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February 10, 2022 HB 22-1025
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Revised Fiscal Note
(replaces fiscal note dated January 13, 2022)
Drafting Number:
Prime Sponsors:
LLS 22-0162
Rep. Benavidez
Sen. Kolker
Date:
Bill Status:
Fiscal Analyst:
February 10, 2022
House Appropriations
Jeff Stupak | 303-866-5834
Jeff.Stupak@state.co.us
Bill Topic: REPEAL OF INFREQUENTLY USED TAX EXPENDITURES
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☒ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
The bill eliminates several tax expenditures from the state’s insurance premium tax,
income tax, sales and use tax, and liquor excise tax. The bill will increases state
revenue and expenditures on an ongoing basis beginning in FY 2022-23.
Appropriation
Summary:
For FY 2022-23, the bill requires an appropriation of $30,750 to the Department of
Revenue.
Fiscal Note
Status:
This fiscal note reflects the introduced bill as amended by the House Finance
Committee. The bill was recommended by the Legislative Oversight Committee
Concerning Tax Policy
Table 1
State Fiscal Impacts Under HB 22-1025
Budget Year
FY 2022-23
Out Year
FY 2023-24
Revenue General Fund $198,250 $400,842
Expenditures General Fund $30,750 $6,400
Transfers - -
Other Budget Impacts
TABOR Refund $198,250 $400,842
General Fund Reserve $4,613 $960
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February 10, 2022 HB 22-1025
Summary of Legislation
The bill eliminates a number of tax expenditures, including:
1. the exemption from the insurance premium tax for educational and scientific institution life
insurance effective upon passage of the bill;
2. the alternative minimum income tax based on annual gross receipts from sales in or into the state
beginning January 1, 2023;
3. the income tax credit for investment in technologies for recycling plastics beginning
January 1, 2023;
4. the income tax credit for crop or livestock contributions to a charitable organization beginning
January 1, 2023;
5. the income tax deduction for income or gain for a C corporation that was taxed prior to 1965
beginning January 1, 2023;
6. the income tax credits for qualifying investments beginning January 1, 2023;
7. the sales and use tax exemption for the transfer of complimentary promotional materials to an
out-of-state vendee beginning January 1, 2023; and
8. the requirement that a portion of a state-employed chaplain’s salary is designated as a rental
allowance effective upon passage of the bill.
Background
Each of the tax expenditures affected by this bill are presented in the Office of the State Auditor’s
(OSA’s) Tax Expenditure Evaluation Reports (https://leg.colorado.gov/node/1147256). For each tax
expenditure impacted by the bill, OSA’s evaluations found that the tax expenditures were rarely
claimed by a small number of taxpayers, and in some instances, not claimed at all.
Assumptions
This fiscal note revenue estimates are based on the Office of the State Auditor’s Tax Expenditure
Evaluation Reports and data from the Department of Revenue. Many of these estimates are based on
revenue data from 2017, 2018, or 2019, depending on data availability. As such, the revenue estimates
presented in this fiscal note have been adjusted for inflation based on the Denver-Aurora-Lakewood
Consumer Price Index, consistent with the December 2021 Legislative Council Staff forecast.
Additionally, this fiscal note assumes that the bill will go into effect July 1, 2022; if the bill takes effect
prior to this date, the bill will increase revenue beginning in the current FY 2021-22.
State Revenue
The bill will increase General Fund revenue by $198,250 in FY 2022-23 and by $400,842in FY 2023-24
and future years. The bill increases revenue from income, sales and use, liquor excise, and premium
insurance taxes, each of which are subject to TABOR. Revenue impacts for each tax expenditure to be
repealed are presented in Table 2 below. Page 3
February 10, 2022 HB 22-1025
Table 2
Revenue Under HB 22-1025
FY 2022-23 FY 2023-24
Exemption from the insurance premium tax for
educational and scientific institution life insurance
1
- -
Alternative minimum income tax based on annual
gross receipts from sales in or into the state
2
$5,670 $11,470
Income tax credit for investment in technologies for
recycling plastics
2
$2,835 $5,735
Income tax credit for crop or livestock contributions to
a charitable organization
2
- -
Income tax deduction for income or gain for a
C corporation that was taxed prior to 1965
2
- -
Income tax credits for qualifying investments
2
$189,527 $383,414
Sales and use tax exemption for the transfer of
complimentary promotional materials to an out-of-state
vendee
2
- -
Requirement that a portion of a state-employed
chaplain’s salary is designated as a rental allowance
1
$218 $223
Total Revenue $198,250 $400,842
1
Repealed upon passage of the bill.
2
Repealed by the bill after December 31, 2022.
State Expenditures
The bill is expected to increase General Fund expenditures by $30,750 in FY 2022-23 and by $6,400 in
FY 2023-24. Expenditures are presented in Table 3 and discussed below.
Table 3
Expenditures Under HB 22-1025
FY 2022-23 FY 2023-24
Department of Revenue
GenTax Programming $6,750 -
Computer and User Acceptance Testing $24,000 -
Data Reporting - $6,400
Total Cost $30,750 $6,400
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February 10, 2022 HB 22-1025
Department of Revenue (DOR). The department will have one-time costs of $30,750in FY 2022-23
and $6,400 in FY 2023-24 to implement this bill. The bill will require changes to the department’s
GenTax software system and additional testing. Changes are programmed by a contractor at a cost
of $225 per hour. Approximately 30 hours of computer programming will be required to implement
this bill, totaling $6,750. Additional computer and user acceptance testing are required to ensure
programming changes function properly, resulting in additional costs of $24,000.
In FY 2023-24, the Office of Research and Analysis within DOR will have costs of $6,400 to update
reporting processes, SQL code, worksheets, report templates, and GenTax database testing.
Additionally, the department anticipates increased workload associated with queries about the
impact of the eliminated tax expenditures.
Other Budget Impacts
TABOR refunds. The bill is expected to increase the amount of state revenue required to be refunded
to taxpayers by the amounts shown in the State Revenue section above. This estimate assumes the
December 2021 LCS revenue forecast. A forecast of state revenue subject to TABOR is not available
beyond FY 2023-24. Because TABOR refunds are paid from the General Fund, increased General Fund
revenue will increase the TABOR refund obligation, but result in no net change to the amount of
General Fund available to spend or save.
General Fund reserve. Under current law, an amount equal to 15 percent of General Fund
appropriations must be set aside in the General Fund statutory reserve beginning in FY 2022-23. Based
on this fiscal note, the bill is expected to increase the amount of General Fund held in reserve by $4,613
in FY 2022-23 and $960 in FY 2023-24, which will decrease the amount of General Fund available for
other purposes.
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming no
referendum petition is filed, except for sections 8, 10, and 11 of the bill, which take effect
January 1, 2023.
State Appropriations
For FY 2022-23, the bill requires a General Fund appropriation of $30,750 to the Department of
Revenue.
State and Local Government Contacts
Information Technology Personnel
Regulatory Agencies Revenue
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit: leg.colorado.gov/fiscalnotes.