Final
STAFF SUMMARY OF MEETING

COMMITTEE ON JOINT FINANCE

Date:01/21/2009
ATTENDANCE
Time:12:08 PM to 01:33 PM
Apuan
X
Benefield
X
Place:LSB A
Brophy
E
Frangas
X
This Meeting was called to order by
Gerou
X
Senator Sandoval
Heath
X
Hudak
X
This Report was prepared by
Isgar
*
Ron Kirk
Kefalas
X
Kerr A.
X
King K.
E
Lambert
X
Roberts
X
Scheffel
E
Summers
X
Swalm
X
Judd
X
Sandoval
X
X = Present, E = Excused, A = Absent, * = Present after roll call
Bills Addressed: Action Taken:
Presentation by Joint Budget Committee
Presentation by Department of Revenue
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-


12:08 PM -- Briefing by the Joint Budget Committee on the Budget Request for the Department of Revenue and Treasury

Senator Sandoval called the meeting to order. Senator Keller, Chairman of the Joint Budget Committee (JBC), began by introducing the members of the JBC and distributed a document entitled "Summary of FY 2009-10 Joint Budget Committee Briefings" (This document can be found at: http://www.state.co.us/gov_dir/leg_dir/jbc/corbrf.pdf). She began by saying that the presentation would highlight the JBC briefings for the Department of Treasury and the Department of Revenue (DOR).

Senator Keller discussed the Department of Revenue's budget history, its key responsibilities, and factors driving its budget. She noted that the briefings (brown book) document shows the dependence each department has on the General Fund budget. Senator Keller referred to page 97 in the book. For the DOR, it is mostly funded by cash funds (83 percent). Very little federal fund money is involved. She noted that the book provides a budget history for the department.








Senator Keller continued by noting that about $18.7 million in state revenue is lost each year from delinquent corporate returns. The recent increase in department FTE is addressing this issue and the need for an increase in auditing capabilities of the department. Senator Keller turned next to the status of the Colorado State Tilting and Registration System Rewrite Project (CSTARS). The CSTARS rewrite project was cancelled after deployment to the counties because the system did not work as expected. The state has reached an agreement with the contractor where neither side admits fault. The department has not yet made a decision as to the next course of action with regard to the system. Senator Keller closed the discussion on CSTARS by talking about the VIPER update.

Senator Keller continued the discussion on the importance of funding the new tax computer system being developed by the department. The Colorado Integrated Tax Architecture (CITA) project affects the largest amount of funds coming into the state, namely the income tax system. The committee discussed the need to replace the current cobalt system computer system that was first put into use in 1967. Senator Keller closed by saying that CITA is the department's only IT project left that will be funded in the FY 2009-10 budget year. The income tax phase of the project is expected to be up and running by the close of 2009.


12:35 PM

The committee discussed the CITA project and funding requirements in the FY 2009-10 budget. Senator Keller reiterated the importance of funding a system that brings in a large part of the money in the state's General Fund. Senator Keller briefly referred the committee to page 112 in the briefings book and discussed an overview of the budget request for the Department of Treasury. She noted that the total growth in the Treasury's budget for the FY 2009-10 request was $425.4 million, a 0.3 percent increase over the prior year's budget. Senator Keller closed by briefly discussing the Treasury's Great Colorado Payback Promotion Program.


12:59 PM -- Presentation by Ms. Roxy Huber, Executive Director for the Colorado Department of Revenue


Representative Judd, taking over the Chair, welcomed Ms. Roxy Huber to the Joint House and Senate Finance Committee meeting. Ms. Huber began by discussing the department's mission statement and noting that some divisions in the department may be affected by the upcoming budget reductions.

Ms. Huber began by discussing the progress on the Colorado Integrated Tax Architecture (CITA) project. She explained that CITA will replace its old cobalt tax computer system. The project is integral to all of the tax systems that the department administers. We are now entering phase II of the project that is the income tax phase of the system development. It is expected to be in place by the close of the year.

Ms. Huber continued by discussing the department's Taxpayer Services Division and noted that its website capabilities allow taxpayers to file taxes on-line. The taxpayer website has had over 3 million hits last year and is becoming very important to the department. Ms. Huber noted that the division's staff is working to meet the needs of all Colorado taxpayers. About 54 percent of all income tax returns are filed electronically and this process is helping the department more efficiently administer the state's income tax system.

Ms. Huber responded to a legislative concern about privatizing more of the department's auditing functions to collect more back tax revenue. Ms. Huber noted that there are many challenges to finding outside auditors that the department can trust. One problem is that these auditing firms make money on collecting back or late taxes so the concern is that these firms do not overstep their authority in the collection of taxes for the state.







01:12 PM

The committee asked Ms. Huber about the number of dollars that are lost to New Mexico in vehicle sales tax revenue and whether the state can track this loss. Ms. Huber noted that it is difficult to tract revenue that is not paid into the state but there may be some compliance issues that the department may be able to look at to reduce tax leakage. The committee continued to discuss tax leakage issues and the areas of compliance that might be most effective. Ms. Huber commented that these tax shifts to other states are often more pronounced during economic downturns. But the real concern in terms of lost revenue is tied to collecting tax revenue from those businesses or people who are on the verge of bankruptcy. These tax obligations can often be delayed to the department. The committee continued to discuss some of the large companies that pay taxes to Colorado that have recently claimed bankruptcy. Ms. Huber responded by discussing the fact that the department will likely end up collecting tax revenue, but collections may be delayed.

Ms. Huber continued by discussing the status of the department theft that occurred in 2007. The department was able to recover 1.1 million that it lost through the theft but the trial has not yet concluded for the defendants. The committee inquired about the total loss of revenue to the state. Ms. Huber noted that the total amount of the theft was just under $12 million.

Ms. Huber continued to discuss the additional FTE that is working to increase the services that it provides through its Division of Motor Vehicles. She briefly noted that some of the IT upgrades that are being integrated into the database systems are working to more efficiently serve citizens of Colorado.

The committee closed the discussion by talking about the compliance issues tied to the "Real ID" process for issuing drivers licenses in the state. Ms. Huber discussed the workload of the division and noted that its offices handled 480,000 driver license issuances last year. The big challenge is that we are coming out of the 5-year renewal process and are now switching to the 10-year renewal process. The 10-year process has its problems because people change over time. Ms. Huber noted that on-line renewals are increasing slowly but can only be done when certain requirements for renewal apply. Ms. Huber closed by discussing how the division is trying to promote on-line renewals. On-line income tax renewals are much more popular because of the many software programs that assist people to file taxes. We are talking to counties about educating the public on how to use more of the division's motor vehicle on-line services.


01:33 PM

Adjourn.