First Regular Session
Sixty-second General Assembly
LLS NO. 99-0455.01 Sharon Eubanks HOUSE BILL 99-1276
STATE OF COLORADO
BY REPRESENTATIVE T. Williams;
also SENATOR Anderson.
FINANCE
A BILL FOR AN ACT
101 CONCERNING THE COMMISSIONING OF A BLUE RIBBON STUDY OF THE
102 FISCAL POLICIES OF STATE AND LOCAL GOVERNMENTS IN
103 COLORADO.
Bill Summary
(Note: This summary applies to this bill as introduced and does
not necessarily reflect any amendments that may be subsequently
adopted.)
Commissions a blue ribbon study of state and local government
fiscal policies and establishes the objectives for the study. Requires the
director of research of the legislative council to conduct the study in
conjunction with institutions of higher education and appropriate private
nonprofit organizations and foundations. Specifies certain issues to be
addressed by the study. Requires the completion of the study and the
submission of a report of study findings and recommendations on or
before November 1, 2001.
1 Be it enacted by the General Assembly of the State of Colorado:
2 SECTION 1. Part 3 of article 3 of title 2, Colorado Revised
3 Statutes, is amended BY THE ADDITION OF A NEW SECTION to
4 read:
5 2-3-312. Legislative declaration - blue ribbon fiscal policies
6 study. (1) (a) THE GENERAL ASSEMBLY HEREBY FINDS AND DECLARES
7 THAT:
[ ] denotes HOUSE amendment. { } denotes SENATE amendment.
Capital letters indicate new material to be added to existing statute.
Dashes through the words indicate material to be deleted from existing statute.
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1 (I) THE STATE OF COLORADO AND ITS CITIZENS HAVE EXPERIENCED
2 MANY CHANGES SINCE THE LAST COMPREHENSIVE REVIEW AND ANALYSIS
3 OF STATE AND LOCAL TAX STRUCTURE AND POLICY WAS COMPLETED
4 NEARLY FORTY YEARS AGO;
5 (II) RECENT ECONOMIC, POLITICAL, AND CONSTITUTIONAL
6 CHANGES HAVE MADE IT INCREASINGLY MORE DIFFICULT FOR THE STATE
7 AND FOR LOCAL GOVERNMENTS TO ADEQUATELY PROVIDE NECESSARY
8 SERVICES AND PROGRAMS WITHIN THEIR EXISTING REVENUES AND FOR
9 TAXPAYERS TO BE IN FULL COMPLIANCE WITH STATE AND LOCAL
10 GOVERNMENT TAX LAWS, AND THESE DIFFICULTIES ARE ANTICIPATED TO
11 WORSEN AS THE STATE AND ITS COMMUNITIES CONTINUE TO EXPERIENCE
12 GROWTH;
13 (III) THESE DIFFICULTIES ARE FURTHER COMPOUNDED BY CERTAIN
14 INEQUITIES THAT EXIST WITHIN THE CURRENT STATE AND LOCAL TAX
15 SYSTEMS AND THAT ARE AGGRAVATED BY THE COMBINED EFFECT OF
16 RECENTLY ADOPTED CONSTITUTIONAL PROVISIONS AND OTHER CHANGES
17 IN FISCAL POLICIES;
18 (IV) THESE INEQUITIES NOT ONLY RESULT IN PLACING AN UNFAIR
19 BURDEN ON DIFFERENT TAXPAYERS FOR THE FINANCING OF GOVERNMENT
20 SERVICES AND PROGRAMS, BUT ALSO RESULT IN INCREASED COSTS FOR
21 BUSINESSES TO COMPLY WITH STATE AND LOCAL GOVERNMENT TAX LAWS,
22 WHICH DIMINISHES COLORADO'S ABILITY TO ATTRACT NEW BUSINESSES AS
23 WELL AS RETAIN EXISTING BUSINESSES THAT ARE VITAL TO THE ECONOMIC
24 WELL-BEING OF THE STATE AND ITS CITIZENS;
25 (V) DUE TO THE IMPOSITION OF CERTAIN FISCAL REQUIREMENTS
26 AND LIMITATIONS AND TO GROWING TAXPAYER RESISTANCE,
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1 GOVERNMENTS CAN NO LONGER RELY SOLELY UPON APPROACHES TO
2 INCREASE REVENUES IN ATTEMPTING TO KEEP PACE WITH INCREASED
3 DEMAND FOR SERVICES AND PROGRAMS;
4 (VI) IN ORDER TO ADEQUATELY ADDRESS THESE ISSUES IN AN
5 INFORMED, COORDINATED, AND EFFECTIVE MANNER, A COMPREHENSIVE
6 REVIEW AND ANALYSIS IS NEEDED OF THE FISCAL POLICIES OF THE STATE
7 AND OF LOCAL GOVERNMENTS, INCLUDING THE MANNER IN WHICH
8 GOVERNMENT ORGANIZATION AND STRUCTURE IMPACT SUCH FISCAL
9 POLICIES AND THE MANNER AND EXTENT SUCH FISCAL POLICIES IMPACT
10 THE ABILITY OF COLORADO BUSINESSES TO BE COMPETITIVE IN LOCAL,
11 NATIONAL, AND INTERNATIONAL MARKETS; AND
12 (VII) AS A RESULT OF THIS STUDY, IT MAY BE DETERMINED
13 WHETHER ANY STATE AND LOCAL GOVERNMENT FISCAL POLICIES AND ANY
14 GOVERNMENT ORGANIZATION OR STRUCTURE THAT IMPACTS SUCH FISCAL
15 POLICIES SHOULD BE MODIFIED AND, IF SO, HOW THEY SHOULD BE
16 MODIFIED TO ENSURE THAT:
17 (A) STATE AND LOCAL GOVERNMENTS ARE PROVIDING NEEDED
18 SERVICES AND PROGRAMS IN THE MOST EFFICIENT AND EFFECTIVE MANNER
19 POSSIBLE AND ARE FUNDED BY AN EQUITABLE AND STABLE FINANCE
20 SYSTEM; AND
21 (B) COMPLIANCE WITH SUCH FISCAL POLICIES DOES NOT PLACE AN
22 UNREASONABLE OR EXCESSIVE BURDEN ON COLORADO BUSINESSES THAT
23 IS DETRIMENTAL TO THE ECONOMIC WELL-BEING OF THE STATE AND ITS
24 CITIZENS.
25 (b) THEREFORE, THE GENERAL ASSEMBLY DECLARES THAT IT IS
26 NECESSARY TO COMMISSION A BLUE RIBBON STUDY OF THE FISCAL
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1 POLICIES OF STATE AND LOCAL GOVERNMENTS, INCLUDING THE EFFECTS OF
2 GOVERNMENT ORGANIZATION AND STRUCTURE ON SUCH FISCAL POLICIES
3 AND THE EFFECTS OF SUCH FISCAL POLICIES ON THE ABILITY OF COLORADO
4 BUSINESSES TO BE COMPETITIVE IN LOCAL, NATIONAL, AND
5 INTERNATIONAL MARKETS, AND TO MAKE A REPORT OF THE STUDY
6 FINDINGS TO THE GOVERNOR AND THE GENERAL ASSEMBLY, INCLUDING
7 ANY RECOMMENDED CHANGES TO STATE AND LOCAL GOVERNMENT FISCAL
8 POLICIES AND ANY RELATED RECOMMENDED CHANGES TO GOVERNMENT
9 ORGANIZATION OR STRUCTURE OR TO TAX COMPLIANCE REQUIREMENTS.
10 (2) THE GENERAL ASSEMBLY HEREBY COMMISSIONS A BLUE
11 RIBBON STUDY OF STATE AND LOCAL GOVERNMENT FISCAL POLICIES. THE
12 OBJECTIVES OF THE STUDY SHALL BE:
13 (a) TO THOROUGHLY REVIEW AND EVALUATE THE OVERALL
14 EFFECTIVENESS AND IMPACT OF STATE AND LOCAL GOVERNMENT FISCAL
15 POLICIES, INCLUDING THE EFFECT OF GOVERNMENT ORGANIZATION AND
16 STRUCTURE ON SUCH FISCAL POLICIES AND THE EFFECT OF SUCH FISCAL
17 POLICIES ON THE ABILITY OF COLORADO BUSINESSES TO BE COMPETITIVE
18 IN LOCAL, NATIONAL, AND INTERNATIONAL MARKETS;
19 (b) TO COMMUNICATE WITH AND OBTAIN INPUT FROM GROUPS
20 THROUGHOUT THE STATE AFFECTED BY STATE AND LOCAL GOVERNMENT
21 FISCAL POLICIES, INCLUDING BUT NOT LIMITED TO GROUPS REPRESENTING
22 THE BUSINESS COMMUNITY;
23 (c) TO IDENTIFY FISCAL POLICIES AND RELATED GOVERNMENT
24 ORGANIZATION AND STRUCTURE AND TAX COMPLIANCE REQUIREMENTS IN
25 NEED OF REVISION; AND
26 (d) TO PROVIDE GUIDANCE AND MAKE RECOMMENDATIONS TO THE
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1 GOVERNOR AND THE MEMBERS OF THE GENERAL ASSEMBLY.
2 (3) THE BLUE RIBBON STUDY OF STATE AND LOCAL GOVERNMENT
3 FISCAL POLICIES SHALL ADDRESS ISSUES, INCLUDING, BUT NOT LIMITED TO,
4 THE FOLLOWING:
5 (a) ISSUES CONCERNING EQUITY, SUCH AS:
6 (I) THE PROPERTY TAX BURDEN OF RESIDENTIAL PROPERTY IN
7 COMPARISON TO THE PROPERTY TAX BURDEN OF THE DIFFERENT CLASSES
8 OF NONRESIDENTIAL PROPERTY;
9 (II) THE APPLICATION OF AGRICULTURAL LAND CLASSIFICATION
10 FOR PROPERTY TAX PURPOSES;
11 (III) THE EXISTING BASES FOR SALES AND USE TAXES AND THE
12 POTENTIAL EXPANSION OF BASES BY APPLYING SALES AND USE TAXES TO
13 TRANSACTIONS CURRENTLY EXEMPT OR NOT OTHERWISE SUBJECT TO
14 TAXATION;
15 (IV) THE EXISTENCE OF DIFFERING RATES AND BASES FOR SALES
16 AND USE TAXES ACROSS TAXING JURISDICTIONS AND THE RESULTING TAX
17 REPORTING PROBLEMS OF VENDORS;
18 (V) THE INCREASING OCCURRENCE OF GOVERNMENTS COMPETING
19 FOR DEVELOPMENT THAT GENERATES INCREASED TAX REVENUES;
20 (VI) THE EXISTENCE OF REGIONAL AND JURISDICTIONAL
21 DIFFERENCES AND DISPARITIES DUE TO DEMOGRAPHIC, GEOGRAPHIC, AND
22 OTHER FACTORS THAT RELATE TO THE ABILITY OF GOVERNMENTS TO
23 GENERATE REVENUES AND TO CIRCUMSTANCES CONTRIBUTING TO
24 INCREASED DEMAND FOR SERVICES;
25 (VII) THE TAX BURDEN ON EXISTING TAXPAYERS, BOTH
26 INDIVIDUALS AND BUSINESSES, TO FUND COSTS ASSOCIATED WITH NEW
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1 GROWTH THAT DOES NOT PRIMARILY BENEFIT SUCH TAXPAYERS;
2 (VIII) THE PROPERTY TAX BURDEN OF AND THE BENEFIT TO
3 NONRESIDENTIAL PROPERTY FOR THE FINANCING OF PUBLIC SCHOOLS IN
4 COMPARISON TO THE PROPERTY TAX BURDEN OF AND THE BENEFIT TO
5 RESIDENTIAL PROPERTY FOR THE FINANCING OF PUBLIC SCHOOLS;
6 (IX) THE DIFFERENCES IN THE LEVEL OF FUNDING FOR EDUCATION
7 AMONG SCHOOL DISTRICTS;
8 (X) THE RELIANCE ON LOCAL REVENUES FOR NEW CONSTRUCTION
9 OR DEFERRED MAINTENANCE OF SCHOOL DISTRICT CAPITAL FACILITIES;
10 (XI) THE IMPACT OF FISCAL POLICIES, SUCH AS THE IMPOSITION OF
11 SALES AND USE TAX AND BUSINESS PERSONAL PROPERTY TAX, ON CAPITAL
12 INVESTMENT WITHIN COLORADO;
13 (XII) THE RELIANCE ON PROPERTY TAXES TO FUND LOCAL
14 GOVERNMENT PROGRAMS AND SERVICES;
15 (b) ISSUES CONCERNING STABILITY, SUCH AS:
16 (I) THE CONTINUAL DECLINE IN THE ASSESSED VALUE OF PROPERTY
17 OF TAXING JURISDICTIONS DUE TO REDUCTIONS IN THE RESIDENTIAL RATIO
18 AND ITS IMPACT ON PROPERTY TAX REVENUES;
19 (II) THE DOUBLE-COUNTING OF INTERGOVERNMENTAL REVENUES
20 FOR PURPOSES OF SECTION 20 OF ARTICLE X OF THE STATE CONSTITUTION;
21 (III) THE RATCHETING DOWN OF PROPERTY TAX MILL LEVIES, TAX
22 REVENUES, AND AGGREGATE GOVERNMENT REVENUES UNDER SECTION 20
23 OF ARTICLE X OF THE STATE CONSTITUTION;
24 (IV) THE RELIANCE ON SALES AND USE TAX BY SOME LOCAL
25 GOVERNMENTS TO THE EXTENT THAT DECLINES IN SALES AND USE TAX
26 REVENUES SIGNIFICANTLY IMPAIR A GOVERNMENT'S ABILITY TO PROVIDE
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1 NECESSARY SERVICES;
2 (V) THE REQUIREMENT THAT REVENUES BE SET ASIDE AS AN
3 EMERGENCY RESERVE UNDER SECTION 20 OF ARTICLE X OF THE STATE
4 CONSTITUTION AND ITS IMPACT ON THE AMOUNT OF REVENUES AVAILABLE
5 FOR GOVERNMENT PURPOSES;
6 (VI) THE INTERACTION BETWEEN SECTION 20 OF ARTICLE X OF THE
7 STATE CONSTITUTION AND THE GALLAGHER AMENDMENT IN SECTION 3 OF
8 ARTICLE X OF THE STATE CONSTITUTION AND ITS RESULTING IMPACT ON
9 THE PROPERTY TAX BASE AND REVENUES;
10 (c) ISSUES CONCERNING ADDITIONAL REVENUE SOURCES, SUCH AS:
11 (I) THE IMPOSITION OF IMPACT AND USER FEES TO PAY FOR ALL OR
12 A PORTION OF THE COSTS OF SERVICES REQUIRED DUE TO GROWTH THAT
13 ARE REASONABLY RELATED TO THE COST OF SUCH SERVICES;
14 (II) THE USE OF GENERAL STATE TAX REVENUES TO SUPPORT THE
15 STATE TRANSPORTATION SYSTEM;
16 (III) POTENTIAL SHARING OF REVENUES AMONG LOCAL
17 GOVERNMENTS AND BETWEEN THE STATE AND LOCAL GOVERNMENTS;
18 (IV) THE IMPOSITION OF REAL ESTATE TRANSFER TAXES;
19 (V) THE REPLACEMENT OF STATE INCOME TAX REVENUES IF THE
20 FEDERAL INCOME TAX IS ABOLISHED IN FAVOR OF A CONSUMPTION TAX;
21 (d) ISSUES CONCERNING GOVERNMENT ORGANIZATION AND
22 STRUCTURE THAT IMPACT FISCAL POLICIES, SUCH AS:
23 (I) THE EXISTENCE AND EXTENT OF OVERLAPPING OR DUPLICATIVE
24 PROVISION OF SERVICES;
25 (II) THE IMPLICATIONS OF ELIMINATION OR CONSOLIDATION OF
26 GOVERNMENTS RELATING TO THE PROVISION OF SERVICES;
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1 (III) THE METHODS BY WHICH GOVERNMENTS PROVIDE SERVICES
2 AND ANY POTENTIAL MODIFICATIONS THAT WOULD ACHIEVE THE MOST
3 EFFICIENT AND EFFECTIVE PROVISION OF SERVICES, INCLUDING THE
4 ELIMINATION OR REDUCTION OF CERTAIN SERVICES;
5 (IV) THE UTILIZATION OF INTERGOVERNMENTAL COORDINATION
6 AND COOPERATION FOR THE PROVISION OF SERVICES;
7 (V) THE IMPLICATIONS OF GOVERNMENT STRUCTURE AND
8 ORGANIZATION ON THE ADMINISTRATIVE BURDEN OF BUSINESSES TO
9 COMPLY WITH TAX LAW REQUIREMENTS.
10 (4) (a) THE DIRECTOR OF RESEARCH OF THE LEGISLATIVE COUNCIL
11 SHALL CONDUCT THE BLUE RIBBON STUDY OF STATE AND LOCAL
12 GOVERNMENT FISCAL POLICIES IN CONJUNCTION WITH INSTITUTIONS OF
13 HIGHER EDUCATION IN THIS STATE, INCLUDING BUT NOT LIMITED TO THE
14 UNIVERSITY OF COLORADO AND THE UNIVERSITY OF DENVER, AND WITH
15 APPROPRIATE PRIVATE NONPROFIT ORGANIZATIONS OR FOUNDATIONS,
16 INCLUDING BUT NOT LIMITED TO THE COLORADO PUBLIC EXPENDITURE
17 COUNCIL AND THE COLORADO ASSOCIATION OF COMMERCE AND INDUSTRY
18 FOUNDATION.
19 (b) IN CONDUCTING THE BLUE RIBBON STUDY OF STATE AND LOCAL
20 GOVERNMENT FISCAL POLICIES PURSUANT TO THIS SECTION, THE DIRECTOR
21 OF RESEARCH OF THE LEGISLATIVE COUNCIL SHALL:
22 (I) ASSEMBLE AND ANALYZE RECENT TAX STUDIES THAT HAVE
23 COMPILED DATA ON SPECIFIC ISSUES INVOLVING FISCAL POLICIES, SUCH AS
24 SALES TAX EXEMPTIONS, THE EFFECTS OF COMPETING CONSTITUTIONAL
25 PROVISIONS, AND INDEBTEDNESS;
26 (II) CONSIDER THE TAX SYSTEMS OF OTHER STATES AND THE
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1 DISTRICT OF COLUMBIA; AND
2 (III) CONSIDER THE IMPORTANCE OF DEPENDABLE, RATIONAL, AND
3 EQUITABLE TAX SYSTEMS THAT:
4 (A) ASSURE SUSTAINABLE GROWTH IN THE STATE AS A WHOLE;
5 (B) PROMOTE INTERGOVERNMENTAL COOPERATION ON ISSUES
6 SPECIFIC TO REGIONAL GROWTH AND ITS RELATED IMPACTS;
7 (C) SUPPORT EFFICIENT USE OF INFRASTRUCTURE AND SERVICES;
8 (D) CONSIDER UNIQUE PROBLEMS OF AREAS WITH DIFFERENT
9 DEMOGRAPHIC AND GEOGRAPHIC CHARACTERISTICS WITH REGARD TO
10 FISCAL ISSUES, REVENUE SHARING, MUNICIPAL CHARTER LIMITS, AND
11 SPECIAL DISTRICTS; AND
12 (E) DO NOT PLACE UNREASONABLY BURDENSOME OR INEFFECTIVE
13 TAX COMPLIANCE REQUIREMENTS ON BUSINESSES.
14 (5) (a) THE DIRECTOR OF RESEARCH OF THE LEGISLATIVE COUNCIL
15 IS AUTHORIZED TO RECEIVE CONTRIBUTIONS, GRANTS, SERVICES, AND
16 IN-KIND DONATIONS FROM ANY PRIVATE ENTITY TO BE EXPENDED FOR ANY
17 DIRECT OR INDIRECT COSTS ASSOCIATED WITH THE BLUE RIBBON STUDY OF
18 STATE AND LOCAL GOVERNMENT FISCAL POLICIES CONDUCTED IN
19 ACCORDANCE WITH THE PROVISIONS OF THIS SECTION. THE DIRECTOR OF
20 RESEARCH OF THE LEGISLATIVE COUNCIL MAY ALSO ACCEPT STAFF
21 SUPPORT FROM THE PRIVATE SECTOR.
22 (b) NOTHING IN THIS SECTION SHALL BE CONSTRUED TO PRECLUDE
23 THE EXPENDITURE OF STATE MONEYS FOR ANY DIRECT OR INDIRECT COSTS
24 ASSOCIATED WITH THE BLUE RIBBON STUDY OF STATE AND LOCAL
25 GOVERNMENT FISCAL POLICIES CONDUCTED IN ACCORDANCE WITH THE
26 PROVISIONS OF THIS SECTION.
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1 (6) THE BLUE RIBBON STUDY OF STATE AND LOCAL GOVERNMENT
2 FISCAL POLICIES CONDUCTED IN ACCORDANCE WITH THE PROVISIONS OF
3 THIS SECTION SHALL BE COMPLETED, AND A REPORT OF THE STUDY
4 FINDINGS AND RECOMMENDATIONS SHALL BE SUBMITTED TO THE
5 GOVERNOR AND THE MEMBERS OF THE GENERAL ASSEMBLY ON OR BEFORE
6 NOVEMBER 1, 2001.
7 SECTION 2. Effective date. This act shall take effect at 12:01
8 a.m. on the day following the expiration of the ninety-day period after
9 final adjournment of the general assembly that is allowed for submitting
10 a referendum petition pursuant to article V, section 1 (3) of the state
11 constitution; except that, if a referendum petition is filed against this act
12 or an item, section, or part of this act within such period, then the act,
13 item, section, or part, if approved by the people, shall take effect on the
14 date of the official declaration of the vote thereon by proclamation of the
15 governor.