Colorado Legislative Council Staff
STATE
REVISED FISCAL IMPACT
(replaces fiscal impact dated February 9, 1999)
Drafting Number: Prime Sponsor(s): |
LLS 99-0481 Rep. McPherson Sen. Powers |
Date: Bill Status: Fiscal Analyst |
March 26, 1999 Senate Finance Harry Zeid (303-866-4753) |
TITLE: CONCERNING THE REFUNDING OF ALL STATE REVENUES IN EXCESS OF THE CONSTITUTIONAL LIMITATION ON STATE FISCAL YEAR SPENDING FOR ANY GIVEN FISCAL YEAR THAT THE VOTERS STATEWIDE HAVE NOT AUTHORIZED THE STATE TO RETAIN, AND MAKING AN APPROPRIATION THEREFOR.
Fiscal Impact Summary |
FY 1999/2000 |
FY 2000/2001 |
State Revenues General Fund |
Refund of Excess TABOR Revenues |
|
State Expenditures General Fund |
$240,888 |
$240,888 |
FTE Position Change |
2.2 FTE |
2.2 FTE |
Other State Impact: None |
||
Effective Date: Upon signature of the Governor. |
||
Appropriation Summary for FY 1999-2000: $240,888 General Fund and 2.2 FTE appropriation required for the Department of Revenue. |
||
Local Government Impact: None |
Summary of Legislation
This reengrossed bill provides a method of refunding 105 percent of state revenues that are in excess of the state fiscal year spending limitation for fiscal years commencing on or after July 1, 1998, as required by Section 20 of Article X of the State Constitution, that the voters have not authorized the state to retain and spend. The bill establishes a temporary state sales tax refund mechanism which would be designed to refund 105 percent of the excess revenues that voters statewide have not authorized the state to retain and spend.
No later than October 1 of each year during which state revenues exceed the constitutional limitations, the Executive Director of the Department of Revenue is required to calculate the amount of the refund per taxpayer. If the average refund per individual is 15 dollars or less, each qualified individual would receive an identical refund amount. If the average refund per individual exceeds 15 dollars, then a six-tiered system would be established. If one or more ballot questions are submitted to the voters, the amount of the temporary sales tax refund per qualified taxpayer per income class would be calculated assuming that the voters approve or reject the issues on the ballot. The amounts of the refund per qualified taxpayer would be doubled for taxpayers who file a married joint tax return. The bill defines a “qualified individual” who would qualify for the sales tax portion of the refund of excess revenues. Table 1 identifies the percentage distribution of the excess revenues that would be refunded through the temporary state sales tax refund mechanism, assuming that the average refund amount exceeds 15 dollars.
Table 1. Percentage Distribution of the
Excess Revenues To Be Refunded Through
A Temporary State Sales Tax Refund
Federal Adjusted Gross Income Class |
Percent of Taxpayers |
Percent of TABOR Refund |
$25,000 or less $25,001 to $50,000 $50,001 to $75,000 $75,001 to $100,000 $100,001 to $125,000 More than $125,000 |
38.3% 24.6% 16.9% 9.4% 4.3% 6.5% |
25% 23% 19% 12% 6% 15% |
Refunds for persons incarcerated in a correctional facility operated by or under contract with the Department of Corrections or in a county or municipal jail awaiting transfer to a correctional facility would be transferred to the Department of Corrections for transmittal to the clerk of the district court that issued an order for payment of restitution. The Department of Corrections, the Department of Human Services, and each county, to the extent that the county has the capability within existing resources, is required to provide in a timely manner to the Department of Revenue, the necessary information to identity those individuals.
The bill would affect state General Fund revenues and expenditures, and is therefore assessed as having state fiscal impact. The bill would become effective upon signature of the Governor.
State Revenues
HB 99-1001 provides a method of refunding 105 percent of the state revenues that are in excess of the state fiscal year spending limitation for fiscal years commencing on or after July 1, 1998, as required by Section 20 of Article X of the State Constitution, that the voters have not authorized the state to retain and spend. The amount of annual excess revenues to be refunded will depend on the amount of revenues received by the state in any given year, and will be affected by tax rate reductions, tax credits, income modifications, and other tax exemptions that may be established by law in the future. Therefore, the amount of the TABOR refund has not been estimated. For illustrative purposes, Table 3 on page 5 identifies the impact of HB 99-1001 assuming current law (no tax law changes) and an estimated refund amount of $797.54 million for FY 1998-99 if the amount targeted is 105 percent of excess TABOR revenues. This estimate is based on the March, 1999 Economic & revenue Forecast prepared by the Colorado Legislative Council staff.
State Expenditures
The Department of Revenue will incur administrative costs implementing the bill. The Department of Revenue will process 1,885,509 document returns affecting 2,672,467 qualified individuals. Assuming that the average refund exceeds 15 dollars per qualified individual, the itemized administrative costs totaling $240,000 and 2.2 FTE, are provided in Table 2. If the average refund is 15 dollars or less, total administrative expenditures would be $110,792 and 1.2 FTE annually.
Table 2. Summary of Department of Revenue
Administrative Expenses for FY 1999-00 and FY 2000-01
Expenditure Category |
FY 1999-00 |
FY 2000-01 |
Personal Services Cash & Document Processing Division* (0.9 FTE) Taxpayer Services Division* (0.3 FTE) Tax Audit and Compliance Division* (1.0 FTE) Personal Services Subtotal (2.2 FTE) |
$19,495 7,774 32,624 $59,893 |
$19,495 7,774 32,624 $59,893 |
Operating Expenses Refund Processing Remittance Processing Savings Microfilm Operating Expenses Subtotal |
$98,712 (7,100) 3,958 $95,570 |
$98,712 (7,100) 3,958 $95,570 |
Other Expenses Pueblo Data Entry |
$85,425 |
$85,425 |
TOTAL ADMINISTRATIVE COSTS (2.2 FTE) |
$240,888 |
$240,888 |
*Includes PERA at 11.4% and Medicare at 1.45% of salary.
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.
Local Government Impact
The fiscal impact (if any) of local governments providing appropriate identification data to the Department of Revenue has not been identified at this time.
State Appropriations
The fiscal note implies that the Department of Revenue requires a General Fund appropriation of $240,888 and 2.2 FTE in FY 1999-00 in order to implement the bill.
Departments Contacted
Legislative Council Staff Revenue
TABLE 3