Fiscal Impact Summary	FY 1999/2000	FY 2000/2001	FY 2001/2002
State Revenues General Fund - Refund of Excess TABOR Rev.	-$198,150,000	-$212,630,000	-$227,110,000
State Expenditures General Fund	$76,890
FTE Position Change	0.0 FTE	0.0 FTE	0.0 FTE
Other State Impact: None
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 and 0.0 FTE appropriation required for the Department of Revenue.
Local Government Impact: None

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 lowers the state income tax rate to 4.75 percent for income tax years commencing on or after January 1, 1999 if the amount of state revenues for the immediately preceding state fiscal year exceeded the limitation on state fiscal year spending imposed by Section 20(7)(a) of Article X of the State Constitution (the TABOR Amendment), and the voters did not authorize the state to retain all or a portion of the money.

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. Based on the March 1999 Economic & Revenue Forecast prepared by the Colorado Legislative Council staff, the reduction in General Fund revenues is projected to be $198.15 million in FY 1999-00, $212.63 million in FY 2000-01, and $227.11 million in FY 2001-02. Table 1. identifies the annual reductions for individuals and fiduciaries, and for corporations.

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

	FY 1999-00	FY 2000-01	FY -2001-02
Individual and Fiduciary	$182.92	$196.29	$209.66
Corporations	15.23	16.34	17.45
Total	$198.15	$212.63	$227.11

Any reduction in individual income tax withholding will also affect revenues from General Fund interest earnings. A reduction in the state income tax rate will also increase federal income taxes paid by Colorado taxpayers. It is estimated that federal income taxes paid by Colorado taxpayers will increase by approximately $41.1 million in FY 1999-00, $44.1 million in FY 2000-01, and $47.1 million in FY 2001-02.

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.

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.