Colorado Legislative Council Staff

STATE and LOCAL

FISCAL NOTE

State Cash Fund Expenditure Impact

School District Expenditure Impact

Drafting Number:

Prime Sponsor(s):

LLS 98-800

Rep. Romero

Sen. Rizzuto

Date:

Bill Status:

Fiscal Analyst:

April 16, 1998

House Business Affairs

Steve Tammeus (866-2756)

 

TITLE:            CONCERNING RESTRICTIONS ON ECONOMIC INCENTIVES, AND, IN CONNECTION THEREWITH, TRANSFERRING THE AUTHORITY OF BOARDS OF EDUCATION OF SCHOOL DISTRICTS TO NEGOTIATE AGREEMENTS TO PROVIDE ECONOMIC INCENTIVES TO PERSONS OR ENTITIES CREATING NEW BUSINESS FACILITIES TO THE COLORADO ECONOMIC DEVELOPMENT COMMISSION AND PROHIBITING THE ECONOMIC DEVELOPMENT COMMISSION FROM ENTERING INTO SUCH AGREEMENTS WITH, OR PROVIDING GRANTS OR LOANS FROM THE COLORADO DEVELOPMENT FUND TO, ANY PERSON OR ENTITY EMPLOYING PERSONS WHO ARE ENGAGED IN A LABOR STRIKE AGAINST SUCH A PERSON OR ENTITY WITHIN COLORADO AT THE TIME THE AGREEMENT IS TO BE ENTERED INTO OR THE GRANT OR LOAN IS TO BE APPROVED OR MADE.


Summary of Legislation


STATE FISCAL IMPACT SUMMARY

FY 1998/99

FY 1999/2000

State Revenues

General Fund

Other Fund



 



 

State Expenditures

General Fund

Colorado Economic Development Fund



Minimal*



Minimal*

FTE Position Change

None

None

School District Impact — Eliminates administrative expenditures for economic incentive agreements.

* Any additional administrative costs incurred by the Colorado Economic Development Commission will be absorbed within existing resources.


            This bill prohibits a board of education of a school district, on or after the effective date of the bill, from entering into an agreement for an incentive payment or a credit with a taxpayer who establishes or expands a new business facility in the school district. The bill specifies that any agreement entered into prior to the effective date of the bill shall be considered valid. The bill repeals, effective four years after the effective date of the bill, the statutory provisions that establish the powers of boards of education to negotiate incentive payments or credits with such taxpayers.


            The bill authorizes the Colorado Economic Development Commission under the Department of Local Affairs to enter into agreements for a specified school district to make incentive payments or provide credits against taxes imposed by the school district to a taxpayer who establishes or expands a new business facility. The bill limits the amount of the payment or credit to 50 percent of the amount of personal property taxes levied by the district, and limits the term of the agreement to four years. The bill requires any school district subject to the agreement to make all incentive payments and allow all credits specified in the agreement.


            The bill prohibits the commission from approving or making a grant or loan to any person or entity, or entering into an agreement requiring a school district to provide an economic incentive to that person or entity, if employees of the person or entity are engaged in a labor strike within the state against that person or entity.


            The bill will become effective January 1, 1999, 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 Expenditures


            The bill limits the amount of the payment or credit to 50 percent of the amount of personal property taxes levied by the district, and limits the term of the agreement to four years under the authority of the Colorado Economic Development Commission. These conditions are the same as under current law as administered by the boards of education.


            The bill retains the existing state budgeting process under the School Finance Act to backfill revenue to school districts that enter into economic incentive agreements. Under current law, 10 school districts have entered into economic incentive agreements with 19 taxpayers that amount to approximately $3.1 million in incentive payments or tax credits for FY 1997-98. Agreements are in effect in 13 school districts with 29 taxpayers amounting to $4.1 million in incentive payments or tax credits for FY 1998-99.


            The provisions of this bill will not affect economic incentive agreements that are in place upon the effective date of the bill. However, this fiscal note cannot ascertain whether the provisions of this bill will affect the number of future economic incentive agreements, the amounts of those agreements, or the amount of the state’s annual General Fund backfill obligation.


            The bill requires the commission under the Department of Local Affairs to evaluate, approve, and administer economic incentive agreements for new or expanding businesses. The Department of Local Affairs believes this effort can be accomplished by the commission within existing available resources.



School District Impact


            The provisions of this bill will eliminate school district expenditures associated with the administration of economic incentive agreements. The amounts of those expenditures is believed to be minimal.



Spending Authority


            This fiscal note would imply that no new state appropriation or spending authority would be required for FY 1998-99.



Departments Contacted


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