Colorado Legislative Council Staff



(replaces fiscal impact dated April 14, 1999)

Drafting Number:

Prime Sponsor(s):

LLS 99-0921

Sen. Owen

Rep. Dean


Bill Status:

Fiscal Analyst:

April 15, 1999

Senate Finance

Will Meyer (303-866-4976)



Fiscal Impact Summary

FY 1998/99

FY 1999/2000

FY 2000/2001

State Revenues

Unemployment Insurance Cash Fund

Employment Support Cash Fund







State Expenditures

Cash Fund




FTE Position Change

0.0 FTE

0.0 FTE

0.0 FTE

Other State Impact: None

Effective Date: Upon signature of the Governor

Appropriation Summary for FY 1999-2000: None required

Local Government Impact: None

Summary of Legislation

            This bill makes changes to the statutes that established the Employment Support (ES) Fund, to be used to offset funding deficits for the administration of the Unemployment Insurance Compensation (UI) Fund. The bill as amended (in the Senate Local Government Committee, April 15, 1999) establishes a fixed surcharge at 0.22 percent, reducing the UI taxes paid by employers to the state. The bill:


               increases the surcharge tax rate allocated to the ES fund from 20 percent to 50 percent and decreases the surcharge tax rate allocated to the UI fund from 80 percent to 50 percent.

               removes the termination date of 2002;

               eliminates the fiscal year-end transfer of unobligated amounts to the UI fund, retaining the unobligated amounts in the ES fund; and

               eliminates the provision that requires the Department of Labor and Employment to reduce the funds available to the ES fund by an amount equal to distributions by the federal government pursuant to the federal "Reed Act".

State Revenues

            This bill reduces state revenues and changes the amount of current revenues allocated to the ES Fund. The changes would result in an increase in the amount of money allocated to the ES Fund and decrease the amount retained in the UI Trust Fund, as follows:


               the increase in the ES fund surcharge from 20% to 50 % will increase the revenues to the ES fund by $12,563,797 in FY 1999-00 and $12,402,856 in FY 2000-01;

               the elimination of the reversion of unobligated amounts will increase the revenues to the ES fund by $986,584 in FY 1999-00 and ($1,978,710) in FY 2000-01; and

               the elimination of the requirement that distributions of the proceeds of the Reed Act offset funds available to the ES fund will increase the revenues to the ES fund by $266,114 in FY 1998/99. Reed Act distributions pay towards the administration of UI programs. Prior to this year, only three distributions had occurred in 1956, 1957, and 1958.

Changes to ES and UI Funds

FY 1998/1999


FY 2000/2001

Increase in Surcharge Allocation to ES fund at Current Surcharge Rates




Increase in Surcharge Allocation to ES fund at New Surcharge Rate of 0.22 percent




Reversion of Unobligated Amounts




Reed Act Distributions




Reduction in UI Funds at New Surcharge Rate




             * Based on the current appropriation to the ES fund and the projected funds available under the current surcharge allocation, there will be a shortfall of $1,978,710 as indicated. However, it is assumed that either adjustments to the appropriation or sources of revenues will be made to eliminate any future shortfall.

State Expenditures

            None identified

State Appropriations

            This fiscal note implies that no appropriation is required.

Departments Contacted

            Labor and Employment