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February 23, 2023 HB 23-1170
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 23-0748
Rep. DeGraaf
Date:
Bill Status:
Fiscal Analyst:
February 23, 2023
House State Affairs
Kristine McLaughlin | 303-866-4776
kristine.mclaughlin@coleg.gov
Bill Topic: DISTRIBUTED LEDGERS VOTING
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☒ TABOR Refund
☒ Local Government
☐ Statutory Public Entity
The bill requires the use of distributed ledger technology in elections and establishes
voter eligibility verification systems for in person and mail in voting. The bill increases
state revenue and expenditures on an ongoing basis.
Appropriation
Summary:
For FY 2023-24, the bill requires an appropriation of $100,000 to the Department of
State.
Fiscal Note
Status:
This fiscal note is preliminary and reflects the introduced bill. The fiscal note will be
updated if more information becomes available.
Table 1
State Fiscal Impacts Under HB 23-1170
Budget Year
FY 2023-24
Out Year
FY 2024-25
Out Year
FY 2025-26
Revenue Cash Funds $100,000 $2,100,000 -
Total Revenue $100,000 $2,100,000 -
Expenditures General Fund - - $40,000,000
Cash Funds $100,000 $2,100,000 -
Total Expenditures $100,000 $2,100,000 $40,000,000
Transfers - - -
Other Budget Impacts TABOR Refund $100,000 $2,100,000 -
General Fund Reserve - - $6,000,000
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February 23, 2023 HB 23-1170
Summary of Legislation
The bill establishes a system for the use of distributed ledgers in elections. A distributed ledger allows
information to be entered into a publicly available common database from multiple locations at
different times. The bill creates a system of vetting registrars and observer teams to verify the
eligibility of both in-person and mail in voters, and a process to assign a unique identifier and other
data about the cast vote record that can be maintained in the distributed ledger. Votes counted must
be entered into the distributed ledger system, unless the vote was part of a manual count.
State Revenue
The bill increases fee revenue in the Department of State by $100,000 in FY 2023-24 and $2.1 million
in FY 2024-25 and each year until the new system is operational, assuming the Department of State
adjusts its fees to cover the estimated costs paid from the Department of State Cash Fund under the
bill.
Fee impact on businesses and professions. Colorado law requires legislative service agency review
of measures which create or increase any fee collected by a state agency. Under current law, the
Department of State (DOS) is authorized to adjust fees so that the revenue generated approximates its
direct and indirect costs. The DOS is primarily funded through business filing fees. To cover the costs
described in the State Expenditures section below, fees will likely need to be raised to cover all or some
of the costs of this bill. The fees affected and the actual amount of fee charges will be set
administratively by the DOS based on cash fund balance, total program costs, and the estimated
number of business activities subject to fees. This revenue is subject to TABOR.
State Expenditures
The bill increases state expenditures in Department of State by $100,000 in FY 2023-24, $2.1 million in
FY 2024-25, and $40 million in FY 2025-26, paid from the Department of State Cash Fund in the first
two years and from the General Fund in the third year. Expenditures are shown in Table 2 and detailed
below.
Table 2
Expenditures Under HB 23-1170
FY 2023-24 FY 2024-25 FY 2025-26
Department of State
System Development and Implementation $100,000 $100,000 $40,000,000
Statewide Hand Count Observation - $2,000,000 -
Total Costs $100,000 $2,100,000 $40,000,000
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February 23, 2023 HB 23-1170
Study and planning. As of this writing, it is not known if voting system technology as described in
the bill is commercially or otherwise available. Thus, it is assumed that the DOS will have costs in the
first two years to study and plan for implementation the system. It is assumed that a contractor with
skills in this area would cost at least $100,000 per year for two years.
System development and implementation. California’s Voting Modernization initiative included
funding for a project of similar scope to the one required by the bill. Of the $200 million bond approved
by California voters for election system improvements, California Senate Bill 360 (2013) appropriated
$40 million for a new statewide voter database, which is assumed to be a system of comparable scope
and complexity as the distributed ledger system required by this bill. Based on this, it is assumed that
DOS will required around $40 million in FY 2025-26 to develop and implement the new system, with
the goal of having it operational for the 2026 general election. Given the magnitude of this cost relative
to current DOS fee revenue, it is assumed that system development costs will be paid from the General
Fund. The timing and amount of these costs may differ once additional information is known. It is
assumed that the DOS will request funding as needed through the annual budget process.
Statewide Hand Count Observation. The earliest election at which this system could potentially be
available is the 2026 general election. Until then, all vote tabulation will must be done using a manual
count. DOS will have costs of about $2 million to observe hand counting of ballots at the 2024
statewide general election in FY 2024-25. This cost is based on the costs of observing a limited manual
count at the 2022 election.
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 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 cash fund
revenue will reduce the amount of General Fund available to spend or save.
Local Government
The voting technology required by the bill is not currently available and a system is assumed to take
at least two years to develop. Therefore, county clerks will be required to conduct hand counts of
ballots until the system required by the bill is available, which is assumed to be no sooner than the
2026 election. Hand-counting ballots would increase costs by for counties by approximately
$12 million statewide and delay reporting of results.
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming no
referendum petition is filed.
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February 23, 2023 HB 23-1170
State Appropriations
For FY 2023-24, the bill requires an appropriation of $100,000 to the Department of State from the
Department of State Cash Fund.
State and Local Government Contacts
Counties County Clerks Secretary of State
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.