Colorado Legislative Council Staff

STATE and LOCAL

FISCAL IMPACT


Drafting Number:

Prime Sponsor(s):

LLS 99-0395

Sen. Linkhart

Date:

Bill Status:

Fiscal Analyst:

January 5, 1999

Senate Education

Harry Zeid (303-866-4753)

 

TITLE:            CONCERNING A CREDIT AGAINST STATE INCOME TAX FOR DONATIONS TO SCHOOLS IN THE STATE.

 



Fiscal Impact Summary

FY 1999/2000

FY 2000/2001

State Revenues

General Fund


General Fund Revenue Reduction

State Expenditures

General Fund


 


 

FTE Position Change

0.0 FTE

0.0 FTE

Other State Impact: TABOR Impact

Effective Date: The bill is effecutive upon signature of the Governor and applies to income tax years commencing on or after January 1, 1999.

Appropriation Summary for FY 1999-2000: None

Local Government Impact: School districts will be the beneficiaries of the monetary and in-kind contributions authorized by the bill.



Summary of Legislation


            Effective for income tax years commencing on or after January 1, 1999, this bill provides an income tax credit equal to 25 percent of the total value of cash contributions, and 12.5 percent of the total value of in-kind contributions made to schools in the state for certain educational purposes. The contributions may include donations of money, real estate, or tangible personal property to any public or private preschool, elementary school, or secondary school in Colorado for the following purposes:

 

               building or maintaining a school building or facility;

               establishing or operating an educational program;

               establishing or contributing to a grant, loan, or scholarship program for students who require financial assistance or demonstrate high academic achievement;

               training teachers; or

               providing or purchasing equipment.



            The school receiving the contribution must provide a verification form to the taxpayer making the contribution specifying the amount of any monetary contribution and the value and nature of any in-kind contribution. The taxpayer would file the verification form with the Department of Revenue for the purpose of claiming the credit. The maximum credit allowed shall not exceed $100,000 for monetary contributions, and no more than $50,000 for in-kind contributions. In addition, the credit may not exceed the taxpayer’s actual income tax liability for the tax year for which the credit is claimed. However, the credit may be carried forward against subsequent years’ income tax liability for a period not to exceed five years.


            The bill will reduce state General Fund revenues, and is therefore, assessed as having state fiscal impact. The bill will become effective upon signature of the Governor.



State Revenues


            The bill provides an income tax credit equal to 25 percent of the total value of cash contributions, and 12.5 percent of the total value of in-kind contributions made to schools in the state for certain educational purposes. The number of taxpayers that may donate cash or in-kind contributions to public or private schools in Colorado, and the annual value of those donations cannot be estimated. Therefore, the reduction in state General Fund revenue as a result of the bill cannot be determined.


State Expenditures


            State expenditures will be unaffected by the bill. A new line and key will be required on the income tax return to accommodate the credit. Based on an agreement with the Joint Budget Committee, Legislative Council Fiscal Note staff, and the Department of Revenue, the Department of Revenue will absorb the costs of approximately 900 hours of programming time necessary to make these changes during the normal annual rewrite by the Ddepartment. Furthermore, any increased telephone calls to the Ddepartment relating to the credit can be absorbed within existing resources. Data entry on returns claiming the credit will be based on seven keystrokes per return claiming the credit at a rate of $2.35 per 1,000 keystrokes. These expenses are anticipated to be minimal.


School District Impact


            School districts will be the beneficiaries of the monetary and in-kind contributions authorized by the bill. The annual value of these contributions cannot be estimated.


State Appropriations


            The fiscal note implies that no new spending authority or appropriations are required to implement the provisions of the bill.


Departments Contacted

 

            Revenue          Education