Date: 07/08/2009
Final
State Revenue Overview
INTERIM COMMISSION TO STUDY FISCAL STABILITY
| Votes: View--> | Action Taken: |
| <none> | <none> |
01:34 PM
The commission reconvened.
Legislative Council Staff and Joint Budget Committee (JBC) staff provided a brief overview of how to access documents about the budget on the JBC's website. Staff also provided an overview of the commission's website.
01:44 PM -- State Revenue Overview
Mr. Ron Kirk, LCS, introduced himself to the commission and began his presentation on Colorado's state revenue structure. Several memoranda authored by legislative staff, including one entitled "Colorado's State Government Revenue Structure" and "How Colorado Compares in State and Local Taxes" are available on the commission's website.
Mr. Kirk explained that 71 percent of taxes paid by Colorado citizens goes to the federal government with the remainder going to state and local governments. He discussed revenue sources by types and provided an explanation of the components of the General Fund, Cash Fund, and Cash Fund Exempt. Mr. Kirk discussed General Fund revenue trends in FY 1975-76 compared to FY 2007-08, concluding the state is much more reliant on individual income taxes now whereas in FY 1975-76, the state was equally reliant on sales and use tax and individual income taxes. Mr. Kirk further explained major cash fund revenue sources subject to TABOR focusing on topics such as gaming, severance, unemployment, insurance, and transportation-related.
The commission discussed the topic of gaming revenues and where the funds are directed. Ms. Mullis, LCS, also came to the table and provided more detail about where the gaming revenue funds are directed, explaining the differences in gaming distributions under the old and new gaming funds distribution.
01:56 PM
The presentation continued by moving to state and corporate income taxes and sales and use taxes, and how the two most recent recessions affected these. Mr. Kirk noted there were significant job losses in the technology industry sector in the 2001 recession, while the current recession shows significant job losses in all industry sectors. He noted that sales taxes are estimated to be declining over 9 percent with this recession - a significant decline. Mr. Kirk highlighted declines in individual income tax collections from the 2001 and 2007 recessions. Discussion ensued about the estimates should the tax rates not be reduced.
02:03 PM
Mr. Kirk discussed the corporate income tax, highlighting the differences between the 2001 and the 2007 recessions, where the current recession has been effected to a greater extent. He explained the state sales tax collections and declining trends over the last two recessions. Ms. Mullis stated that she expects consumers will start spending again but at a much slower pace. Mr. Kirk presented a comparison of income, property, and sales tax ranking compared to other state's.
02:14 PM
Mr. Kirk further discussed state individual income taxes, where Colorado ranks the 29th highest and shows that most taxes are paid by full year residents. State sales and use taxes rank 44th (7th lowest) which has been consistent over the last few years. Businesses and residents in Colorado pay most of the taxes collected, he explained. The commission asked questions about export of taxes and also requested a chart from legislative staff illustrating where the burden falls as to who pays taxes.