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April 25, 2022 HB 22-1392
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 22-1033
Rep. Bird; Lindsay
Sen. Moreno
Date:
Bill Status:
Fiscal Analyst:
April 25, 2022
House Finance
Greg Sobetski | 303-866-4105
Greg.Sobetski@state.co.us
Bill Topic: CONTAMINATED LAND INCOME TAX AND PROPERTY TAX EXEMPT ION
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☒ TABOR Refund
☒ Local Government
☐ Statutory Public Entity
The bill extends and expands the state income tax credit for environmental remediation
of contaminated land, and extends property tax exemptions for certain low-income
housing developments. It decreases state and local government revenue and
increases state and local government workload on an ongoing basis, and requires
one-time expenditures for implementation.
Appropriation
Summary:
For FY 2022-23, the bill requires an appropriation of $41,102 to the Department of
Revenue.
Fiscal Note
Status:
The fiscal note reflects the introduced bill. Due to time constraints, this analysis is
preliminary and will be updated following further review and any additional information
received.
Table 1
State Fiscal Impacts Under HB 22-1392
Current Year
FY 2021-22
Budget Year
FY 2022-23
Out Year
FY 2023-24
Revenue General Fund
Cash Funds
(up to $2.0 million)
-
(up to $5.50 million)
$0.05 million
(up to $7.00 million)
$0.05 million
Total (up to $2.0 million) (up to $5.45 million) (up to $6.95 million)
Expenditures General Fund - $41,102 -
Transfers - - -
Other Budget
Impacts
TABOR Refund
GF Reserve
(up to $2.0 million)
-
(up to $5.45 million)
$6,165
(up to $6.95 million)
-
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April 25, 2022 HB 22-1392
Summary of Legislation
The bill makes changes to the state income tax credit for environmental remediation of contaminated
land, and to state property tax exemptions for certain low-income housing developments, as discussed
below.
Income tax credit for environmental remediation of contaminated land. The credit is scheduled to
expire after tax year 2022 under current law. The bill extends the credit for ten years, from 2023
through 2032.
Under current law, claims for the credit are required first to be certified by the Hazardous Materials
and Waste Management Division in the Department of Public Health and Environment (CDPHE).
Beginning in tax year 2022, the bill increases the amount of credit that the CDPHE may certify each
year from $3 million to $7 million.
Under current law, credits are limited to $525,000 for each approved remediation, and are equal to
40 percent of the first $750,000 of remediation costs, plus 30 percent of the next $750,000 of remediation
costs. For income tax year beginning in 2022, the bill allows credits of up to $675,000, equal to
50 percent of the first $750,000 of remediation costs, plus 40 percent of the next $750,000 of remediation
costs, for each approved remediation in a rural community. For purposes of the expanded credit, a
rural community is a municipality or unincorporated area of a county with a population of less than
50,000 people located outside of the Denver Metropolitan Area, defined to include Denver;
Broomfield; Adams, Arapahoe, Boulder, and Jefferson counties; and Douglas County except for Castle
Rock and Larkspur.
Under current law, the credit is nonrefundable, but may be transferred between taxpayers. The bill
makes administrative changes to the transfer procedures to clarify the relationship between the
taxpayer who is awarded the credit, the transferee, the CDPHE, and the Department of Revenue
(DOR). Under current law, certain entities that do not pay taxes may be certified for a transferrable
expense amount, which may be transferred to a taxpayer and used like a tax credit. The bill broadens
the list of entities that may be awarded a transferrable expense amount to include school districts,
charter schools, special districts, higher education institutions, quasi-governmental entities, and
public corporations.
Property tax exemptions. Current state law allows a property tax exemption for certain low-income
housing developments, including housing for disabled seniors, transitional housing developments,
and other housing developments serving low-income residents. Current state law allows a 15-year
exemption. The bill allows the exemption for 15 additional years, or 30 years total, for properties that
qualify for an extended use period income tax credit under the federal internal revenue code.
Background
The Office of the State Auditor completed a tax expenditure evaluation of the income tax credit for
environmental remediation of contaminated land in January 2022. The evaluation report is available
online here:
https://leg.colorado.gov/sites/default/files/te11_contaminated_land_redevelopment_credit.pdf Page 3
April 25, 2022 HB 22-1392
State Revenue
The bill is expected to decrease state revenue by up to $2.00 million in the current FY 2021-22, by up
to $5.45 million in FY 2022-23, and by up to $6.95 million annually beginning in FY 2023-24. The bill
reduces state income tax revenue to the General Fund and increases fee revenue to the Hazardous
Substance Response Fund; both of these revenue streams are subject to TABOR.
General Fund. The bill is expected to reduce General Fund revenue by up to $2.0 million in the
current FY 2021-22, $5.5 million in FY 2022-23, and $7.0 million annually beginning in FY 2023-24.
Revenue reductions are attributable to the expanded and extended tax credit in the bill. Increasing
the tax credit cap in tax year 2022 will decrease state revenue by up to $4 million, while extending the
tax credit beginning in tax year 2023 will decrease state revenue by up to $7 million annually. The
revenue reduction for the current FY 2021-22 represents a half-year impact for tax year 2022 on an
accrual accounting basis. The revenue reduction for FY 2022-23 represents half-year impacts for tax
years 2022 and 2023 on an accrual accounting basis.
The revenue estimates in this fiscal note are maximum amounts if the entire amount of credit is
utilized each year. Revenue reductions will be smaller than the amounts published here if fewer
credits are certified, or if remediators choose to carry credits forward from year to year, rather than
transferring them to other taxpayers.
Cash funds. Applicants for tax credit certificates for environmental remediation of contaminated land
pay fees to the Hazardous Substance Response Fund in the CDPHE. By increasing the credit cap, the
bill is expected to raise the number of applications, thereby increasing application fee revenue by
$50,000 annually beginning in FY 2022-23.
State Expenditures
The bill requires one-time General Fund expenditures of $41,102 in FY 2022-23, and increases state
agency workload in FY 2022-23 and subsequent fiscal years, as discussed below.
Department of Revenue. The bill requires one-time expenditures to update DOR’s GenTax software
system for the expanded and extended income tax credit in the bill, and to perform additional testing.
Programming changes are expected to require 25 hours and are performed by a contractor at a cost of
$225 per hour. Additional computer and user acceptance testing is needed to ensure that
programming changes are functioning properly, requiring an additional $35,477 in departmental
expenditures.
Department of Public Health and Environment. Under current law, taxpayers must apply for a tax
credit certificate with the CDPHE. By extending the credit, the bill increases CDPHE workload to
process credit applications. Workload to process applications is assumed to continue at
approximately current law levels, and can be accomplished within existing appropriations.
Department of Local Affairs. The bill requires one-time workload to update manuals and training
documents to reflect the ongoing change in the measure, and ongoing workload to support local
government officials in implementing the policy. This workload can be accomplished within existing
appropriations. Page 4
April 25, 2022 HB 22-1392
Other Budget Impacts
TABOR refunds. The bill is expected to decrease the amount of state revenue required to be refunded
to taxpayers by the amounts shown in the State Revenue section. This estimate assumes the
March 2022 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, decreased General Fund revenue will lower
the TABOR refund obligation, but result in no net change to the amount of General Fund otherwise
available to spend or save. Increased cash fund revenue will decrease the amount of General Fund
available to spend or save. On net, the bill’s revenue and TABOR impacts will decrease the amount
of General Fund revenue available for the budget by $50,000 annually beginning in FY 2022-23.
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 the
amount shown in Table 1, which will decrease the amount of General Fund available for other
purposes.
Local Government
By extending certain property tax exemptions for low-income housing, the bill decreases local
government revenue beginning in property tax year 2022. Property taxes for 2022 are paid in calendar
year 2023. Because data on this exemption are not tracked separately from those for other exemptions,
the amount of the revenue impact is assessed as indeterminate. The impact on each local government
will depend on the amount of exempt property located in the taxing jurisdiction.
Effective Date
The bill takes effect upon signature of the Governor, or upon becoming law without his signature.
State Appropriations
For FY 2022-23, the bill requires a General Fund appropriation of $41,102 to the Department of
Revenue.
State and Local Government Contacts
Counties County Assessors Local Affairs
Public Health and Environment 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.