Colorado Legislative Council Staff

STATE and LOCAL

FISCAL IMPACT

TITLE:            CONCERNING AUTHORIZING THE DEPARTMENT OF REVENUE TO ACCEPT ADDITIONAL FORMS OF PAYMENT FOR PAYMENT OF MONEYS RELATING TO THE OPERATION OF MOTOR VEHICLES.

Summary of Legislation

            The bill would allow the Department of Revenue to accept credit and debit card payments for fees, taxes, and fines related to the operation of motor vehicles. The department would contract with a third-party provider for credit or debit card processing services to process payments. A surcharge would be authorized and assessed on each transaction to pay for the processing of credit or debit card payments. The surcharge would be disclosed at the time of the transaction. The surcharge would not be assessed to persons that would pay by cash, check, or similar means.

State Revenues

            The bill allows for an additional surcharge on the use of credit services to pay motor vehicle related fees and taxes. It is assumed that this would apply to:

            •   motor vehicle registration fees to the Highway Users Tax Fund;

            •   driver’s licenses to the Highway Users Tax Fund;

            •   purchase of motor vehicle records to the Highway Users Tax Fund;

            •   driver’s license penalty assessments to the Highway Users Tax Fund;

            •   emission mechanic and station licenses to the Highway Users Tax Fund;

            •   title issuance to the Highway Users Tax Fund;

            •   auto salesperson/dealers licenses to the Highway Users Tax Fund;

            •   specific ownership taxes to local governments; and

            •   ID cards to the General Fund.

            There are several ways the department may implement the bill. However, it appears that the revenue generated from the surcharge are considered "revenue" under TABOR. The Department of Revenue could contract with a third party vendor where the vendor would collect the money and remit the amount of the taxes and fees to the department minus the additional surcharge. In this case, the vendor may be considered to be acting as an agent of the state and the surcharge revenue would be considered state revenue under TABOR. The department may also contract with the vendor and the department could collect the surcharge itself and pay the vendor for their services. For purposes of this fiscal note it is assumed that the vendor fee is 1.75 percent. It is estimated that approximately $2,040,900 in surcharges may be assessed annually. Of that amount, $30,000 would be GF, $725,500 would be Highway Users Tax Fund, and $1,285,300 would be local government funds. There would be no impact on existing revenues to the General Fund, Highway Users Tax Fund, or to specific ownership taxes.

            Using credit services would reduce the state’s losses from the number of bad checks written for motor vehicle fees and taxes. The credit card company would be responsible for collecting the payments as they currently do for other credit purchases. The department's cost of collecting and the amount of current fees and taxes lost to bad checks is believed to be insignificant.

State Expenditures

             The department would have additional expenditures equal to the amount of surcharge revenue generated. The revenue generated from the surcharge would be used to pay for the services provided from the third party vendor. The estimated cost is $2,040,900. Of that amount, $30,000 would be GF, $725,500 would be Highway Users Tax Fund, and $1,285,300 would be local government funds.

            Current economic forecasts indicate that the state will be required to issue a refund under TABOR. This bill would increase the amount of the refund by $755,500.

Local Government Impact

            Local governments would receive additional revenues from not having bad checks written for specific ownership taxes. The amount of the increase has been estimated to be minimal to any one jurisdiction. The bill would also increase HUTF distributions from any increased revenue that goes to the HUTF. The surcharge would be assessed against the local government entity for which the specific ownership tax is collected. The impact to any one local government entity would be minimal.

State Appropriations

            This fiscal note implies that the Department of Revenue would require an additional General Fund appropriation of $30,000 and a Highway Users Tax Fund appropriation of $725,500 to implement the provisions of this bill for FY 1999-00.

Departments Contacted

Revenue          Transportation