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April 25, 2023 HB 23-1008
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Revised Fiscal Note
(replaces fiscal note dated March 30, 2023)
Drafting Number:
Prime Sponsors:
LLS 23-0486
Rep. Weissman
Sen. Fields; Hinrichsen
Date:
Bill Status:
Fiscal Analyst
April 25, 2023
Senate Second Reading
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 creates a tax credit and requires that certain federal income tax deductions be
added back when computing state taxable income. It also requires a one-time
appropriation to fund healthy eating program incentives. On net, it increases state
revenue in FY 2023-24 and FY 2024-25, and reduces state revenue from FY 2025-26
through FY 2030-31; it also increases state expenditures from FY 2023-24 through
FY 2030-31.
Appropriation
Summary:
For FY 2023-24, the bill requires and includes a General Fund appropriation of
$610,413 to multiple agencies.
Fiscal Note
Status:
This revised fiscal note reflects the reengrossed bill, as amended by the Senate
Appropriations Committee.
Table 1
State Fiscal Impacts Under HB 23-1008
Budget Year
FY 2023-24
Out Year
FY 2024-25
Out Year
FY 2025-26
Revenue General Fund $1.3 million $1.1 million ($0.3 million)
Total Revenue $1.3 million $1.1 million ($0.3 million)
Expenditures General Fund $610,413 $616,455 $459,865
Centrally Appropriated $58,402 $81,860 $76,346
Total Expenditures $668,815 $698,315 $536,211
Total FTE 3.2 FTE 4.6 FTE 4.3 FTE
Transfers - -
Other Budget
Impacts
TABOR Refund $1.3 million $1.1 million ($0.3 million)
General Fund Reserve $91,562 $92,468 $68,980 Page 2
April 25, 2023 HB 23-1008
Summary of Legislation
For FY 2023-24 only, the bill funds healthy eating program incentives. Beginning in tax year 2024, the
bill creates a state income tax credit for small food retailers, small family farms, and consortium
members of the Community Food Access Program. The bill also requires that certain federal income
tax deductions be added back when computing state taxable income. These provisions are discussed
below.
Healthy eating program incentives. For FY 2023-24 only, the bill requires the General Assembly to
appropriate $250,000 dollars 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. The division shall not use more than $10,000 and the nonprofit shall not use more than
five percent of the appropriation ($12,500) for administrative expenses.
Income tax credit. The bill creates a tax credit for any consortium member and any small food
business or small family farm that purchases small food business recovery and resilience grant
program equipment. For the members of the consortium, the credit is equal to 75 percent of the
amount spent on completing their duties and responsibilities, after subtracting any amount they
receive through the Community Food Access Program. For small food retailers and small family
farms, the credit is equal to 75 percent of the costs for the purchase, tax paid on, and shipment of
equipment from among listed items. Qualifying purchases include cold storage, display shelving,
produce scales, and point of sales systems. 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 $10 million for each year.
The Department of Agriculture is responsible for verifying and issuing tax credit certificates, which
taxpayers must attach to their state income tax return to claim the credit.
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.
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April 25, 2023 HB 23-1008
Assumptions
Data from the Department of Revenue show that individual Colorado taxpayers deducted business
meal expenses totaling $148 million on 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 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 $9.7 million per year.
The fiscal note also assumes that in the first year the income tax credit is available, approximately
$7.0 million will be claimed as small food retailers, small family farms, and members of the consortium
become aware of the credit. After the first year, it is assumed the full $10.0 million allowed will be
claimed each year the credit is available.
State Revenue
The bill is expected to increase General Fund revenue by $1.3 million in FY 2023-24 (half-year impact)
and $1.1 million in FY 2024-25 and decrease state revenue by $0.3 million in FY 2025-26 and by similar
amounts each year through FY 2029-30, and with a half-year impact in FY 2030-31, when the required
income tax addition and tax 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 impacts individual income tax revenue, which is subject to
TABOR. Table 2 shows the net difference between the individual and corporate add backs and the
amount of credits claimed on a calendar year basis.
Table 2
Net Difference Between Add Backs and Credits Claimed Under HB 23-1008
2024 2025 2026 2027
State Tax Credits Claimed ($7.0 million) ($10.0 million) ($10.0 million) ($10.0 million)
Add Backs (Individual Taxpayers) $6.3 million $6.3 million $6.3 million $6.2 million
Add Backs (Corporate Taxpayers) $3.2 million $3.4 million $3.5 million $3.6 million
Net Difference $2.5 million ($0.3 million) ($0.3 million) ($0.1 million)
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April 25, 2023 HB 23-1008
State Expenditures
The bill increases state expenditures by $668,158 in FY 2023-24, $698,315 in FY 2024-25, and $536,211
in FY 2025-26 and later years. Expenditures are shown in Table 3 and detailed below.
Table 3
Expenditures Under HB 23-1008
FY 2023-24 FY 2024-25 FY 2025-26
Department of Revenue (DOR)
Personal Services - $85,773 $62,212
Operating Expenses - $2,295 $1,485
Capital Outlay Costs - $12,006 -
GenTax Programming and Testing - $116,956 -
Data Reporting - $7,392 $7,328
Document Management and Tax Form Changes - $51,630 $48,437
Centrally Appropriated Costs
1
- $23,458 $17,944
FTE – Personal Services - 1.4 FTE 1.1 FTE
DOR Subtotal - $299,510 $137,406
Department of Agriculture (CDA)
Personal Services $270,423 $270,423 $270,423
Operating Expenses $4,050 $4,050 $4,050
Capital Outlay Costs $20,010 - -
Legal Services $44,411 $44,411 $44,411
Translation Services $15,050 $15,050 $15,050
Travel $6,469 $6,469 $6,469
Centrally Appropriated Costs
1
$58,402 $58,402 $58,402
FTE – Personal Services 3.0 FTE 3.0 FTE 3.0 FTE
FTE – Legal Services 0.2 FTE 0.2 FTE 0.2 FTE
CDA Subtotal $418,815 $398,805 $398,805
Department of Public Health and Environment (CDPHE)
CDPHE Grant Administration $10,000 - -
Statewide Nonprofit Organization Partnership $12,500 - -
Grant Funding $227,500 - -
CDPHE Subtotal $250,000 - -
Total Costs $668,158 $698,315 $536,211
Total FTE 3.2 FTE 4.6 FTE 4.3 FTE
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April 25, 2023 HB 23-1008
Department of Revenue. Beginning in FY 2024-25, expenditures will increase in DOR to administer
the income tax credit and income tax addition in the bill.
Personal services. The Department of Revenue will require 1.4 FTE in FY 2024-25. Of this, 0.7 FTE
will be used for a term-limited employee for development and testing work in support of GenTax
programing. The remaining 0.7 FTE is for 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. Estimated personnel costs for
FY 2024-25 assume an October 1, 2024. After FY 2024-25 and for each year the credit is available,
the Taxpayer Service Division will require 1.1 FTE to continue to administer the income tax credit
and add-back provision.
Computer programming and testing. For FY 2024-25 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 $231.75 per hour. Approximately 400 hours of computer programming will be required to
implement this bill, totaling $92,700. Additional computer and user acceptance testing are
required to ensure programming changes are tested and functioning properly, resulting in an
additional $24,256 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 about $7,400 to collect and report data on the new tax credit. The costs are
ongoing through FY 2030-31.
Document management and tax form changes. In FY 2025-26, the bill requires changes to nine
tax forms and computer testing for paper filings at a cost of $51,630. Expenditure for form changes
occur in the Department of Personnel and Administration using reappropriated funds. DPA will
require $48,437 in FY 2025-26 to administer paper filings.
Department of Agriculture. Beginning in FY 2023-24, expenditures will increase in CDA to determine
if the applicant qualifies for participation in the program. The CDA is also responsible for verifying,
approving, and issuing tax credits and accounting to ensure that the number of credits does not exceed
the $10 million allowable amount each year.
Personal services. The CDA will require 3.0 FTE in FY 2023-24 and FY 2024-25 to administer,
monitor, verify and provide oversight for the income tax credit. This will require a senior
manager.
Legal services. The department will require 420 hours annually of legal guidance regarding the
tax credits. Legal services are provided at an hourly rate of $105.74 by the Department of Law.
Translation services and travel. The department will provide communication, outreach,
interpretation and translation services in order to meet the targeted communities. 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. Page 6
April 25, 2023 HB 23-1008
Department of Public Health and Environment. For FY 2023-24 only, expenditures will increase in
CDPHE to administer the grant program and conduct assessments.
Grant program. Expenditures will increase by $250,000 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 and allows the nonprofit to use no more than 5 percent of the $250,000
($12,500) 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 3.
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 March 2023 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 and includes the following General Fund appropriations:
$360,413 and 3.0 FTE to the Department of Agriculture, of which $44,411 is reappropriated to the
Department of Law with an additional 0.2 FTE; and
$250,000 to the Department of Public Health and Environment.
State and Local Government Contacts
Agriculture Personnel 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.