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Second Regular Session

Sixty-first General Assembly

LLS NO. 98­0364.01 SLE SENATE BILL 98­083

STATE OF COLORADO

BY SENATOR Feeley

LOCAL GOVERNMENT

A BILL FOR AN ACT

CONCERNING THE ESTABLISHMENT OF A TASK FORCE TO STUDY THE FISCAL POLICIES OF STATE AND LOCAL GOVERNMENTS IN COLORADO.

Bill Summary

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

Creates a legislative review committee to oversee the study of state and local government fiscal policies. Specifies the membership and the responsibilities of the legislative review committee.

Establishes a task force for the study of state and local government fiscal policies and provides for the appointment of task force members. Sets forth the duties of the task force. Specifies certain issues to be addressed by the task force study and any proposed legislation. Authorizes the task force to receive private moneys to be used for the direct and indirect costs of the study. Provides for staff support to the legislative review committee.

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

SECTION 1.  Title 39, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW ARTICLE to read:

ARTICLE 32

Task Force to Study State and Local

Government Fiscal Policies

39­32­101.  Legislative declaration. (1)  THE GENERAL ASSEMBLY HEREBY FINDS AND DECLARES THAT:

(a)  THE STATE OF COLORADO AND ITS CITIZENS HAVE EXPERIENCED MANY CHANGES SINCE THE LAST COMPREHENSIVE REVIEW AND ANALYSIS OF STATE AND LOCAL TAX STRUCTURE AND POLICY WAS COMPLETED NEARLY FORTY YEARS AGO;

(b)  RECENT ECONOMIC, POLITICAL, AND CONSTITUTIONAL CHANGES HAVE MADE IT INCREASINGLY MORE DIFFICULT FOR THE STATE AND FOR LOCAL GOVERNMENTS TO ADEQUATELY PROVIDE NECESSARY SERVICES AND PROGRAMS, AND THESE DIFFICULTIES ARE ANTICIPATED TO WORSEN AS THE STATE AND ITS COMMUNITIES CONTINUE TO EXPERIENCE GROWTH;

(c)  THESE DIFFICULTIES ARE FURTHER COMPOUNDED BY CERTAIN INEQUITIES THAT EXIST WITHIN THE CURRENT STATE AND LOCAL TAX SYSTEMS AND RESULT IN UNINTENDED CONSEQUENCES BY THE COMBINED EFFECT OF RECENTLY ADOPTED CONSTITUTIONAL PROVISIONS AND OTHER CHANGES IN FISCAL POLICIES;

(d)  THESE INEQUITIES CAN RESULT IN THE TAX BURDEN FOR FINANCING GOVERNMENT SERVICES AND PROGRAMS BEING BORNE UNFAIRLY BY CERTAIN TAXPAYERS, AND CAN ALSO DIMINISH COLORADO'S ABILITY TO ATTRACT NEW BUSINESSES AND RETAIN EXISTING BUSINESSES THAT ARE VITAL TO THE ECONOMIC WELL­BEING OF THE STATE AND ITS CITIZENS;

(e)  DUE TO THE IMPOSITION OF CERTAIN FISCAL REQUIREMENTS AND LIMITATIONS, GOVERNMENTS CAN NO LONGER RELY SOLELY UPON INCREASED REVENUES TO KEEP PACE WITH INCREASED DEMAND FOR SERVICES AND PROGRAMS;

(f)  IN ORDER TO ADEQUATELY ADDRESS THESE ISSUES IN AN INFORMED, COORDINATED, AND EFFECTIVE MANNER, A COMPREHENSIVE REVIEW AND ANALYSIS OF THE FISCAL POLICIES OF THE STATE AND LOCAL GOVERNMENTS IS NEEDED, INCLUDING THE MANNER IN WHICH GOVERNMENT ORGANIZATION AND STRUCTURE IMPACT SUCH FISCAL POLICIES; AND

(g)  AS A RESULT OF THIS STUDY, IT MAY BE DETERMINED WHETHER ANY STATE AND LOCAL GOVERNMENT FISCAL POLICY OR GOVERNMENT ORGANIZATION OR STRUCTURE SHOULD BE MODIFIED AND, IF SO, HOW SUCH POLICY, ORGANIZATION, OR STRUCTURE SHOULD BE MODIFIED TO ENSURE THAT STATE AND LOCAL GOVERNMENTS ARE PROVIDING NEEDED SERVICES AND PROGRAMS IN THE MOST EFFICIENT AND EFFECTIVE MANNER POSSIBLE AND ARE FUNDED BY AN EQUITABLE AND STABLE FINANCE SYSTEM.

(2)  THEREFORE, THE GENERAL ASSEMBLY DECLARES THAT IT IS NECESSARY TO CREATE A TASK FORCE TO STUDY THE FISCAL POLICIES OF STATE AND LOCAL GOVERNMENTS, INCLUDING THE EFFECTS OF GOVERNMENT ORGANIZATION AND STRUCTURE ON SUCH FISCAL POLICIES, AND TO MAKE RECOMMENDATIONS TO A LEGISLATIVE REVIEW COMMITTEE THAT WILL DEVELOP A LEGISLATIVE PROPOSAL FOR CHANGING STATE AND LOCAL GOVERNMENT FISCAL POLICIES AND ANY RELATED CHANGES TO GOVERNMENT ORGANIZATION OR STRUCTURE.

39­32­102.  Legislative review committee ­ creation ­ duties. (1)  THERE IS HEREBY CREATED A LEGISLATIVE REVIEW COMMITTEE TO OVERSEE THE STUDY OF STATE AND LOCAL GOVERNMENT FISCAL POLICIES. THE MEMBERS OF THE COMMITTEE SHALL BE RESPONSIBLE FOR CONSULTING WITH MEMBERS OF THE TASK FORCE CREATED IN SECTION 39­32­103 AND DEVELOPING A LEGISLATIVE PROPOSAL FOR CHANGES TO THE FISCAL POLICIES OF THE STATE AND LOCAL GOVERNMENTS AND ANY RELATED CHANGES TO GOVERNMENT ORGANIZATION OR STRUCTURE.

(2)  THE MEMBERS OF THE LEGISLATIVE REVIEW COMMITTEE SHALL BE AS FOLLOWS:

(a)  TWO MEMBERS OF THE HOUSE OF REPRESENTATIVES TO BE APPOINTED BY THE SPEAKER OF THE HOUSE OF REPRESENTATIVES;

(b)  ONE MEMBER OF THE HOUSE OF REPRESENTATIVES TO BE APPOINTED BY THE MINORITY LEADER OF THE HOUSE OF REPRESENTATIVES;

(c)  TWO MEMBERS OF THE SENATE TO BE APPOINTED BY THE PRESIDENT OF THE SENATE; AND

(d)  ONE MEMBER OF THE SENATE TO BE APPOINTED BY THE MINORITY LEADER OF THE SENATE.

(3)  THE COMMITTEE SHALL COMPLETE THE LEGISLATIVE PROPOSAL ON OR BEFORE OCTOBER 15, 2000.

39­32­103.  Fiscal policies study task force ­ creation ­ duties. (1)  THERE IS HEREBY CREATED A TASK FORCE FOR THE STUDY OF STATE AND LOCAL GOVERNMENT FISCAL POLICIES. THE TASK FORCE SHALL CONSIST OF TWENTY­FOUR MEMBERS AS FOLLOWS:

(a)  TWENTY MEMBERS APPOINTED BY THE GOVERNOR. OF THESE MEMBERS:

(I)  FOUR SHALL BE REPRESENTATIVES OF THE DEPARTMENT OF REVENUE, THE DEPARTMENT OF LOCAL AFFAIRS, THE DEPARTMENT OF EDUCATION, AND THE DIRECTOR OF THE OFFICE OF STATE PLANNING AND BUDGETING, WHICH ARE EXECUTIVE BRANCH DEPARTMENTS AND AGENCIES AFFECTED BY STATE AND LOCAL FISCAL POLICIES;

(II)  EIGHT SHALL BE REPRESENTATIVES OF ORGANIZATIONS AFFECTED BY STATE AND LOCAL FISCAL POLICIES, INCLUDING BUT NOT LIMITED TO ORGANIZATIONS REPRESENTING THE INTERESTS OF RETAIL BUSINESSES, MANUFACTURING, HOMEBUILDERS, REALTORS, AGRICULTURE, AND CITIZENS. IN MAKING THE APPOINTMENTS, CONSIDERATION SHALL BE GIVEN TO THE DIVERSITIES OF INTERESTS AND GEOGRAPHY.

(III)  EIGHT SHALL BE LOCAL GOVERNMENT REPRESENTATIVES, OF WHICH TWO SHALL REPRESENT COUNTIES, TWO SHALL REPRESENT MUNICIPALITIES, TWO SHALL REPRESENT SCHOOL DISTRICTS, AND TWO SHALL REPRESENT SPECIAL DISTRICTS. THE GOVERNOR SHALL CONSULT WITH THE STATEWIDE ASSOCIATION OF EACH LOCAL GOVERNMENT SPECIFIED IN THIS SUBPARAGRAPH (III) PRIOR TO APPOINTING ANY REPRESENTATIVE OF SUCH LOCAL GOVERNMENT.

(b)  TWO MEMBERS APPOINTED BY THE SPEAKER OF THE HOUSE OF REPRESENTATIVES WHO SHALL NOT BE MEMBERS OF THE GENERAL ASSEMBLY; AND

(c)  TWO MEMBERS APPOINTED BY THE PRESIDENT OF THE SENATE WHO SHALL NOT BE MEMBERS OF THE GENERAL ASSEMBLY.

(2)  MEMBERS OF THE TASK FORCE SHALL SERVE AT THE PLEASURE OF THE APPOINTING AUTHORITY. MEMBERS SHALL SERVE WITHOUT COMPENSATION.

(3)  THE TASK FORCE SHALL HAVE THE FOLLOWING DUTIES:

(a)  TO EVALUATE THE OVERALL EFFECTIVENESS AND IMPACT OF STATE AND LOCAL GOVERNMENT FISCAL POLICIES, INCLUDING THE EFFECT OF GOVERNMENT ORGANIZATION AND STRUCTURE ON SUCH FISCAL POLICIES, IDENTIFY FISCAL POLICIES AND RELATED GOVERNMENT ORGANIZATION AND STRUCTURE IN NEED OF REVISION, AND PROVIDE GUIDANCE AND MAKE RECOMMENDATIONS TO THE LEGISLATIVE REVIEW COMMITTEE ESTABLISHED PURSUANT TO SECTION 39­32­102;

(b)  TO COMMUNICATE WITH AND OBTAIN INPUT FROM GROUPS THROUGHOUT THE STATE AFFECTED BY STATE AND LOCAL GOVERNMENT FISCAL POLICIES;

(c)  TO CREATE SUBCOMMITTEES OR SUBGROUPS AS NECESSARY, WHICH GROUPS MAY INCLUDE INDIVIDUALS NOT SERVING ON THE TASK FORCE, IN ORDER TO AID IN THE COMPLETION OF THE TASK FORCE STUDY AND THE DEVELOPMENT OF A LEGISLATIVE PROPOSAL FOR CHANGES TO STATE AND LOCAL FISCAL POLICIES, INCLUDING CHANGES TO GOVERNMENT ORGANIZATION AND STRUCTURE THAT RELATE TO SUCH FISCAL POLICIES;

(d)  TO REPORT AT LEAST MONTHLY TO THE MEMBERS OF THE LEGISLATIVE REVIEW COMMITTEE ESTABLISHED PURSUANT TO SECTION 39­32­102.

39­32­104.  Issues to be addressed by task force study and proposed legislation. (1)  THE TASK FORCE STUDY AND THE PROPOSED LEGISLATION FOR CHANGING STATE AND LOCAL GOVERNMENT FISCAL POLICIES SHALL ADDRESS ISSUES, INCLUDING BUT NOT LIMITED TO THE FOLLOWING:

(a)  ISSUES CONCERNING EQUITY, SUCH AS:

(I)  THE PROPERTY TAX BURDEN OF RESIDENTIAL PROPERTY IN COMPARISON TO THE PROPERTY TAX BURDEN OF THE DIFFERENT CLASSES OF NONRESIDENTIAL PROPERTY;

(II)  THE APPLICATION OF AGRICULTURAL LAND CLASSIFICATION FOR PROPERTY TAX PURPOSES;

(III)  THE EXISTING BASES FOR SALES AND USE TAXES AND THE POTENTIAL APPLICATION OF SALES AND USE TAX TO TRANSACTIONS CURRENTLY EXEMPT OR NOT OTHERWISE SUBJECT TO TAXATION;

(IV)  THE EXISTING BASES FOR INDIVIDUAL AND CORPORATE INCOME TAX;

(V)  THE EXISTENCE OF DIFFERING RATES AND BASES FOR SALES AND USE TAXES ACROSS TAXING JURISDICTIONS AND THE RESULTING TAX REPORTING PROBLEMS OF VENDORS;

(VI)  THE INCREASING OCCURRENCE OF GOVERNMENT COMPETITION FOR DEVELOPMENT THAT GENERATES INCREASED TAX REVENUES;

(VII)  THE EXISTENCE OF REGIONAL AND JURISDICTIONAL DIFFERENCES AND DISPARITIES RELATING TO THE ABILITY OF GOVERNMENTS TO GENERATE REVENUES AND TO CIRCUMSTANCES CONTRIBUTING TO INCREASED DEMAND FOR SERVICES;

(VIII)  THE TAX BURDEN ON EXISTING TAXPAYERS, BOTH INDIVIDUALS AND BUSINESSES, TO FUND COSTS ASSOCIATED WITH NEW GROWTH THAT DOES NOT PRIMARILY BENEFIT SUCH TAXPAYERS;

(IX)  THE PROPERTY TAX BURDEN OF AND THE BENEFIT TO NONRESIDENTIAL PROPERTY FOR FINANCING PUBLIC SCHOOLS IN COMPARISON TO THE PROPERTY TAX BURDEN OF AND THE BENEFIT TO RESIDENTIAL PROPERTY FOR FINANCING PUBLIC SCHOOLS;

(X)  THE STATE'S AND SCHOOL DISTRICTS' SHARES OF FUNDING FOR PUBLIC EDUCATION;

(XI)  THE DIFFERENCES IN THE LEVEL OF FUNDING FOR EDUCATION AMONG SCHOOL DISTRICTS;

(XII)  THE RELIANCE ON LOCAL REVENUES FOR NEW CONSTRUCTION OR DEFERRED MAINTENANCE OF SCHOOL DISTRICT CAPITAL FACILITIES;

(XIII)  THE IMPACT OF FISCAL POLICIES, SUCH AS THE IMPOSITION OF SALES AND USE TAX AND BUSINESS PERSONAL PROPERTY TAX, ON CAPITAL INVESTMENT WITHIN COLORADO;

(XIV)  THE RELIANCE ON PROPERTY TAXES TO FUND LOCAL GOVERNMENT PROGRAMS AND SERVICES;

(b)  ISSUES CONCERNING STABILITY, SUCH AS:

(I)  THE CONTINUAL DECLINE IN THE ASSESSED VALUE OF PROPERTY IN TAXING JURISDICTIONS DUE TO REDUCTIONS IN THE RESIDENTIAL RATIO AND ITS IMPACT ON PROPERTY TAX REVENUES;

(II)  THE DOUBLE­COUNTING OF INTERGOVERNMENTAL REVENUES FOR PURPOSES OF SECTION 20 OF ARTICLE X OF THE STATE CONSTITUTION;

(III)  THE AUTOMATIC RATCHETING DOWN OF PROPERTY TAX MILL LEVIES, TAX REVENUES, AND AGGREGATE GOVERNMENT REVENUES UNDER SECTION 20 OF ARTICLE X OF THE STATE CONSTITUTION;

(IV)  THE RELIANCE ON SALES AND USE TAXES BY SOME LOCAL GOVERNMENTS TO THE EXTENT THAT DECLINES IN SALES AND USE TAX REVENUES SIGNIFICANTLY IMPAIR A GOVERNMENT'S ABILITY TO PROVIDE NECESSARY SERVICES;

(V)  THE REQUIREMENT THAT REVENUES BE SET ASIDE AS AN EMERGENCY RESERVE UNDER SECTION 20 OF ARTICLE X OF THE STATE CONSTITUTION AND ITS IMPACT ON THE AMOUNT OF REVENUES AVAILABLE FOR GOVERNMENT PURPOSES;

(VI)  THE INTERACTION BETWEEN ARTICLE X OF SECTION 20 OF THE STATE CONSTITUTION AND THE GALLAGHER AMENDMENT IN SECTION 3 OF ARTICLE X OF THE STATE CONSTITUTION AND THE RESULTING IMPACT ON THE PROPERTY TAX BASE AND REVENUES;

(VII)  THE INTERACTION BETWEEN THE VARIOUS GOVERNMENT REVENUE AND EXPENDITURE LIMITATIONS THAT HAVE BEEN ENACTED OR MODIFIED DURING THE PAST DECADE;

(c)  ISSUES CONCERNING ADDITIONAL REVENUE SOURCES, SUCH AS:

(I)  THE IMPOSITION OF IMPACT AND USER FEES TO PAY FOR ALL OR A PORTION OF THE COSTS OF SERVICES REQUIRED DUE TO GROWTH THAT ARE REASONABLY RELATED TO THE COST OF SUCH SERVICES;

(II)  THE USE OF GENERAL STATE TAX REVENUES TO SUPPORT THE STATE TRANSPORTATION SYSTEM;

(III)  POTENTIAL SHARING OF REVENUES AMONG LOCAL GOVERNMENTS AND BETWEEN THE STATE AND LOCAL GOVERNMENTS;

(IV)  THE IMPOSITION OF REAL ESTATE TRANSFER TAXES;

(V)  THE REPLACEMENT OF STATE INCOME TAX REVENUES IF THE FEDERAL INCOME TAX IS ABOLISHED IN FAVOR OF A CONSUMPTION TAX;

(d)  ISSUES CONCERNING GOVERNMENT ORGANIZATION AND STRUCTURE THAT IMPACT FISCAL POLICIES, SUCH AS:

(I)  THE EXISTENCE AND EXTENT OF OVERLAPPING OR DUPLICATIVE PROVISION OF SERVICES;

(II)  THE IMPLICATIONS OF ELIMINATION OR CONSOLIDATION OF GOVERNMENTS RELATING TO THE PROVISION OF SERVICES;

(III)  THE METHODS BY WHICH GOVERNMENTS PROVIDE SERVICES AND ANY POTENTIAL MODIFICATIONS THAT WOULD ACHIEVE THE MOST EFFICIENT AND EFFECTIVE PROVISION OF SERVICES, INCLUDING THE ELIMINATION, REDUCTION, OR PRIVATIZATION OF CERTAIN SERVICES;

(IV)  THE UTILIZATION OF INTER­GOVERNMENTAL COORDINATION AND COOPERATION FOR THE PROVISION OF SERVICES.

(2)  IN PERFORMING ITS DUTIES UNDER THIS SECTION, THE TASK FORCE SHALL:

(a)  ASSEMBLE AND ANALYZE RECENT TAX STUDIES THAT HAVE COMPILED DATA ON SPECIFIC ISSUES INVOLVING FISCAL POLICIES, SUCH AS SALES TAX EXEMPTIONS, THE EFFECTS OF COMPETING CONSTITUTIONAL PROVISIONS, AND INDEBTEDNESS; AND

(b)  CONSIDER THE IMPORTANCE OF DEPENDABLE, RATIONAL, AND EQUITABLE TAX SYSTEMS THAT:

(I)  ASSURE SUSTAINABLE GROWTH IN THE STATE AS A WHOLE;

(II)  PROMOTE INTER­GOVERNMENTAL COOPERATION ON ISSUES SPECIFIC TO REGIONAL GROWTH AND ITS RELATED IMPACTS;

(III)  SUPPORT EFFICIENT USE OF INFRASTRUCTURE AND SERVICES; AND

(IV)  CONSIDER THE UNIQUE PROBLEMS IN THE METROPOLITAN AREA WITH REGARD TO FISCAL ISSUES, REVENUE SHARING, MUNICIPAL CHARTER LIMITS, AND SPECIAL DISTRICTS.

39­32­105.  Private source of funding ­ staff support for tax policy study. (1)  THE TASK FORCE FOR THE STUDY OF STATE AND LOCAL GOVERNMENT FISCAL POLICIES IS AUTHORIZED TO RECEIVE CONTRIBUTIONS, GRANTS, SERVICES, AND IN­KIND DONATIONS FROM ANY PRIVATE ENTITY TO BE EXPENDED FOR ANY DIRECT OR INDIRECT COSTS ASSOCIATED WITH THE DUTIES OF THE TASK FORCE SET FORTH IN THIS ARTICLE.

(2)  THE DIRECTOR OF RESEARCH OF THE LEGISLATIVE COUNCIL, THE DIRECTOR OF THE OFFICE OF LEGISLATIVE LEGAL SERVICES, AND THE EXECUTIVE DIRECTORS OF THE DEPARTMENTS REPRESENTED ON THE TASK FORCE SHALL SUPPLY STAFF ASSISTANCE TO THE LEGISLATIVE REVIEW COMMITTEE AS THEY DEEM APPROPRIATE. THE COMMITTEE MAY ALSO ACCEPT STAFF SUPPORT FROM THE PRIVATE SECTOR.

(3)  NOTHING IN THIS SECTION SHALL BE CONSTRUED TO PRECLUDE THE EXPENDITURE OF STATE MONEYS FOR ANY DIRECT OR INDIRECT COSTS ASSOCIATED WITH THE DUTIES OF THE TASK FORCE OR THE LEGISLATIVE REVIEW COMMITTEE SET FORTH IN THIS ARTICLE.

39­32­106.  Repeal of article.  THIS ARTICLE IS REPEALED, EFFECTIVE JULY 1, 2002.

SECTION 2.  Effective date.  This act shall take effect at 12:01 a.m. on the day following the expiration of the ninety­day period after final adjournment of the general assembly that is allowed for submitting a referendum petition pursuant to article V, section 1 (3) of the state constitution; except that, if a referendum petition is filed against this act or an item, section, or part of this act within such period, then the act, item, section, or part, if approved by the people, shall take effect on the date of the official declaration of the vote thereon by proclamation of the governor.