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February 10, 2023 HB 23-1008
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 23-0486
Rep. Weissman
Sen. Fields
Date:
Bill Status:
Fiscal Analyst:
February 10, 2023
House Finance
Louis Pino | 303-866-3556
louis.pino@coleg.gov
Bill Topic: FOOD ACCESSIBILITY
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☒ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
The bill funds programs related to food accessibility, creates a tax credit, and requires
that certain federal income tax deductions be added back when computing state taxable
income. It increases state revenue, on net, and increases state expenditures from
FY 2023-24 through FY 2030-31.
Appropriation
Summary:
For FY 2023-24, the bill requires an appropriation of $2,987,864 to multiple agencies.
Fiscal Note
Status:
The fiscal note reflects the introduced bill.
Table 1
State Fiscal Impacts Under HB 23-1008
Budget Year
FY 2023-24
Out Year
FY 2024-25
Revenue General Fund $2.8 million $4.4 million
Total Revenue $2.8 million $4.4 million
Expenditures General Fund $2,987,864 $6,363,651
Centrally Appropriated $73,103 $67,368
Total Expenditures $3,060,967 $6,431,019
Total FTE 4.2 FTE 3.9 FTE
Transfers - -
Other Budget Impacts TABOR Refund $2.8 million $4.4 million
General Fund Reserve $448,180 $954,548
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February 10, 2023 HB 23-1008
Summary of Legislation
The bill funds two programs related to food accessibility, and creates a tax credit. It also requires
certain taxpayers to make additions when calculating their Colorado taxable income. These
provisions are discussed below.
Community Food Access Program. Under current law, the Community Food Access Program in the
Department of Agriculture is scheduled to repeal on September 1, 2027. The bill extends the program
until September 1, 2031, and directs annual appropriations to fund the program. The bill requires the
General Assembly to annually appropriate $2.5 million for the program in FY 2023-24, $5.0 million in
each of FY 2024-25 through FY 2029-30, and $2.5 million in FY 2030-31.
Healthy eating program incentives. For FY 2024-25 through FY 2029-30, the bill requires the General
Assembly to appropriate $1.0 million dollars each year to the Prevention Services Division within the
Department of Public Health and Environment. The division is required to use the money to partner
with a statewide nonprofit organization to provide healthy eating programs incentives among
Colorado low-income populations.
Income tax credit. The bill creates a tax credit for small food retailers and small family farms
participating in the Community Food Access Program. The credit is for the purchase, tax paid on,
and shipment cost of equipment from among listed items and is equal to 75 percent of the costs of
these items. Qualifying purchases include cold storage, display shelving, produce scales, and point
of sales systems. Purchasers may transfer the tax credit to the seller who sells them the qualifying
systems or equipment. The tax credit is available for tax years 2024 through 2030. The tax credit is
refundable, meaning if the amount exceeds the taxpayer's state income tax liability, the balance is
refunded to the taxpayer. The amount of credits is capped at $6.5 million for each year
Income tax addition. For corporate and individual taxpayers that claim the business meal expenses
income tax deduction on their federal income tax return, the bill requires these taxpayers to add back
the amount they claimed when computing their state tax liability for the 2024 through 2030 tax years.
Background
House Bill 22-1380 created the Community Food Access Program in the Department of Agriculture to
improve access to and lower prices for healthy foods in low-income or underserved areas in Colorado
by supporting small grocery retailers. The program includes a small business consortium to provide
technical assistance and subsidies to Colorado food producers and small retailers, a small food
business recovery and resilience grant program that provides one-time grants to small food retailers
and family farms, and an advisory committee to assist with the grant program. Under current law,
the food access program is repealed on September 1, 2027.
Assumptions
Data from the Department of Revenue show that individual Colorado taxpayers deducted
$148 million on their federal tax forms for 2019. State-level data on corporate deductions were not
available. However, data from the U.S. Department of the Treasury on the revenue impact of federal Page 3
February 10, 2023 HB 23-1008
corporate deductions were adjusted for Colorado’s share of U.S. taxable income and for an assumed
federal effective income tax rate, to arrive at an assumed deduction of $69 million for corporate
taxpayers in Colorado. Therefore, it is assumed that Colorado taxpayers deducted $217 million for
business meal expenses in 2019 The fiscal note uses this estimate as a starting point and increases it
each year through the estimation period. By tax year 2025, the fiscal note assumes approximately
$224 million will be added back to Colorado taxable income, increasing state revenue by about
$9.6 million per year.
The fiscal note also assumes that in the first year the income tax credit is available, approximately
$4.0 million will be claimed as small food retailers and small family farms become aware of the credit.
After the first year, it is assumed the full $6.5 million allowed will be claimed each year.
State Revenue
The bill is expected to increase General Fund revenue by $2.8 million in FY 2023-24 (half-year impact)
and $4.4 million in FY 2024-25 with similar amounts each year through FY 2029-30, and with a
half-year impact in FY 2030-31, when the required added back federal deduction and credit are
repealed. The revenue increase is the net difference from requiring individuals and corporations to
add their Meal Expenses federal deduction back to their Colorado taxable income, which raises state
revenue, and the state credits allowed under the bill, which reduces state revenue. The bill increases
individual income tax revenue, which is subject to TABOR.
State Expenditures
The bill increases state expenditures by $3.1 million and 4.2 FTE in FY 2023-24, and by $6.4 million
and 3.9 FTE in FY 2024-25 and later years. Expenditures are shown in Table 2 and detailed below.
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February 10, 2023 HB 23-1008
Table 2
Expenditures Under HB 23-1008
FY 2023-24 FY 2024-25
Department of Revenue (DOR)
Personal Services $75,941 $50,024
Operating Expenses $1,620 $1,350
Capital Outlay Costs $6,670 -
GenTax Programming and Testing $128,560 -
Data Reporting - $7,392
Document Management and Tax Form Changes - $62,511
Centrally Appropriated Costs
1
$20,334 $14,599
FTE – Personal Services 1.2 FTE 0.9 FTE
DOR Subtotal $233,125 $135,876
Department of Agriculture (CDA)
Personal Services $210,461 $210,461
Operating Expenses $4,050 $4,050
Capital Outlay Costs $20,010 -
Legal Services $19,033 $6,344
Translation Services $15,050 $15,050
Travel $6,469 $6,469
Grant Funding $2,500,000 $5,000,000
Centrally Appropriated Costs
1
$52,769 $52,769
FTE – Personal Services 3.0 FTE 3.0 FTE
CDA Subtotal $2,827,842 $5,295,143
Department of Public Health and Environment (CDPHE)
CDPHE Grant Administration - $10,000
Grant Funding - $990,000
CDPHE Subtotal - $1,000,000
Total $3,060,967 $6,431,019
Total FTE 4.2 FTE 3.9 FTE
1
Centrally appropriated costs are not included in the bill's appropriation.
Department of Revenue. Beginning in FY 2023-24, expenditures will increase in DOR to administer
the income tax credit and addition in the bill.
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February 10, 2023 HB 23-1008
Personal services. The Department of Revenue will require 1.2 FTE in FY 2023-24 for a
term-limited employee for development and testing work in support of GenTax programing. In
FY 2024-25, the department will require 1.3 FTE for tax examiners and to administer the tax credit
based on current DOR staff levels. The majority of the personal services expenditure increase is
attributable to staffing in the Taxpayer Service Division to review tax credits claimed, identify and
address taxpayer errors, and manage call and correspondence volume associated with the new
tax credit. In addition, the department will administer the new add-back provisions for the
business meal income tax deduction beginning in FY 2024-25. Estimated personnel costs assume
an October 1, 2024, start date to administer tax credits claimed on 2024 tax forms and are prorated
for the General Fund pay date shift.
Computer programming and testing. For FY 2023-24 only, the bill will require changes to DOR’s
GenTax software system and additional testing. Changes are programmed by a contractor at a
cost of $225 per hour. Approximately 400 hours of computer programming will be required to
implement this bill, totaling $90,000. Additional computer and user acceptance testing are
required to ensure programming changes are tested and functioning properly, resulting in an
additional $38,560 in expenditures by the department.
Data reporting. Beginning in FY 2024-25, the Office of Research and Analysis (ORA) within DOR
will have costs of $7,392 to collect and report data on the new tax credit. The costs are ongoing
through FY 2029-31
Document management and tax form changes. In FY 2024-25, the bill requires changes to nine
tax forms and computer testing for paper filings at a cost of $62,511. Expenditures for form
changes occur in the Department of Personnel and Administration using reappropriated funds.
Department of Agriculture. Beginning in FY 2023-24, expenditures will increase in CDA to
administer grants via the Food Access Grant Program and certify participation in the program for
taxpayers claiming the tax credit in the bill.
Personal services. The CDA will require 3.0 FTE in FY 2023-24 and FY 2024-25 to administer,
monitor, and provide oversight for the Community Food Access Program coordination with the
DOR on the effectiveness of the income tax credit. The coordination will require a senior manager.
Legal services. The department will require legal guidance regarding the tax credits. It is
estimated the department will require an initial appropriation of 15 hours monthly or 180 hours
in legal services in FY 2023 -24, with 5 hours monthly or 60 hours annually following the first year
at a rate of $105.74 per hour.
Translation services and travel. The department will provide communication, outreach,
interpretation and translation services in order to meet the targeted communities. The current staff
has contracted for these services in the past and has developed a plan for the translation services
they will require. This will include the annual translation of 32 documents, interpretation of 20
hours of meetings, and phone interpretation of 97 hours. In addition, the program will require
outreach, including for example advertisements and mailers. Lastly, they will utilize personal
services of the Department’s Communications team to implement and oversee these activities.
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February 10, 2023 HB 23-1008
Grant funding. The department will require a grant specialist and a purchasing agent to complete
the grant work for this program The Department will receive an additional $2.5 million
appropriation in FY2023-24, with a grant maximum at $25,000, or 100 grantees. For FY 2024-25
and beyond, the bill appropriates $5 million annually, or up to 200 grantees. Contracting and
reporting for each grantee will average 20 hours annually.
Department of Public Health and Environment. Beginning in FY 2024-25, expenditures will increase
in CDPHE to administer the grant program and conduct assessments.
Grant program. Expenditures will increase by $1,000,000 from the General Fund to administer
and partner with a statewide nonprofit organization to provide health eating program incentives
among Colorado’s low-income population. The bill allows CDPHE to use up to $10,000 for
administrative expenses.
Centrally appropriated costs. Pursuant to a Joint Budget Committee policy, certain costs associated
with this bill are addressed through the annual budget process and centrally appropriated in the Long
Bill or supplemental appropriations bills, rather than in this bill. These costs, which include employee
insurance and supplemental employee retirement payments, are shown in Table 2.
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 for FY 2023-24 and FY 2024-25.
This estimate assumes the December 2022 LCS revenue forecast. A forecast of state revenue subject
to TABOR is not available beyond FY 2024-25. 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 otherwise 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 decrease the amount of General Fund held in reserve by the
amounts shown in Table 1, which will increase 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.
State Appropriations
For FY 2023-24, the bill requires a General Fund appropriation of $2,775,073 and 3.0 FTE to the
Department of Agriculture, and $212,791 and 1.2 FTE to the Department of Revenue.
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February 10, 2023 HB 23-1008
State and Local Government Contacts
Personnel Agriculture Public Health and Environment
Revenue State Auditor
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.