Colorado Legislative Council Staff

STATE and LOCAL

REVISED CONDITIONAL FISCAL IMPACT

(replaces fiscal impact dated January 6, 1999)

TITLE:            CONCERNING MECHANISMS TO ENSURE THAT ENTERPRISE ZONES MEET THE ECONOMIC DEVELOPMENT OBJECTIVES SET FORTH FOR SUCH ZONES IN THE URBAN AND RURAL ENTERPRISE ZONE ACT.

Summary of Legislation

            This bill (as amended by the House Finance Committee, April 7, 1999) requires enterprise zone development plans to include: specific economic development objectives that have measurable outcomes; information on how the outcomes will be measured; and the specific verifiable data that will be used to measure those outcomes. The bill requires the Executive Director of the Department of Local Affairs (DOLA) to work with the zone administrator of any zone designated prior to July 1, 1999, to ensure the zone complies with the development plan criteria.

            The bill modifies the annual reporting requirements that zone administrators are to provide to DOLA, and specifies new, additional documentation that must be included in the report. DOLA is then required to submit an annual report to the General Assembly summarizing the annual documentation provided by zone administrators. The bill requires the State Auditor to submit a report by September 1, 2001, and every two years thereafter, which reviews the DOLA report.

            In the event an enterprise zone does not meet measurable objectives, the amended bill requires the State Auditor to notify the chairpersons of the Senate and House Finance Committees to schedule a joint meeting with the Economic Development Commission. The zone administrator is to develop a plan to bring the zone into compliance with the zone objectives. The joint meeting may take place during the interim as an interim committee or upon convening of the next regular session of the General Assembly. The bill also requires the State Auditor to submit a report no less than once every five years that evaluates the effectiveness of each zone in reaching its measurable objectiveness.

            The bill requires DOLA once every five years to create a plan for the termination of zones that no longer meet the development plan criteria or other criteria established by the Colorado Economic Development Commission. The bill allows a taxpayer to extend the period to claim tax benefits upon the termination of a zone by filing a certification with the state income tax return rather than filing for an extension with the commission.

            The bill revises the commission's annual hearing and review authority to be limited to any new programs or any programs that have changed materially, rather than all programs. The bill authorizes the commission to reject an ineligible program upon a two-thirds vote of the members present at a meeting rather than upon a two-thirds vote of the members.

State Expenditures

            Department of Revenue. The Department of Revenue would be required to microfilm certification forms that are attached to a taxpayer's tax return. The department believes the volume of certifications will be minimal, and any resulting additional costs will be absorbed within existing resources.

            State Auditor. The State Auditor has included the costs of the report and program reviews in long-range budgeting plans. No additional resources will be required.

            Legislative Department. This amended bill may affect Legislative Department General Fund expenditures in the event 1) an enterprise zone fails to meet objective criteria, and 2) the Senate and House Finance Committees meet as an interim committee during FY 2001-02 to review the zone's development plan. The joint committee is comprised of a total of 20 members. The amount of the potential General Fund expenditures to support the interim committee is estimated to be approximately $5,960 based upon the following assumptions:•that all 20 legislative members will attend two meetings;

            •   that the committee will not require administrative support from Legislative Council staff and Legislative Legal Services; and

            •   that each member will be reimbursed at a rate of $149 (per diem and expenses) per day.

            Additional personal services costs may also be incurred by the Legislative Department in the event that staff assistance is required to support the interim committee.

Local Government Impact

            This amended bill will not affect local government revenue or expenditures. However, the bill may affect 13 of the 16 enterprise zones that are currently located within counties due to the requirement to obtain and provide information in a format that is not currently available at the zone level. The information is currently only available at the county level. The cost of providing this information is estimated to be minimal.

State Appropriations

            This bill will require no new state appropriations for FY 1999-2000.

Departments Contacted

            Revenue          Local Affairs              State Auditor              Legislative Council Staff