Colorado Legislative Council Staff



TABOR Refund Impact

State Cash Fund Revenue and General and Cash Fund Expenditure Impact

Drafting Number:

Prime Sponsor(s):

LLS 98-176

Sen. Tebedo

Rep. Swenson


Bill Status:

Fiscal Analyst:

April 17, 1998

Senate Business Affairs

Will Meyer (866-4976)



Summary of Legislation

          The provisions of this bill would make numerous changes to the motor vehicle insurance requirements. In particular, the bill would repeal the requirement that motor vehicle owners purchase motor vehicle insurance. Instead of mandatory motor vehicle insurance, the bill would require motor vehicle owners to make financial arrangements, in specified amounts, sufficient to cover personal and property losses and damages. It would prohibit any operator of a motor vehicle who is injured in an automobile accident from recovering noneconomic damages unless such operator or the owner of the vehicle has made the required financial arrangements. The bill also would eliminate the penalties that apply when a person fails to meet the motor vehicle insurance requirements.

          The bill will become effective at 12:01 a.m. on the day following the ninety-day period after adjournment sine die of the General Assembly, 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.


FY 1998/99

FY 1999/2000

State Revenues

HUTF - Department of Revenue

 Revenues from Driver’s Licenses Reinstatements

 Motorist Insurance Database Account*



State Expenditures

General Fund - Department of Revenue

 HUTF - Motorist Insurance Database Account

Other Fund





FTE Position Change

(0.7 FTE)

(0.7 FTE)

Local Government Impact — None Identified.

          *Section 42-3-134 (1)(a) C.R.S., requires the payment of a motorist insurance identification fee of $1 when registering a vehicle. As the provisions of this bill repeal the database (which is supported by this fee), Section 42-3-134 (1)(a) through (1)(c) C.R.S., should also be repealed. This would result in a decrease of $3,100,000 in revenues to this account in the HUTF.

State Revenues

          Based on the number of driver’s license suspensions of 30,930 in FY 1996/97, the amount of revenues currently collected and deposited in the HUTF would decrease by an estimated to be $1,237,200 (30,930 reinstatements times $40) each year. Assuming the bill would become effective October 1, 1998, only $927,750 (3/4 of one year) less would be collected in FY 1998/99.


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

          Even though the bill would repeal all mandatory motor vehicle insurance requirements, the Division of Insurance, Department of Regulatory does not anticipate any significant fiscal impact to the division. The division anticipates that they would see a shift in complaints, with an increase in the number of health insurance and liability related complaints being offset by a decrease in the number of complaints related to mandatory motor vehicle insurance coverage.  

          The repeal of all mandatory motor vehicle insurance requirements would have a fiscal impact on the Department of Revenue, Division of Motor Vehicles. The provisions of the bill would impact the division in the following ways: (1) a decrease in the number of suspensions processed and citations processed for points associated with conviction for failure to have required motor vehicle insurance, (2) an increase in the number of accident reports filed with the division (each party would file their own accident report), and (3) costs to modify the current reporting forms. The provisions of the bill would result in a net reduction in expenditures and staffing in the Department of Revenue, Division of Motor Vehicles. It is estimated that the net decrease would total 0.7 FTE and $25,229 in FY 1998/99, and 0.7 FTE and $27,629 in FY 1999/2000.

          The bill also would eliminate the need to continue the development of, and future maintenance, of the Motorist Insurance Database resulting in a cost savings of $3,100,000 a year.

          To the extent that the provisions of the bill would result in decreased damages being awarded to a third party liable in an motor vehicle accident involving Medicaid clients, the provisions of the bill would have an impact on future Medicaid expenditures by the Department of Health Care Policy and Financing. The magnitude of this impact cannot be estimated at this time.


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;

            short-term disability costs;

            inflationary cost factors;

            leased space; and

            indirect costs.

Spending Authority

          This fiscal note implies that the Department of Revenue, Division of Motor Vehicles would require a reduction in their General Fund Appropriation of $25,299 and 0.7 FTE in FY 1998/99. In addition, the Department of Revenue’s appropriation out of the Highway Users Tax Fund, Motorist Insurance Database Account, should be reduced by $3,100,000 in FY 1998/99. 

Departments Contacted

          Regulatory Agencies Judicial Branch         Personnel      Public Safety            Revenue

          Public Policy and Financing