STATE FISCAL IMPACT SUMMARY	FY 1998/99	FY 1999/2000	FY 2000/01
State Revenues General Fund Elderly Property Tax Assistance Fund		Income Tax Increase Contributions	Income Tax Increase Contributions
State Expenditures General Fund - School Finance Elderly Property Tax Assistance Fund		$13,970,279 Contributions*	$14,198,492 Contributions*
FTE Position Change	None	None	None
Local Government Impact — This bill will reduce property tax collections for units of local government where eligible residential properties are located.

* The amount of the annual expenditures of the Elderly Property Tax Assistance Fund is limited to the amount of contributions credited to the fund.

This bill, as amended by the Senate Finance Committee (Senate Journal, February 13, 1998, pages 242 and 243), allows for property tax years commencing on or after January 1, 1999, a credit against property taxes based upon the actual value of the qualified individual’s residence. Provisions of the tax credit are as follows:

• for a residence valued at $150,000 or less, the credit shall be 30 percent of the qualified individual’s property tax liability for that residence;

• for a residence valued at more than $150,000 but not more than $300,000, the credit shall be 25 percent of the qualified individual’s property tax liability for that residence;

• for a residence valued at more than $300,000 but not more than $500,000, the credit shall be 20 percent of the qualified individual’s property tax liability for that residence; and

• for a residence valued at more than $500,000, the qualified individual shall not be allowed a credit.

The bill requires the taxpayer’s claim for credit to be submitted to the county treasurer between October 1 and December 1 of the property tax year for which the credit is claimed. The bill requires the amount of property tax not collected to be apportioned among property taxing entities based upon the amount each taxing entity levies on the property in proportion to the total amount of property tax levied on the property.

The bill defines a “qualified individual” as a natural person 65 years of age or older who has resided in Colorado for at least 10 consecutive years preceding the beginning of the property tax year for which the credit is claimed.

The amended bill creates the Elderly Property Tax Assistance Fund to be comprised of moneys contributed by state income taxpayers. The bill requires for income tax years commencing on January 1, 1998, but prior to January 1, 2001, each Colorado state individual income tax return form to contain a line whereby each taxpayer may designate the amount of the contribution to make to the fund.

The bill requires the Department of Revenue to annually report the amount of the contributions to the State Treasurer and the General Assembly. The bill requires the State Treasurer to credit the amount of the contributions to the Elderly Property Tax Assistance Fund, then to transfer the moneys in the fund, including investment earnings, to the Division of Property Taxation in the Department of Local Affairs. The bill authorizes the Property Tax Administrator to use those moneys to reimburse property taxing entities for the costs of administering the property tax credit, and for all or a portion of the amount of property tax not collected because of the credit. The bill will become effective upon the signature of the Governor.

The provisions of the bill will affect state revenue and expenditures, and local government revenue. Therefore, the bill is assessed as having a state and local fiscal impact.

Property taxes are deductible for individual taxpayers who itemize deductions. The reduction of property taxes will increase the taxable incomes, and subsequent state tax liabilities, of those taxpayers benefitting from a property tax credit. In spite of the limited amount of information that is available on elderly income taxes, Legislative Council Staff estimates the amount of additional state income tax revenue generated by the provisions of this bill may be approximately $0.5 million for income tax years 2000 and 2001.

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.

School Finance Act. State aid for schools is computed as the difference between Total Program and the amount collected from property taxes and specific ownership taxes. The bill requires the amount of property tax not collected to be apportioned among property taxing entities based upon the amount each taxing entity levies on the property in proportion to the total amount of property tax levied on the property.

Legislative Council staff has determined the amount of property taxes levied for school districts, on a statewide basis, is 43 percent of the total amount of property tax levied by local governments in the state. The residential property tax credits identified in the “Local Government Impact” section of this fiscal note will reduce the amount of property tax revenue to school districts by $13,970,279 for FY 1999-2000 and $14,198,492 for FY 2000-01.

The School Finance Act requires the state to make up for any lost operating budget property tax revenue. Therefore, starting in FY 1999-2000, the state may be required to reimburse (General Fund) lost property tax revenues to school districts that are affected by the property tax reduction.

Department of Revenue. Based upon available information for other income tax check-offs, the department does not expect a significant number of taxpayers to contribute monies to the fund. An average number of 23,800 taxpayers annually utilize an income tax form check-off with an average check-off amount of $6.72 per person. The department will be able to absorb all additional data entry costs, software programming costs, and income tax form modifications within existing resources.

This bill will reduce property tax collections for units of local government where eligible residential properties are located. The amounts of the statewide residential property tax credits are estimated to be $32,489,022 for CY 2000 and $23,019,749 for CY 2001, based upon the following:

• an assumption the credit for property tax year 1999 is based upon the assessed value for 1999, and the credit will be against taxes payable during 2000;

• a projection of a residential assessment rate of 9.59 percent for 1999 and 2000;

• data from the 1990 Census on residency, owner-occupancy, and elderly status;

• data from the 1997 Thos. Y. Pickett & Company, Inc. report on values of single-family homes; and

• an assumption that a single-family residence is a single-family home as classified by the Division of Property Tax and the county assessors.

As shown in the “State Expenditures” section of this fiscal note, the state will reimburse school districts in the amounts of $13,970,279 for FY 1999-2000 and $14,198,492 for FY 2000-01. Non-school district local governments will realize a revenue reduction of $18,518,743 for FY 1999-2000 and $18,821,257 for FY 2000-01.

The Department of Education, Public School Finance, Total Program may require a General Fund appropriation increase of $13,970,279 for FY 1999-2000. The General Assembly will determine the FY 1999-2000 Total Program appropriation during the 1999 legislative session.