Colorado Legislative Council Staff



Drafting Number:

Prime Sponsor(s):

LLS 99-0003

Rep. Spradley

Sen. Lamborn


Bill Status:

Fiscal Analyst:

January 9, 1999

House Finance

Harry Zeid (866-4753)



Fiscal Impact Summary

FY 1998/99

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

Effective Date: 90 days after adjournment; and applies to income tax years commencing on or after January 1, 1999.

Appropriation Summary for FY 1999-2000: $76,890 General Fund appropriation required for the Department of Revenue.

Local Government Impact: None

Summary of Legislation

            Under current law, Colorado imposes an income tax on individuals, estates, trusts, and corporations at the rate of five percent of federal taxable income, after certain adjustments have been made. This bill permanently lowers the state income tax rate to 4.75 percent for income tax years commencing on or after January 1, 1999.

State Revenues

            An 0.25 percent income tax rate reduction from 5.00 percent to 4.75 percent for individuals, estates, trusts, and corporations would reduce total income tax collections by five percent. The reduction in General Fund revenues on an accrual accounting basis is projected to be $88.0 million in FY 1998-99 (the current fiscal year), $195.7 million in FY 1999-00, and $206.6 million in FY 2000-01. Table 1 identifies the annual reductions for individuals and fiduciaries, and for corporations.

Table 1. Projected General Fund Revenue Reduction Based on Changing

the State Income Tax Rate from 5.0 Percent to 4.75 Percent (millions of dollars)


FY 1998-99

FY 1999-00

FY -2000-01

Individual and Fiduciary












            Note: columns may not add to do rounding.

            Any reduction in individual income tax withholding will also affect revenues from General Fund interest earnings.

State Expenditures

            The Department of Revenue will require a one-time General Fund expenditure of $76,890 in FY 1999-00 to implement the provisions of the bill. While no personal services are required, operating expenses for the Cash & Document Processing Division include postage and printing related expenses for the additional refund checks that will need to be processed and mailed. In addition, $36,000 will be necessary for printing withholding booklets to be sent to employers to reflect changes in income tax withholding for the new income tax rate.

Other State Impacts

            The reduced state income tax revenues will mean a reduction of the amount of state funds required to be refunded to taxpayers under the terms of TABOR, and less state funds will be available for capital construction needs. This will trigger a reduction in SB 97-1 transfers to the Highway User Tax Fund. Table 2 summarizes the net impact of this bill on these state obligations. The changes in Table 2 are changes from a base that includes continuing capital construction projects. A reduction in the state income tax rate will also increase federal income taxes paid by Colorado taxpayers.

Table 2. Additional Impact of HB 99-1098 (millions of dollars)


FY 1998-99

FY 1999-00

FY 2000-01

General Fund Revenue




General Fund Appropriations

SB 97-1 Transfer




Controlled Maintenance Trust Fund Appropriations

Excess General Fund Reserve




Federal Income Taxes Paid by Colorado Taxpayers

Additional Money Available for New Capital or Rebates





TABOR Refund (from prior year)




State Appropriations

            The fiscal note implies that the Department of Revenue would require an additional General Fund appropriation in the amount of $76,890 in FY 1999-00 to implement the provisions of the bill.

Departments Contacted


            Legislative Council Staff        Revenue