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April 24, 2023 HB 23-1281
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Revised Fiscal Note
(replaces fiscal note dated April 18, 2023)
Drafting Number:
Prime Sponsors:
LLS 23-0894
Rep. Titone; Vigil
Date:
Bill Status:
Fiscal Analysts:
April 24, 2023
House Finance
Matt Bishop | 303-866-4796
Emily Dohrman | 303-866-3687
Bill Topic: ADVANCE THE USE OF CLEAN HYDROGEN
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☒ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
The bill creates a state approval process for clean hydrogen projects and a refundable
income tax credit for using clean hydrogen. It decreases state revenue and increases
state expenditures beginning in FY 2023-24.
Appropriation
Summary:
For FY 2023-24, the bill requires appropriations of $64,759 to multiple state agencies.
See State Appropriations section.
Fiscal Note
Status:
The revised fiscal note reflects the introduced bill, as amended by the House Energy
and Environment Committee.
Table 1
State Fiscal Impacts Under HB 23-1281
Budget Year
FY 2023-24
Out Year
FY 2024-25
Out Year
FY 2025-26
Revenue General Fund (up to $2.5 million) (up to $5.0 million) (up to $6.0 million)
Cash Funds $61,580 $109,820 $109,820
Total Revenue (up to $2.4 million) (up to $4.9 million) (up to $5.9 million)
Expenditures General Fund $12,861 $182,693 $142,126
Cash Funds $51,898 $90,455 $90,455
Centrally
Appropriated
$9,682 $37,719 $29,477
Total Expenditures $74,441 $310,867 $262,058
Total FTE 0.5 FTE 1.9 FTE 1.5 FTE
Other Budget
Impacts
TABOR Refund (up to $2.4 million) (up to $4.9 million) (up to $5.9 million)
GF Reserve $1,929 $27,404 $21,319
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April 24, 2023 HB 23-1281
Summary of Legislation
The bill requires the Public Utilities Commission (PUC) to initiate a proceeding and adopt rules
addressing the appropriate regulatory framework for potential clean hydrogen projects by
September 1, 2024.
The bill creates a refundable income tax credit for qualified uses of clean hydrogen for tax years 2024
through 2032. The credit is $0.33 to $1.00 per kilogram, depending on the lifecycle greenhouse gas
emissions resulting from the clean hydrogen’s production. To claim the credit, a taxpayer must apply
annually for a certificate from the Colorado Energy Office, which must develop standards for qualified
uses. The maximum tax credit per taxpayer is shown in Table 2.
Table 2
Maximum Tax Credit Per Taxpayer
Tax Years Maximum Credit
2024 – 2025 $1,000,000
2026 – 2028 $500,000
2029 – 3032 $250,000
State Revenue
The bill decreases state General Fund revenue and increase state cash fund revenue, as outlined below.
Income tax credit. The bill is expected to decrease state tax revenue to the General Fund by up to
$2.5 million in FY 2023-24 (half-year impact), up to $5.0 million in FY 2024-25, and up to $6.0 million
in FY 2025-26. Clean hydrogen is considered an early-developmental-stage technology by the
U.S. Energy Information Association. As such, current levels of production and consumption are not
well documented, and future trends are difficult to forecast. Actual changes in revenue may fall well
below the maximum amounts identified in this fiscal note. The maximum revenue amounts were
approximated using estimations of the total amount of clean hydrogen produced in the U.S., adjusted
for Colorado’s population.
Fixed Utility Fund. The bill increases state cash fund revenue to the Fixed Utility Fund (FUF) by
$61,580 in FY 2023 24, and $109,820 in FY 2024-25 and subsequent fiscal years. Administrative costs
incurred by the PUC are paid from the FUF, which receives an annual assessment on the state's
regulated utilities. Whenever additional expenses are incurred against the fund, the assessment must
be raised to increase revenue to cover these expenses.
State Expenditures
The bill increases state expenditures in the Department of Regulatory Agencies by $61,580 in
FY 2023-24, and $109,820 in subsequent years, paid from the Fixed Utility Fund. It also increases state
expenditures in the Department of Revenue by $12,861 in FY 2023-24, $74,615 in FY 2024-25, and $7,328
in subsequent years, paid from the General Fund. Finally, it increases state expenditures in the Page 3
April 24, 2023 HB 23-1281
Colorado Energy Office by $126,432 in FY 2024-25 and $144,910 in subsequent years, paid from the
General Fund. Expenditures are shown in Table 3 and detailed below.
Table 3
Expenditures Under HB 23-1281
FY 2023-24 FY 2024-25 FY 2025-26
Department of Regulatory Agencies
Personal Services $44,553 $89,105 $89,105
Operating Expenses $675 $1,350 $1,350
Capital Outlay Costs $6,670 - -
Centrally Appropriated Costs
1
$9,682 $19,365 $19,365
FTE – Personal Services 0.5 FTE 1.0 FTE 1.0 FTE
DORA Subtotal $61,580 $109,820 $109,820
Department of Revenue
Document Management $12,861 - -
Computer Programming and Testing - $67,223 -
Office of Research and Analysis - $7,392 $7,328
DOR Subtotal $12,861 $74,615 $7,328
Colorado Energy Office
Personal Services - $90,058 $49,123
Operating Expenses - $1,350 $675
Capital Outlay Costs - $6,670 -
Consultant - - $75,000
Software - $10,000 $10,000
Centrally Appropriated Costs
1
- $18,354 $10,112
FTE – Personal Services - 0.9 FTE 0.5 FTE
CEO Subtotal - $126,432 $144,910
Total $74,441 $310,867 $262,058
Total FTE 0.5 FTE 1.9 FTE 1.5 FTE
1
Centrally appropriated costs are not included in the bill's appropriation.
Department of Regulatory Agencies. Expenditures increase in the PUC to develop and manage the
application process for clean hydrogen projects. This requires 0.5 FTE in FY 2023-24, increasing to
1.0 FTE in subsequent years. Outyear costs may vary depending on the regulatory framework
established in FY 2023-24. Standard operating and capital outlay costs are included.
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April 24, 2023 HB 23-1281
Department of Revenue. Expenditures increase to implement the new tax credit included in the bill.
Document management. The bill requires an additional $12,861 in expenditures to implement
tax form changes in FY 2023-24. These expenditures will be reappropriated to the Department of
Personnel and Administration.
Computer programming and testing. For FY 2024-25 only, the bill requires changes to the DOR’s
GenTax system and additional computer and user acceptance testing. Approximately 230 hours
of computer programming are required to make changes in the GenTax system, totaling $53,303.
Additional computer and user acceptance testing are required to ensure programming changes
are functioning properly, resulting in an additional $13,920.
Data reporting. Beginning in FY 2024-25, the Office of Research and Analysis within DOR will
expend about $7,300 each year to collect and report data on the new tax credit.
Colorado Energy Office. Expenditures increase beginning in FY 2024-25 to administer the tax credit
certificate program. The office requires 1.0 FTE in FY 2024-25, decreasing to 0.5 FTE in future years to
respond to inquiries, report on the program, and manage contracts. Standard operating and capital
outlay costs are included, and costs in FY 2024-25 account for the General Fund pay date shift.
Other expenditures include tracking software for administering tax certificates. Beginning in
FY 2025-26, the office will contract with a consultant for technical support on clean hydrogen uses.
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 decrease 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
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, 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.
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. Based on this fiscal note, the
bill is expected to increase the amount of General Fund held in reserve by the amounts shown in
Table 1, decreasing the amount of General Fund available for other purposes.
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April 24, 2023 HB 23-1281
Technical Note
The fiscal note includes 230 hours of GenTax programming in the Department of Revenue in
FY 2024-25. However, some of this programming is duplicative with similar requirements in
House Bill 23-1272. If both bills pass, the FY 2024-25 appropriation for the Department of Revenue
can be reduced by an estimated 150 hours of GenTax programming, or $34,763.
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 the following appropriations:
$51,898 from the Fixed Utility Fund to the Department of Regulatory Agencies, and 0.5 FTE; and
$12,861 from the General Fund to the Department of Revenue, which is reappropriated to the
Department of Personnel and Administration.
State and Local Government Contacts
Colorado Energy Office Information Technology Law
Personnel Regulatory Agencies 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.