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Second Regular Session

Sixty-first General Assembly

LLS NO. 98­0925.01D JAG HOUSE BILL 98­1417

STATE OF COLORADO

BY REPRESENTATIVE Paschall

FINANCE

A BILL FOR AN ACT

CONCERNING THE REFUNDING OF STATE REVENUES IN EXCESS OF THE CONSTITUTIONAL LIMITATION ON STATE FISCAL YEAR SPENDING FOR ANY GIVEN FISCAL YEAR.

Bill Summary

(Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments that may be subsequently adopted.)

Requires that all excess state revenues for any given fiscal year commencing on or after July 1, 1997, be refunded through a state income tax credit. Requires the executive director of the department of revenue to determine a single percentage that, when used to calculate the amount of the credit to be allowed to each taxpayer in the manner set forth in the statute, will cause the total amount of credits allowed to equal the amount of excess state revenues required to be refunded. Requires the executive director to give written notification of the single percentage determined and amounts of the credit calculated to the executive committee of the legislative council for review and approval or disapproval. Sets forth procedures for the executive committee's review of the executive director's percentage determination and credit calculations.

Places each individual taxpayer into one of 3 tiers based on the taxpayer's federal adjusted gross income. Requires the executive director of the department of revenue to adjust the amounts of federal adjusted gross income at which the tiers are set to reflect annual changes in the Denver­Boulder consumer price index, rounding to the nearest $1,000. States that all taxpayers in the lowest income tier shall receive the identical amount of the credit calculated by multiplying the percentage determined by the executive director by the dollar amount that is the upper income limit of that tier. States that each taxpayer in the middle income tier shall receive a credit calculated by multiplying the percentage determined by the executive director by the taxpayer's federal adjusted gross income. States that all taxpayers in the highest income tier shall receive the identical amount of the credit calculated by multiplying the percentage determined by the executive director by the dollar amount that is the lower income limit of that tier. States that 2 individuals filing a joint return or individuals filing as surviving spouses shall be placed in a tier in the same manner as an individual taxpayer but shall be allowed twice the amount of the credit allowed to an individual taxpayer.

Makes additional conforming amendments to the statutory provisions regarding the state sales tax refund of excess revenues for the 1996­97 fiscal year through a state income tax credit to make such amended provisions applicable to the refund of excess state revenues for any given fiscal year.

Sets forth the individuals who are eligible to claim the credit. Specifies that a person who is serving a sentence in a correctional facility at the time of filing an income tax return is not eligible for the credit.

Based upon the financial statement prepared to ascertain compliance with section 20 of article X of the state constitution, requires the state controller to certify the amount of state revenues in excess of the constitutional limitation on state fiscal year spending for a given fiscal year by a specified date. Requires the state auditor to conduct an audit of the certified amount of excess state revenues by a specified date.


Be it enacted by the General Assembly of the State of Colorado:

SECTION 1.  Article 77 of title 24, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SECTION to read:

24­77­103.5.  Excess revenues ­ refund.  IF, FOR ANY STATE FISCAL YEAR COMMENCING ON OR AFTER JULY 1, 1997, THE AMOUNT OF STATE REVENUES EXCEEDS THE LIMITATION ON STATE FISCAL YEAR SPENDING IMPOSED BY SECTION 20 (7) (a) OF ARTICLE X OF THE STATE CONSTITUTION AND VOTERS STATEWIDE HAVE NOT AUTHORIZED THE STATE TO RETAIN AND SPEND ALL OR ANY PORTION OF THE EXCESS STATE REVENUES FOR THAT FISCAL YEAR, ALL EXCESS REVENUES REQUIRED TO BE REFUNDED FOR THAT FISCAL YEAR SHALL BE REFUNDED IN THE NEXT FISCAL YEAR PURSUANT TO SECTION 39­22­120, C.R.S.

SECTION 2.  39­22­120 (1) (b), (1) (e), (1) (f), (1) (i), (2), (3), (4), and (5), Colorado Revised Statutes, are amended, and the said 39­22­120 is further amended BY THE ADDITION OF THE FOLLOWING NEW SUBSECTIONS, to read:

39­22­120.  Legislative declaration ­ state sales tax refund ­ credit against state income tax. (1)  The general assembly hereby finds and declares that:

(b)  During the 1996­97 fiscal year, state revenues from sources not excluded from state fiscal year spending exceeded the limitation on state fiscal year spending;

(e)  Since IF voters have not approved a revenue change, the state is required to refund during the 1997­98 ANY GIVEN fiscal year the revenues in excess of the state fiscal year spending limitation for the 1996­97 PRECEDING fiscal year;

(f)  It is within the legislative prerogative of the general assembly to enact legislation to implement the refund of state excess revenues for the 1996­97 ANY GIVEN fiscal year in compliance with section 20 of article X of the state constitution IF THERE ARE EXCESS STATE REVENUES FOR THAT FISCAL YEAR;

(i)  It is the considered judgment of the general assembly that:

(I)  The State excess revenues, IF ANY, for the 1996­97 ANY GIVEN fiscal year are WILL BE derived from a wide variety of state taxes and fees ranging from state sales tax to severance and transportation taxes to health service fees to court fines to permit and license fees and to higher education fees and should, therefore, be returned to as large a group of Colorado residents as is identifiable and economically feasible;

(II)  It is not feasible to make proportional refunds of state excess revenues, for the 1996­97 IF ANY, FOR ANY GIVEN fiscal year due to the impossibility of identifying or returning prior payments;

(III)  It is reasonable and fair to refund state excess revenues, for the 1996­97 IF ANY, FOR ANY GIVEN fiscal year to a large group of individuals as a refund of state sales tax revenues since more Coloradans pay state sales tax than any other state tax;

(IV)  The state collected over one billion three million dollars in state sales tax revenues during the 1996­97 fiscal year from which the refund of state excess revenues may be made;

(V)  Refunding state excess revenues, for the 1996­97 IF ANY, FOR ANY GIVEN fiscal year through the state income tax system in the manner set forth in this section is a reasonable method for refunding such excess revenues; and

(VI)  ONE OF the most cost­effective and expeditious method METHODS of refunding state excess revenues, for the 1996­97 IF ANY, FOR ANY GIVEN fiscal year is through the state income tax system but that a credit against state income tax TAX LIABILITY is merely a mechanism for refunding said state excess revenues to a broad spectrum of persons.

(2) (a)  As used in this section, "qualified individual" means:

(a) (I)  A natural person who is domiciled in this state for the entire taxable year commencing on January 1 1997, and ending ON December 31 1997, OF SUCH TAX YEAR and who is required to file a Colorado individual income tax return for that tax year pursuant to section 39­22­601 (1) (a) or who files a Colorado individual income tax return to claim a refund of Colorado income tax withheld from wages or estimated Colorado income tax paid for that tax year; or

(b) (II)  Any natural person who is domiciled in this state for the entire taxable year commencing on January 1 1997, and ending ON December 31 1997, OF SUCH TAX YEAR and who is at least eighteen years of age as of December 31 1996 OF THE TAXABLE YEAR PRECEDING SUCH TAXABLE YEAR.

(b)  "QUALIFIED INDIVIDUAL" DOES NOT INCLUDE ANY NATURAL PERSON SERVING A SENTENCE OF CONFINEMENT IN A CORRECTIONAL FACILITY UNDER THE SUPERVISION OF THE DEPARTMENT OF CORRECTIONS OR THE UNITED STATES GOVERNMENT AS A RESULT OF CONVICTION OF A CRIME AT THE TIME OF FILING A COLORADO INDIVIDUAL INCOME TAX RETURN, REGARDLESS OF WHETHER SUCH PERSON MEETS THE QUALIFICATIONS SET FORTH IN PARAGRAPH (a) OF THIS SUBSECTION (2).

(3)  With respect to the taxable year commencing on January 1, 1997 1998, and ending December 31, 1997 1998, AND EACH SUBSEQUENT TAXABLE YEAR THEREAFTER, there shall be allowed to each qualified individual a state sales tax refund credit in an amount specified in subsection (4) of this section with respect to the income taxes imposed by this article IF THERE WERE EXCESS STATE REVENUES FOR THE FISCAL YEAR ENDING IN THE IMMEDIATELY PRECEDING TAXABLE YEAR THAT ARE REQUIRED TO BE REFUNDED PURSUANT TO SECTION 24­77­103.5, C.R.S.

(3.5)  NO LATER THAN OCTOBER 1 OF ANY GIVEN CALENDAR YEAR DURING WHICH IT IS CERTIFIED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 24­77­106.5, C.R.S., THAT STATE REVENUES EXCEED THE LIMITATION ON STATE FISCAL YEAR SPENDING IMPOSED BY SECTION 20 (7) (a) OF ARTICLE X OF THE STATE CONSTITUTION FOR THE FISCAL YEAR ENDING IN THAT CALENDAR YEAR AND ARE REQUIRED TO BE REFUNDED PURSUANT TO SECTION 24­77­103.5, C.R.S., THE EXECUTIVE DIRECTOR SHALL DETERMINE A SINGLE PERCENTAGE THAT, WHEN USED TO CALCULATE THE AMOUNT OF THE CREDIT TO BE ALLOWED PURSUANT TO PARAGRAPHS (a) AND (b) OF SUBSECTION (4) OF THIS SECTION, FOR THE TAXABLE YEAR COMMENCING DURING SAID FISCAL YEAR, SHALL CAUSE THE TOTAL AMOUNT OF CREDITS TO BE ALLOWED PURSUANT TO THIS SECTION TO EQUAL THE AMOUNT OF EXCESS STATE REVENUES REQUIRED TO BE REFUNDED.

(4)  The amount of the credit allowed under this section shall be as follows:

(a)  For a qualified individual filing a single return, a married filing separate return, or as a head of a household for the 1997 tax year:

(I)  If the qualified individual's federal adjusted gross income for the 1997 tax year is less than or equal to fifteen TWENTY­FIVE thousand dollars, the credit shall be in the AN amount of thirty­seven dollars EQUAL TO TWENTY­FIVE THOUSAND DOLLARS MULTIPLIED BY THE PERCENTAGE DETERMINED BY THE EXECUTIVE DIRECTOR PURSUANT TO SUBSECTION (3.5) OF THIS SECTION;

(II)  If the qualified individual's federal adjusted gross income for the 1997 tax year is greater than fifteen thousand TWENTY­FIVE THOUSAND dollars but not more than one hundred EIGHTY thousand dollars, the credit shall be in the AN amount of sixty dollars EQUAL TO THE QUALIFIED INDIVIDUAL'S FEDERAL ADJUSTED GROSS INCOME MULTIPLIED BY THE PERCENTAGE DETERMINED BY THE EXECUTIVE DIRECTOR PURSUANT TO SUBSECTION (3.5) OF THIS SECTION;

(III)  If the qualified individual's federal adjusted gross income for the 1997 tax year is more than one hundred EIGHTY thousand dollars, the credit shall be in the AN amount of eighty dollars EQUAL TO EIGHTY THOUSAND ONE DOLLARS MULTIPLIED BY THE PERCENTAGE DETERMINED BY THE EXECUTIVE DIRECTOR PURSUANT TO SUBSECTION (3.5) OF THIS SECTION.

(b)  For two qualified individuals filing a joint return or a qualified individual filing as a surviving spouse for the 1997 tax year:

(I)  If the qualified individuals' aggregate federal adjusted gross income is less than or equal to fifteen TWENTY­FIVE thousand dollars, the credit shall be in the AN amount of seventy­four dollars EQUAL TO THE AMOUNT OF THE CREDIT ALLOWED UNDER SUBPARAGRAPH (I) OF PARAGRAPH (a) OF THIS SUBSECTION (4) MULTIPLIED BY TWO;

(II)  If the qualified individuals' aggregate federal adjusted gross income is greater than fifteen TWENTY­FIVE thousand dollars but not more than one hundred EIGHTY thousand dollars, the credit shall be in the AN amount of one hundred twenty dollars EQUAL TO THE AMOUNT OF THE CREDIT ALLOWED UNDER SUBPARAGRAPH (II) OF PARAGRAPH (a) OF THIS SUBSECTION (4) MULTIPLIED BY TWO;

(III)  If the qualified individuals' aggregate federal adjusted gross income is greater than one hundred EIGHTY thousand dollars, the credit shall be in the AN amount of one hundred sixty dollars EQUAL TO THE AMOUNT OF THE CREDIT ALLOWED UNDER SUBPARAGRAPH (III) OF PARAGRAPH (a) OF THIS SUBSECTION (4) MULTIPLIED BY TWO.

(5) (a)  Any credit allowed pursuant to this section shall be claimed by a qualified individual as defined in SUBPARAGRAPH (I) OF paragraph (a) of subsection (2) of this section by timely filing a 1997 AN income tax return with the department of revenue FOR A TAXABLE YEAR FOR WHICH THE CREDIT IS ALLOWED in compliance with the provisions of this article. The department of revenue shall not allow said credit claimed on any 1997 income tax return not filed in compliance with the provisions of this article. In no event shall the credit claimed by a qualified individual as defined in SUBPARAGRAPH (I) OF paragraph (a) of subsection (2) of this section on any 1997 income tax return be allowed if said return is filed after October 15 1998 OF THE CALENDAR YEAR FOLLOWING THE TAX YEAR FOR WHICH THE CREDIT IS BEING CLAIMED.

(b)  Any credit allowed pursuant to this section shall be claimed by a qualified individual as defined in SUBPARAGRAPH (II) OF paragraph (b) PARAGRAPH (a) of subsection (2) of this section by filing a 1997 AN income tax return FOR A TAXABLE YEAR FOR WHICH THE CREDIT IS ALLOWED with the department of revenue no later than April 15 1998 OF THE CALENDAR YEAR FOLLOWING THE TAX YEAR FOR WHICH THE CREDIT IS CLAIMED. The department of revenue shall not allow said credit claimed by a qualified individual as defined in paragraph (b) SUBPARAGRAPH (II) OF PARAGRAPH (a) of subsection (2) of this section on any 1997 income tax return filed with the department of revenue after April 15 1998 OF THE CALENDAR YEAR FOLLOWING THE TAX YEAR FOR WHICH THE CREDIT IS BEING CLAIMED.

(8)  NO LATER THAN OCTOBER 1 OF ANY GIVEN CALENDAR YEAR DURING WHICH IT IS CERTIFIED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 24­77­106.5, C.R.S., THAT STATE REVENUES EXCEED THE LIMITATION ON STATE FISCAL YEAR SPENDING IMPOSED BY SECTION 20 (7) (a) OF ARTICLE X OF THE STATE CONSTITUTION FOR THE FISCAL YEAR ENDING IN THAT CALENDAR YEAR THAT ARE REQUIRED TO BE REFUNDED PURSUANT TO SECTION 24­77­103.5, C.R.S.:

(a)  THE EXECUTIVE DIRECTOR SHALL CALCULATE THE AMOUNT OF THE CREDIT TO BE ALLOWED PURSUANT TO PARAGRAPHS (a) AND (b) OF SUBSECTION (4) OF THIS SECTION FOR THE TAXABLE YEAR COMMENCING DURING SAID FISCAL YEAR. THE SINGLE PERCENTAGE USED TO CALCULATE THE AMOUNT OF THE CREDIT AND THE AMOUNT OF THE CREDIT SHALL BE CALCULATED IN ACCORDANCE WITH THE PROVISIONS OF SUBSECTIONS (3.5) AND (4) OF THIS SECTION, SHALL BE PUBLISHED IN RULES PROMULGATED BY THE EXECUTIVE DIRECTOR IN ACCORDANCE WITH ARTICLE 4 OF TITLE 24, C.R.S., AND SHALL BE INCLUDED IN INCOME TAX FORMS FOR THAT TAXABLE YEAR.

(b)  IF ONE OR MORE BALLOT QUESTIONS ARE SUBMITTED TO THE VOTERS AT A STATEWIDE ELECTION TO BE HELD IN NOVEMBER OF ANY GIVEN CALENDAR YEAR THAT SEEK AUTHORIZATION FOR THE STATE TO RETAIN AND SPEND ALL OR ANY PORTION OF THE AMOUNTS OF EXCESS STATE REVENUES FOR THE FISCAL YEAR ENDING DURING SAID CALENDAR YEAR, THE EXECUTIVE DIRECTOR SHALL NOT DETERMINE THE SINGLE PERCENTAGE USED TO CALCULATE THE AMOUNTS OF THE CREDIT OR THE AMOUNTS OF THE CREDIT UNTIL THE RESULTS OF SAID ELECTION ARE KNOWN SO THAT THE PERCENTAGE AND THE CREDIT MAY BE CALCULATED TO REFLECT THE IMPACT OF THE RESULTS OF SAID ELECTION ON THE AMOUNT OF EXCESS STATE REVENUES REQUIRED TO BE REFUNDED.

(c)  NOTWITHSTANDING ANY PROVISION OF THIS SECTION TO THE CONTRARY, FOR THE TAXABLE YEAR COMMENCING ON JANUARY 1, 1999, AND ENDING DECEMBER 31, 1999, AND FOR EACH SUBSEQUENT TAXABLE YEAR, THE EXECUTIVE DIRECTOR SHALL ADJUST THE AMOUNTS OF FEDERAL ADJUSTED GROSS INCOME OF QUALIFIED INDIVIDUALS, AS SPECIFIED IN SUBSECTION (4) OF THIS SECTION, TO REFLECT THE PERCENTAGE CHANGE IN THE CONSUMER PRICE INDEX FOR THE DENVER­BOULDER CONSOLIDATED METROPOLITAN STATISTICAL AREA FOR ALL URBAN CONSUMERS, ALL GOODS, AS PUBLISHED BY THE UNITED STATES DEPARTMENT OF LABOR, BUREAU OF LABOR STATISTICS, OR ITS SUCCESSOR, FOR SAID FISCAL YEAR. THE AMOUNTS OF FEDERAL ADJUSTED GROSS INCOME, AS ADJUSTED PURSUANT TO THIS PARAGRAPH (c), SHALL BE ROUNDED TO THE NEAREST ONE THOUSAND DOLLARS, SHALL BE PUBLISHED IN RULES PROMULGATED BY THE EXECUTIVE DIRECTOR IN ACCORDANCE WITH ARTICLE 4 OF TITLE 24, C.R.S., AND SHALL BE INCLUDED IN INCOME TAX FORMS FOR THAT TAXABLE YEAR.

(9) (a)  UPON CALCULATING THE SINGLE PERCENTAGE AND AMOUNTS OF THE CREDIT FOR ANY TAXABLE YEAR IN ACCORDANCE WITH THE PROVISIONS OF SUBSECTIONS (3.5) AND (4) OF THIS SECTION, THE EXECUTIVE DIRECTOR SHALL NOTIFY IN WRITING THE EXECUTIVE COMMITTEE OF THE LEGISLATIVE COUNCIL CREATED PURSUANT TO SECTION 2­3­301 (1), C.R.S., OF THE PERCENTAGE AND AMOUNTS OF THE CREDIT SO CALCULATED AND THE BASIS FOR SUCH CALCULATIONS. SUCH WRITTEN NOTIFICATION SHALL BE GIVEN WITHIN FIVE WORKING DAYS AFTER SUCH CALCULATIONS ARE COMPLETED AND SHALL BE GIVEN NO LATER THAN OCTOBER 1 OF THE CALENDAR YEAR UNLESS ONE OR MORE BALLOT QUESTIONS ARE SUBMITTED TO THE VOTERS AT A STATEWIDE ELECTION TO BE HELD IN NOVEMBER OF SUCH CALENDAR YEAR THAT SEEK AUTHORIZATION FOR THE STATE TO RETAIN AND SPEND ALL OR ANY PORTION OF THE AMOUNT OF EXCESS STATE REVENUES FOR THE FISCAL YEAR ENDING DURING SUCH CALENDAR YEAR.

(b)  IT IS THE FUNCTION OF THE EXECUTIVE COMMITTEE TO REVIEW AND APPROVE OR DISAPPROVE THE PERCENTAGE AND AMOUNTS OF THE CREDIT CALCULATED BY THE EXECUTIVE DIRECTOR WITHIN TWENTY DAYS AFTER RECEIPT OF THE WRITTEN NOTIFICATION FROM THE EXECUTIVE DIRECTOR. ANY PERCENTAGE AND CREDIT AMOUNTS CALCULATED PURSUANT TO THE PROVISIONS OF THIS SECTION THAT ARE NOT APPROVED OR DISAPPROVED BY THE EXECUTIVE COMMITTEE WITHIN SAID TWENTY DAYS SHALL BE AUTOMATICALLY APPROVED; EXCEPT THAT, IF WITHIN SAID TWENTY DAYS THE EXECUTIVE COMMITTEE SCHEDULES A HEARING ON SUCH PERCENTAGE AND CREDIT AMOUNTS, SUCH AUTOMATIC APPROVAL SHALL NOT OCCUR UNLESS THE EXECUTIVE COMMITTEE DOES NOT APPROVE OR DISAPPROVE SUCH PERCENTAGE AND CREDIT AMOUNTS AFTER THE CONCLUSION OF SUCH HEARING. ANY HEARING CONDUCTED BY THE EXECUTIVE COMMITTEE PURSUANT TO THE PROVISIONS OF THIS PARAGRAPH (b) SHALL BE HELD NO LATER THAN TWENTY­FIVE DAYS AFTER RECEIPT OF THE WRITTEN NOTIFICATION FROM THE EXECUTIVE DIRECTOR.

(c) (I)  IF THE EXECUTIVE COMMITTEE DISAPPROVES ANY PERCENTAGE AND CREDIT AMOUNTS CALCULATED BY THE EXECUTIVE DIRECTOR, THE EXECUTIVE COMMITTEE SHALL SPECIFY THE ADJUSTED PERCENTAGE AND CREDIT AMOUNTS TO BE IMPLEMENTED BY THE EXECUTIVE DIRECTOR. ANY PERCENTAGE AND CREDIT AMOUNTS SPECIFIED BY THE EXECUTIVE COMMITTEE PURSUANT TO THIS SUBPARAGRAPH (I) SHALL BE CALCULATED IN ACCORDANCE WITH THE PROVISIONS OF SUBSECTIONS (3.5) AND (4) OF THIS SECTION.

(II)  THE EXECUTIVE DIRECTOR SHALL NOT SET THE PERCENTAGE AND CREDIT AMOUNTS AT ANY NUMBER THAT HAS NOT BEEN APPROVED PURSUANT TO THE PROVISIONS OF PARAGRAPH (b) OF THIS SUBSECTION (9).

SECTION 3.  24­77­106.5, Colorado Revised Statutes, is amended to read:

24­77­106.5.  Annual financial report ­ certification of state excess revenues. (1) (a)  For each fiscal year, the controller shall prepare a financial report for the state for purposes of ascertaining compliance with the provisions of this article. Any financial report prepared pursuant to this section shall include, but shall not be limited to, state fiscal year spending, reserves, revenues, and debt.

(b)  BASED UPON THE FINANCIAL STATEMENT PREPARED IN ACCORDANCE WITH PARAGRAPH (a) OF THIS SUBSECTION (1) FOR ANY FISCAL YEAR COMMENCING ON OR AFTER JULY 1, 1997, THE CONTROLLER SHALL CERTIFY TO THE GOVERNOR, THE GENERAL ASSEMBLY, AND THE EXECUTIVE DIRECTOR OF THE DEPARTMENT OF REVENUE NO LATER THAN SEPTEMBER 1 FOLLOWING THE END OF EACH FISCAL YEAR THE AMOUNT OF STATE REVENUES IN EXCESS OF THE LIMITATION ON STATE FISCAL YEAR SPENDING IMPOSED BY SECTION 20 (7) (a) OF ARTICLE X OF THE STATE CONSTITUTION, IF ANY, FOR SUCH FISCAL YEAR.

(2)  Such ANY financial report PREPARED AND CERTIFICATION OF STATE EXCESS REVENUES MADE PURSUANT TO SUBSECTION (1) OF THIS SECTION shall be audited by the state auditor. NO LATER THAN SEPTEMBER 15 FOLLOWING THE CERTIFICATION MADE BY THE STATE CONTROLLER FOR ANY GIVEN FISCAL YEAR, THE STATE AUDITOR SHALL REPORT AND TRANSMIT TO THE GOVERNOR, THE GENERAL ASSEMBLY, AND THE EXECUTIVE DIRECTOR OF THE DEPARTMENT OF REVENUE THE RESULTS OF ANY AUDIT CONDUCTED IN ACCORDANCE WITH THIS SUBSECTION (2).

SECTION 4.  Safety clause.  The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.