Colorado Legislative Council Staff



(replaces fiscal impact dated March 18, 1999)

Drafting Number:

Prime Sponsor(s):

LLS 99-0141

Rep. Taylor

Sen. Wattenberg


Bill Status:

Fiscal Analyst:

April 15, 1999

Senate Appropriations

Harry Zeid (866-4753)



Fiscal Impact Summary

FY 1999/2000

FY 2000/2001

State Revenues

General Fund



State Expenditures

General Fund



FTE Position Change

0.0 FTE

0.0 FTE

Other State Impact: TABOR Impact; SB97-1 Sales Tax Transfer Impact

Effective Date: January 1, 2000

Appropriation Summary for FY 1999-2000: None

Local Government Impact: Statutory cities and counties and certain special districts may exempt sales tax on food sold through vending machines by adoption of a sales tax ordinance or resolution.

Summary of Legislation

            This bill, as amended in the Senate Finance Committee, exempts sales and purchases of food sold through vending machines from state sales and use tax, effective January 1, 2000. Statutory cities and counties, and certain special districts would continue to collect sales tax on sales of food sold through vending machines unless specifically exempted by the adoption of a sales tax ordinance or resolution.

            The bill reduces state General Fund revenues and expenditures, and authorizes certain local governments to exempt sales tax on vending machine purchases of food. Therefore, the bill is assessed as having state and local fiscal impact.

State Revenues

            Under current law, all personal property sold in excess of fifteen cents through coin operated vending machines (unless otherwise exempt) is subject to the collection of the state sales tax. This bill would exempt the items purchased through vending machines from the state sales tax.

            Information obtained from the Department of Revenue, and knowledgeable industry sources indicate that approximately 1,450 vending machine operators in Colorado operate approximately 55,000 vending machines in the state, including approximately 50,000 standard vending machines and 5,000 countertop machines.

            Based on direction from the General Assembly, the Department of Revenue conducted a survey of vending machine operators, beginning in August 1995, in an effort to determine the average vending sales per machine in the state. The survey requested vending machine operators to identify the average number of machines each business had on location during Calendar Year 1994, and the gross annual proceeds from those machines during the year. It is estimated that the average state sales tax liability per machine is approximately $60. On this basis, the sales tax exemption provided in the bill will reduce state General Fund revenues by $3,300,000 annually (55,000 vending machines x $60 sales tax liability per machine).

            Currently, the Department of Revenue registers vending machines through the issuance of one-time stickers that cost ten cents per vending machine to register. In FY 1997-98, $1,964 was collected in vending machine sticker revenue. The current method of vending machine registration is assumed to continue in the future.

State Expenditures

            State expenditures will be unaffected by the bill.

Other State Impacts

            Under current law, SB97-1 requires the diversion of 10 percent of sales tax revenues to the Highway User Tax Fund for use on highway projects. This bill will reduce state sales tax revenues beginning in FY 1999-00, and will therefore, reduce the amount of state funds available for the SB 97-1 diversion. Additionally, the reduced state revenues will mean a reduction of the amount of future state funds required to be refunded to taxpayers under the terms of TABOR. Table 1 summarizes the net impact of this bill on these state obligations. The changes in Table 1 are changes from a base that includes continuing capital construction projects.

Table 1 Additional Impact of HB 99-1015 (millions of dollars)


FY 1999-00

FY 2000-01

General Fund Revenue

SB 97-1 Diversion

Excess General Fund Reserve

Federal Income Taxes Paid by Colorado Taxpayers

TABOR Refund (from prior year)











Local Government Impact

            Statutory cities and counties, and certain special districts would continue to collect sales tax on food purchased through vending machines unless specifically exempted by the adoption of a sales tax ordinance or resolution. They would be authorized to make the exemption if they choose.

State Appropriations

            The fiscal note implies that no new spending authority or appropriations are required to implement the provisions of the bill.

Departments Contacted