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February 6, 2024 HB 24-1137
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 24-0796
Rep. Mauro; Taggart
Date:
Bill Status:
Fiscal Analyst:
February 6, 2024
House Business & Labor
Hamza Syed | 303-866-4976
hamza.syed@coleg.gov
Bill Topic: IMPLEMENT FRAUDULENT FILINGS GROUP REC OMMENDATION S
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☐ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
The bill makes changes to the business filing practices based on recommendations
from the Fraudulent Filings Working Group. The bill increases state expenditures and
may increase state revenue beginning FY 2024-25.
Appropriation
Summary:
For FY 2024-25, the bill requires an appropriation of $464,310 to the Department of
State.
Fiscal Note
Status:
The fiscal note reflects the introduced bill.
Table 1
State Fiscal Impacts Under HB 24-1137
Budget Year
FY 2024-25
Out Year
FY 2025-26
Revenue - -
Expenditures Cash Fund $464,310 $228,342
Centrally Appropriated $31,934 $71,102
Total Expenditures $496,244 $299,444
Total FTE 2.0 FTE 4.5 FTE
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February 6, 2024 HB 24-1137
Summary of Legislation
The bill implements some of the recommendations of the Fraudulent Filings Working Group in
the Department of State (DOS), from the workgroup’s February 2023 final report. Notable
among its many changes, the bill:
requires that a registered agent of a business have a valid Colorado license or state
identification;
authorizes the DOS to change the status of a delinquent business immediately after a ruling
by an administrative law judge;
allows law enforcement officials to make a complaint against filings by businesses they
believe are fraudulent;
restricts businesses that have a delinquent status for at least 5 years from refiling;
restricts businesses that have been dissolved for at least 2 years from refiling, and;
clarifies the perjury statement affirmed by filers when submitting a document to the DOS.
Background
Senate Bill 22-034 created the Fraudulent Filings Business Working Group to make
recommendations to counteract fraudulent filings in the DOS’s online business filing system. The
working group highlighted a number of legislative solutions to the fraudulent filings in its final
report. The bill implements several of those recommendations.
State Revenue
On net, the bill may increase fee revenue collected by the DOS to cover the costs of
implementing this bill, after accounting for reductions in certain filings, as described below.
Reduced business filings. Fees paid to the Department of State Cash Fund may be reduced if
the filing restrictions on dissolved and delinquent businesses result in fewer business
registrations. Overall, this impact is assumed to be minimal and has not been estimated.
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 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 may 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 professional activities subject to fees. This revenue is subject to TABOR.
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February 6, 2024 HB 24-1137
State Expenditures
This bill will increase state expenditures in DOS by $496,244 and 2.0 FTE in FY 2024-25 and
$299,444 and 4.5 FTE in FY 2025-26. These costs, paid from the Department of State Cash Fund,
are displayed in Table 2 and described below
Table 2
Expenditures Under HB 24-1137
FY 2024-25 FY 2025-26
Department of State
Personal Services $93,580 $202,572
Operating Expenses $2,560 $5,760
Capital Outlay Costs $20,010 $20,010
Computer Programming $348,160 -
Centrally Appropriated Costs
1
$31,934 $71,102
FTE – Personal Services 2.0 FTE 4.5 FTE
Total Cost $496,234 $299,444
Total FTE 2.0 FTE 4.5 FTE
1
Centrally appropriated costs are not included in the bill's appropriation.
Personal Services. This bill changes the process and content of business filings with the DOS.
For FY 2024-25, DOS will require 0.5 FTE Analyst to create new systems and policies, and 1.5 FTE
Technicians to implement and develop system changes, process additional fraud complaints,
provide customer support, and process cure of delinquency and reinstatement documents. For
FY 2025-26, workload increases to 3.0 FTE Technicians for additional customer support and to
administer the anticipated increase in complaints of fraudulent filings submitted by law
enforcement.
Computer Programming. The IT Division of DOS must modify the Business Filing application
and allow additional content submitted in an application such as proof of identification. This is
estimated to require 2,720 hours of time at a rate of $123 per hour.
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.
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming
no referendum petition is filed, except that Section 4 of the bill concerning registered agents
takes effect on July 1, 2025. Page 4
February 6, 2024 HB 24-1137
State Appropriations
For FY 2024-25, the bill requires an appropriation of $464,310 from the Department of State Cash
Fund to the Department of State, and 2.0 FTE.
State and Local Government Contacts
Law Personnel 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 the General Assembly website.