Colorado Legislative Council Staff

STATE, LOCAL and STATUTORY PUBLIC ENTITY

CONDITIONAL FISCAL NOTE

TABOR Refund Impact

State General Fund Expenditure Impact

School District Revenue Impact

TITLE:            CONCERNING THE RETENTION OF A PORTION OF STATE REVENUES IN EXCESS OF THE CONSTITUTIONAL LIMITATION ON STATE FISCAL YEAR SPENDING FOR THE PURPOSE OF PROVIDING FINANCIAL ASSISTANCE TO ELIGIBLE SCHOOL DISTRICTS FOR CAPITAL CONSTRUCTION PROJECTS.

Summary of Legislation

            This bill would submit a question to the registered electors of the State of Colorado at the next general election in November 1998, to authorize the State Treasurer to annually transfer the lesser of $100 million, or one-third of the excess revenues prescribed by Section 20 of Article X of the State Constitution to the School Capital Construction Trust Fund. The bill would apply to the excess revenues for FY 1997-98, and each fiscal year thereafter. Transfers to the fund would not be deemed to be appropriations subject to the restriction on state appropriations identified in Section 24-75-201.1, C.R.S. Moneys in the School Capital Construction Trust Fund would be subject to annual appropriation by the General Assembly to the Department of Education beginning with the General Appropriation Bill for FY 2000-01.

            The Colorado Postsecondary Educational Facilities Authority would be authorized to accept loan applications from school districts by July 1, 1999. The loan applications would specify the construction project for which the loan is requested; the amount of the loan; and that prior to submitting the application, the Board of Education of the school district has received approval at an election to issue bonds for: acquiring or purchasing buildings or grounds; enlarging, improving, remodeling, repairing, or making additions to any school building; constructing or erecting school buildings; equipping or furnishing any school building; or improving school grounds. Moneys would only be loaned to school districts that can repay the loan.

            The bill would take effect following proclamation by the Governor of the vote of the registered electors at the 1998 general election. Since the bill is conditional upon voter approval, the bill is assessed as having conditional state and school district fiscal impact.

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 bill authorizes the annual transfer of the lesser of $100 million, or one-third of the excess revenues prescribed by Section 20 of Article X of the State Constitution to the School Capital Construction Trust Fund beginning with FY 1997-98. The projected excess TABOR revenue for FY 1997-98 would be transferred in FY 1998-99, and would be available for loans to school districts in FY 2000-01. Projected TABOR excess revenues and the amount that would be available for annual transfer to the School Capital Construction Trust Fund based on the Colorado Legislative Council staff December 1997 economic forecast for FY 1997-98 through FY 2002-03 is identified in the table below.

Projected Transfer to the School Capital Construction

Trust Fund FY 1997-98 through FY 2002-03

(in millions of dollars)

            Cost of Program Administration. The bill authorizes the Colorado Postsecondary Educational Facilities Authority to accept loan applications from school districts beginning in 1999. Among its other duties and responsibilities, the Authority is currently authorized by statute to lend money to institutions of postsecondary education and to cultural institutions. The Colorado Postsecondary Educational Facilities Authority is an independent public body politic and body corporate. The authority is a political subdivision of the state and is not an agency of state government. Therefore, the Authority is not subject to administrative direction by any department, commission, board, or agency of the state. The Authority anticipates that there will be administrative costs incurred in prioritizing and approving loan applications from school districts. It is assumed that prior to implementation of the loan program, a fee structure will be established that will be reflective of the administrative cost requirements of the authority in managing the program. It is assumed that the administrative fee imposed by the Authority would be paid by annual contract from the funds made available through the transfer of General Fund moneys to the School Capital Construction Trust Fund. The fee would be consistent with other fees and charges imposed by the Authority.

Election Expenditure Impacts (For Informational Purposes Only)

            A General Fund line-item in the 1998-99 Long Appropriations Bill will fund the costs of publicizing any initiative or referendum proposal in newspapers and for printing and distribution of the Blue Book to all electors. The General Assembly spent $291,267 GF for one state-wide ballot proposal on the November, 1995 ballot and $1,042,014 GF for the 12 proposals that appeared on the November, 1996 ballot.

            The 1996 General Election fixed costs for mailing the Blue Book to 1.35 million registered voters was $174,036 for postage and $3,800 for obtaining mailing addresses. These costs will be the same regardless of the number of issues on the ballot. Variable costs included: Spanish translation of $11,215; newspaper publication of $644,828; printing costs of $206,806; and other costs of $1,328. Total costs were $1,042,014 GF. Fixed costs totaled $177,837 and variable costs were $72,015 per ballot issue.

            Based on the costs incurred for the 1996 Blue Book, one ballot issue cost $249,852 to print and mail to the public. The $72,015 of incremental cost would be added for each issue to the basic mailing costs of $177,837.

School District Impact

          School districts would be eligible to apply for loans from the Colorado Postsecondary Educational Facilities Authority for qualified capital construction projects. Moneys would be awarded beginning in FY 2000-01. The bill does not identify the interest rate that would be charged to school districts by the Colorado Postsecondary Facilities Authority for borrowed funds. It is assumed that the loans would be made to school districts at a more favorable interest rate than could be obtained in the open bond market.

Spending Authority

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

Departments Contacted

Legislative Council                Colorado Commission on Higher Education              Education