Colorado Legislative Council Staff

STATE and LOCAL

REVISED FISCAL IMPACT

(replaces fiscal impact dated February 8, 1999)

Drafting Number:

Prime Sponsor(s):

LLS 99-0439

Rep. Plant

Date:

Bill Status:

Fiscal Analyst:

February 23, 1999

House 3rd Reading

Harry Zeid (303-866-4753)

 

TITLE:            CONCERNING THE CREATION OF A VOLUNTARY CONTRIBUTION ON COLORADO INCOME TAX RETURNS FOR THE PURPOSE OF ALLOWING INDIVIDUALS TO MAKE CONTRIBUTIONS TO BENEFIT PUBLIC EDUCATION, AND MAKING AN APPROPRIATION IN CONNECTION THEREWITH.



Fiscal Impact Summary

FY 1999/2000

FY 2000/2001

State Revenues

Cash Fund Exempt


Revenue Increase


Revenue Increase

State Expenditures

Cash Fund Exempt


$136,200


$75,000

FTE Position Change

0.0 FTE

0.0 FTE

Other State Impact: None

Effective Date: Upon signature of the Governor; for income tax years commencing on or after January 1, 1999.

Appropriation Summary for FY 1999-2000: $136,200 CF Exempt to the Department of Revenue

Local Government Impact: School districts would be the beneficiaries of the contributions.



Summary of Legislation


            This engrossed bill authorizes the Colorado state individual income tax return form to contain a line whereby each individual taxpayer may designate a contribution for the purpose of providing financial assistance to improve public schools. The voluntary contribution designation would be for income tax years commencing on or after January 1, 1999, but prior to January 1, 2002.


            Earmarked contributions would be deposited in the Public Education Voluntary Contribution Fund, which would be established in the State Treasury. The General Assembly would annually appropriate money from the fund to the Department of Revenue for its costs of administering the contributions. Individuals may designate a specific school district to receive their contribution. If no school district is designated, the money would be credited to the School Construction and Renovation Fund. School districts would prioritize the use of moneys transferred to the district based on the following criteria:

               capital construction projects that address immediate safety hazards or health concerns at existing school facilities; and

               academic resource acquisition.


            The Department of Revenue would experience a one-time expenditure in FY 1999-00 in order to implement the new tax check-off. These costs would be reimbursed from moneys donated to the program. Moneys donated to the program are considered cash fund exempt, as would the expenditures of the Department of Revenue to administer the program. The bill would become effective upon signature of the Governor.



State Revenues


            Currently, six income tax checkoffs appear on the 1998 individual income tax return for returns to be filed in 1999. These include: Colorado Non-Game and Endangered Wildlife Fund, Colorado Domestic Abuse Fund, Colorado Homeless Prevention Activities Fund, Colorado Child Care Improvement Fund, Colorado Special Olympics Fund, and the United States Olympic Committee Fund*. The number and value of contributions that would be made to benefit public education is unknown. Furthermore, the impact of adding one more tax checkoff to the income tax form will have on the number and amount of donations to the current list of six checkoff programs is unknown.


            The table below identifies the number of income tax returns, the total donation, and the average donation that was recorded on income tax returns filed in 1998.


Value of Individual Income Tax Checkoffs Filed During 1998*



Tax Checkoff Name

Number

of Returns

Total

Donation

Average

Donation

Nongame Wildlife

Child Care Improvement

Special Olympics

Domestic Abuse

Homeless Prevention

   Total

52,171

33,896

31,142

41,825

  36,455

195,489

$408,823

188,538

190,538

270,615

     238,566

$1,297,080

$7.84

5.56

6.12

6.47

  6.54

$6.64

             *The Olympic Committee checkoff was not in effect for returns filed in 1998.



State Expenditures


            The addition of the individual income tax checkoff to benefit public education in Colorado would require a new line on the income tax return for 1999 that will be filed by taxpayers in 2000. This would be handled as part of the annual rewrite process by the Department of Revenue. However, a key will have to be added to the income tax return system in order to track the contributions. The Information Technology Division of the Department of Revenue would require 900 hours of computer programming contract labor in order to accommodate the new checkoff. Based on an hourly rate of $68 per hour, total one-time programming costs would be $61,200 in FY 1999-00. In addition, new pages will need to be added to the income tax instruction booklet in order to accommodate a list of school district names and codes as part of the tax checkoff. The annual cost for paper and printing to include the list of school districts in the income tax instruction booklet is $75,000. If codes are not provided, the taxpayer would have to write in the school district name, and this could lead to considerable confusion. The total cash fund exempt expenditures required to provide the income tax checkoff is $136,200 in FY 1999-00 and $75,000 in FY 2000-01.


            Since donations from the voluntary contribution program will not be received until after January 1, 2000, it is assumed that the Department of Revenue will request a cash advance from the Public Education Voluntary Contribution Fund to cover the up-front costs associated with making the necessary changes to accommodate the additional tax checkoff.



School District Impact


            Contributions would be used to provide financial assistance to improve public schools.



Spending Authority


            The fiscal note would imply that the Department of Revenue would require cash fund exempt spending authority from the Public Education Voluntary Contribution Fund in the amount of $136,200 during FY 1999-00 in order to implement the provisions of the bill.



Departments Contacted


            Revenue          Education