 in General Fund spending authority for FY 1998-99 to implement this bill. Of that amount $7,366 cash fund exempt would be to the Department of Law for legal services. The Department of Human Services would also require $22,000 in cash fund spending authority.

Departments Contacted

            Human Services         Revenue          Health and Environment         Public Safety