Colorado Legislative Council Staff

STATE and LOCAL

FISCAL NOTE

TABOR Refund Impact

General Fund Revenue Impact

Local Government Revenue Impact


Drafting Number:

Prime Sponsor(s):

LLS 98-443

Sen. Weddig

Rep. Hagedorn

Date:

Bill Status:

Fiscal Analyst:

January 14, 1998

Senate Finance

Harry Zeid (866-4753)

 

TITLE:            CONCERNING THE REINSTATEMENT OF THE SALES AND USE TAX EXEMPTION FOR BULK SALES OF COINS AND PRECIOUS METAL BULLION.



Summary of Legislation


            The bill would reinstate the state sales tax on all bulk sales of coins and precious metal bullion that are substantially equivalent to transactions in securities or commodities through a national securities or commodities exchange. This would include the bulk sale of coins and precious metal bullion by or through any person who is registered pursuant to the federal “Commodity Exchange Act”, or who is not required to be registered by the federal act. The previous sales tax exemption on coins and precious metal bullion expired on April 17, 1995. The bill would reduce state General Fund revenues. Statutory cities and counties, and special districts whose sales and use tax is collected by the state would also experience a reduction in sales tax revenues. Therefore, the bill is assessed as having state and local fiscal impact. The bill would apply to sales made on or after January 1, 1999.


STATE FISCAL IMPACT SUMMARY

FY 1998/99

FY 1999/2000

State Revenues

General Fund (reduction)

Other Fund


($81,089)


($168,503)

State Expenditures

General Fund

Other Fund


 


 

FTE Position Change

None

None

Local Government Impact — Statutory cities and counties and other special districts whose sales tax is collected by the state would experience a revenue reduction in the collection of local sales tax revenue on coins and precious metal bullion purchases. Home rule cities would be unaffected by the bill.



State Revenues


            Legislative Council staff has projected the state’s revenues that will be in excess of the state fiscal year spending limitation for the 1998-99 fiscal year, as required by Section 20 of Article X of the State Constitution, to be $286.10 million. This bill would repeal the state sales tax on bulk sales of coins and precious metal bullion, effective January 1, 1998, thereby reducing the projected state revenue excess by $81,089.


            The Department of Revenue estimates that 90 percent of the volume of all sales of precious metal bullion and coins purchased in-state would be exempted by the bill. The General Fund revenue reduction impact of the bill is estimated to be $81,089 in FY 1998-99 (six-month impact) and $168,503 in FY 1999-00.



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.



Local Government Impact


            Except for specific exceptions, the sales tax base for statutory cities, counties, and other special districts whose sales tax is collected by the state is the same as the state sales tax base. These local governments would also experience a reduction in the collection of local sales tax revenue on coins and precious metal bullion purchases. Home rule cities would be unaffected by the bill. It is presumed that the majority of gold dealers are located in home rule cities or in unincorporated areas, and would be unaffected by the bill.



Spending Authority


            The fiscal note would imply that no appropriations or spending authority are required to implement the provisions of the bill.



Departments Contacted


            Revenue