TITLE: CONCERNING THE CREATION OF ENHANCED RURAL ENTERPRISE ZONES IN COUNTIES THAT MEET SPECIFIED CRITERIA, AND, IN CONNECTION THEREWITH, ESTABLISHING STATE INCOME TAX CREDITS FOR TAXPAYERS WHO ESTABLISH NEW BUSINESS FACILITIES IN SUCH ENHANCED RURAL ENTERPRISE ZONES.

Fiscal Impact Summary	FY 1999/2000	FY 2000/2001
State Revenues General Fund	Revenue Reduction
State Expenditures General Fund
FTE Position Change	0.0 FTE	0.0 FTE
Other State Impact: TABOR
Effective Date: Upon signature of the Governor.
Appropriation Summary for FY 1999-2000: None.
Local Government Impact: Enterprise zone administrators and boards of county commissioners will be responsible for some program administration activities at the local level.

This bill authorizes a county or a group of contiguous counties that has designated an enterprise zone to designate all or part of the zone as an "enhanced rural enterprise zone" if the county or the counties that contain the area meets at least two of the following criteria:

• an unemployment rate a least 50 percent above the state average unemployment rate;

• a population growth rate less than 25 percent of the state average population growth rate;

• an average per capita income less than 75 percent of the state average per capita income;

• the total assessed value of all nonresidential property is in the lower one-half of the total assessed value of all nonresidential property within all counties; and

The Department of Local Affairs must determine by December, 1999, and every two years thereafter, whether the area meets the qualification requirements. The department is required to provide each zone administrator and each board of county commissioners a list of the counties meeting the criteria.

The bill requires the department to establish procedures for recognizing and allowing credits to taxpayers who have entered into long-term agreements with zone administrators or local governments. The bill requires the zone administrator and the taxpayer to jointly certify the circumstances to extend certain enterprise zone tax credits in the event the enhanced zone is terminated. The certification is to be filed with the taxpayer's income tax return. The bill eliminates the requirement for the Colorado Economic Development Commission to evaluate and certify the extension.

The bill, effective January 1, 2000, allows the following tax credits to enhanced rural enterprise zones in addition to those allowed under current law for enterprise zones:

• $300 for each new business facility employee, not to exceed 20 employees, who is insured under a health insurance plan provided by an employer who contributes at least 50 percent of the cost of the program;

• $500 for each new business facility employee in a business that adds value through manufacturing or processing agricultural commodities; and

According to available data, the Department of Revenue indicates 31 counties may meet at least two of the criteria to qualify as an enhanced rural enterprise zone. Based on this data, the department estimates if all 31 counties were to qualify as enhanced rural enterprise zones, and if those counties were able to increase their employment by 5.0 percent (an additional 5,969 employees), state General Fund revenue may be reduced by approximately $8.9 million over four years.

This fiscal note cannot determine the number of new businesses that may locate in these areas or the number of new business facility employees that will qualify for the tax credits provided by this bill. However, this fiscal note assumes that some number of businesses will qualify for these tax credits which will reduce state General Fund revenue starting in tax year 2000.

Department of Local Affairs. The bill requires the Department of Local Affairs to accomplish the following:

• determine whether the area meets requirements to qualify as an enhanced rural enterprise zone;

• provide each zone administrator and each board of county commissioners a list of the counties meeting the criteria; and

• establish procedures for recognizing and allowing credits to taxpayers who have entered into long-term agreements with zone administrators or local governments.

The department indicates the administrative costs for these activities are minimal and can be absorbed within existing resources.

Department of Revenue. The bill requires the zone administrator and the taxpayer to jointly certify the circumstances to extend certain tax credits in the event the enhanced rural enterprise zone is terminated. The certification is to be filed with the taxpayer's income tax return. The department indicates any associated administrative costs will be minimal and can be absorbed within existing resources.

State Auditor. The State Auditor indicates any additional audit functions will be minimal and

This bill requires enterprise zone administrators and boards of county commissioners to be responsible for some additional program administration activities. This fiscal note assumes any administrative costs, if any, associated with these activities will be minimal.

This fiscal note would imply that no new state appropriations are required for FY 1999-2000.