Colorado Legislative Council Staff

STATE

REVISED FISCAL IMPACT

(replaces fiscal impact dated March 1, 1999)

TITLE:            CONCERNING STATE EXCESS REVENUES THAT ARE REQUIRED TO BE REFUNDED PURSUANT TO SECTION 20 (7) (D) OF ARTICLE X OF THE STATE CONSTITUTION BUT THAT ARE NOT REFUNDED AS REQUIRED, AND MAKING AN APPROPRIATION IN CONNECTION THEREWITH.

Summary of Legislation

            This reengrossed bill requires the Department of Revenue to refund excess revenues for FY 1996-97 to qualified individuals who, pursuant to a rule of the Department of Revenue, were not allowed to receive the refund due to a failure to pay all or at least 90 percent of the otherwise qualified individual's net tax liability due prior to April 15, 1998. The Department of Revenue would be required to notify these individuals of the allowance of the refund by September 30, 1999.

            The bill also requires that for FY 1996-97, any excess revenues that are required to be refunded but that have not been refunded, would be added to the excess revenues for FY 1998-99. For FY 1997-98 and each fiscal year thereafter, any excess revenues that are required to be refunded but that are not refunded, would be added to the excess revenues for the following fiscal year.

State Expenditures

            Refund of Excess State Revenues. Section 20 of Article X of the State Constitution requires excess state revenues to be refunded in the subsequent state fiscal year. For FY 1996-97, $139,026,138 was required to be refunded in FY 1997-98. To date, a total of $134,865,518 (or 96.95 percent of the state excess revenues) has been refunded. This leaves an unrefunded balance of $4,160,620 for the FY 1996-97 excess TABOR refund requirement. Several groups of individuals account for the disparity, including individuals who may have qualified for the refund, but who simply did not claim the TABOR refund on their income tax return. This unrefunded liability has been booked as part of FY 1997-98.

            The Department of Revenue estimates that 23,029 tax returns were either denied a refund claim or failed to request a refund because of the taxpayer's failure to pay all or at least 90 percent of the individual's net tax liability due prior to April 15, 1998. It is this group of taxpayers that Section 1 of the bill requires the Department of Revenue to provide refunds for. Based on an average credit for this group estimated to be $90.79, the refund to these individuals will total $2,090,765.

            Department of Revenue Expenditures. The Department of Revenue will experience additional one-time expenditures in FY 1999-00 in order to refund that additional portion of the excess state revenues that are required by the bill to the 23,029 qualified individuals for the FY 1996-97 refund. For FY 1999-00, these expenses for postage, envelopes, printing of warrants, and paper are estimated to be $7,705.

Expenditures Not Included

            Pursuant to the Joint Budget Committee’s budget policies, the following expenditures have not been included in this fiscal note:

            •   health and life insurance costs;

            •   short-term disability costs;

            •   inflationary cost factors;

            •   leased space; and

            •   indirect costs.

State Appropriations

            The fiscal note implies that the Department of Revenue requires a General Fund appropriation of $7,705 in FY 1999-00 in order to implement the bill.

Departments Contacted

            Revenue          Legislative Council Staff