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March 21, 2024 HB 24-1349
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 24-0546
Rep. Duran
Date:
Bill Status:
Fiscal Analyst:
March 21, 2024
House Finance
Amanda Liddle | 303-866-5834
amanda.liddle@coleg.gov
Bill Topic: FIREARMS AND AMMUNITION EXCISE TAX
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☒ State Transfer
☐ TABOR Refund
☒ Local Government
☐ Statutory Public Entity
The bill refers a ballot measure to voters at the November 2024 election. Conditional
on voter approval, the bill imposes an excise tax on firearms dealers, firearms
manufacturers, and ammunition vendors beginning April 1, 2025. The bill conditionally
increases state revenue, expenditures, and transfers beginning in FY 2024-25.
Appropriation
Summary:
For FY 2024-25, the bill conditionally requires an appropriation of $346,807 to the
Department of Revenue.
Fiscal Note
Status:
The fiscal note reflects the introduced bill.
Table 1
Conditional State Fiscal Impacts Under HB 24-1349
Budget Year
FY 2024-25
Out Year
FY 2025-26
Revenue Cash Funds $15.6 million $62.2 million
Total Revenue $15.6 million $62.2 million
Expenditures General Fund $346,807 $122,546
Cash Funds up to $15.6 million up to $62.2 million
Centrally Appropriated $8,825 -
Total Expenditures up to $16.0 million up to $62.3 million
Total FTE 0.9 FTE 0.5 FTE
Transfers Cash Funds ($15.6 million) ($62.2 million)
Cash Funds $15.6 million $62.2 million
Net Transfers $0 $0
Other Budget Impacts General Fund Reserve $52,021 $18,382 Page 2
March 21, 2024 HB 24-1349
Summary of Legislation
The bill refers a ballot measure to voters at the November 2024 election. If voters approve the
ballot measure, the bill imposes an excise tax on firearms dealers, firearms manufacturers, and
ammunition vendors equal to 11 percent of gross taxable sales from the retail sale of any
firearm, firearm precursor part, or ammunition in Colorado. The tax is levied beginning on
April 1, 2025. If approved by voters, revenue from the tax is exempt from TABOR as a voter-
approved revenue change.
Revenue from the tax is collected in the General Fund and transferred to a new Firearms and
Ammunition Excise Tax Cash Fund. Revenue in the fund is distributed annually as follows:
the first $45 million in the first fiscal year and that amount adjusted for inflation in each fiscal
year thereafter is transferred to the Colorado Crime Victim Services Fund (Victim Services
Fund) in the Division of Criminal Justice of the Department of Public Safety for crime victim
services grants;
the next $5 million in each fiscal year is transferred to the Victims and Witnesses Assistance
and Law Enforcement Fund for local judicial districts;
the next $5 million in each fiscal year is transferred to the Victim Services Fund for mass
tragedy response and prevention programs, except that any funds not spent or encumbered
for that purpose may be used by the division for additional crime services grants;
the next $4 million in each fiscal year is transferred to the Wildlife Cash Fund in the Division
of Parks and Wildlife of the Department of Natural Resources for administration and
enforcement of wildlife laws against the illegal use of firearms;
the next $2 million in each fiscal year is transferred to the Wildlife Cash Fund for programs to
support shooting and shooting range safety; and
any remaining money in each fiscal year must be transferred to the Victim Services Fund for
crime victim services grants.
Exemptions. If total retail sales of a firearms dealer, manufacturer, or ammunition vendor is less
than $2,000 in a month, the business’s sales are exempt from the excise tax. Retail sales to peace
officers and law enforcement agencies are exempt from the excise tax.
Background
Firearms and ammunition are currently subject to an 11 percent federal excise tax. Other states
have historically levied taxes on those selling, purchasing, or possessing firearms and other
weapons. As of 2023 legislative sessions, California is the only other state that imposes an
11 percent excise tax and firearms and ammunition, though Pennsylvania and some local
governments levy comparable excise taxes or surcharges on firearm sales.
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March 21, 2024 HB 24-1349
State Revenue
If voters approve the ballot measure, the bill is estimated to increase state revenue to the
Firearms and Ammunition Excise Tax Cash Fund by $15.6 million in FY 2024-25, $62.2 million in
FY 2025-26, and $64.2 million in FY 2026-27 with comparable growth in future years. Revenue
from the tax is exempt from TABOR as a voter-approved revenue change.
Based on national retail sale prices for firearms and ammunition, the fiscal note assumes average
costs as follows:
$548 for a handgun;
$932 for a long gun;
$740 for other types of guns and precursor parts; and
$1,480 for purchases that include multiple guns.
Due to volatility in prices of firearms and precursor parts that is not solely attributable to
inflation, firearms and precursor parts are not inflation-adjusted. The total estimated number of
firearms sold each year is derived from approved firearm background checks as reported by the
Colorado Bureau of Investigation (CBI) and the Federal Bureau of Investigation (FBI). The fiscal
note assumes about 410,000 total firearm sales per year. The revenue estimate does not account
for any sales exempted from the excise tax or any behavioral changes in sales that may result
from the enactment of the bill.
Based on the estimated ammunition market size in the United States and the proportion of
firearm background checks that occur in Colorado compared to the rest of the U.S., the fiscal
note estimates that ammunition retail sales will contribute $5.6 million to revenue collections in
FY 2024-25, $22.7 million in FY 2025-26, and $24.2 million in FY 2026-27 with comparable
growth in future years. The price of ammunition is assumed to increase by the Denver-Aurora-
Lakewood inflation rates assumed in the March 2024 LCS forecast and growth in total amount of
guns owned in Colorado each year.
State Transfers
If voters approve the ballot measure, the bill makes yearly transfers from the Firearms and
Ammunition Excise Tax Cash Fund to three different cash funds in the order specified in the
summary section of the fiscal note; the amount of total transfers to each cash fund is dependent
on the total revenue collected from the excise tax per this bill.
For FY 2024-25, the bill makes an estimated transfer of $15.6 million to the Victim Services Fund.
In FY 2025-26, the bill makes transfers estimated as follows:
a total of $51.2 million to the Victim Services Fund, including $46.2 million for crime victim
services grants and $5 million for mass tragedy response and prevention programs;
$5 million to the Victims and Witnesses Assistance and Law Enforcement Fund for local
jurisdictions; and Page 4
March 21, 2024 HB 24-1349
$6 million to the Wildlife Cash Fund, including $4 million for administration and enforcement
if wildlife laws against illegal use of firearms and $2 million for programs to support
shooting and shooting range safety.
State Expenditures
If voters approve the ballot measure, the bill increases state expenditures to administer the new
excise tax by about $355,100 in FY 2024-25 and $122,500 in FY 2025-26 and future years. These
costs, which are paid from the General Fund, are summarized in Table 2 and discussed below.
The bill will also increase spending of the new tax revenue by up to $15.6 million in FY 2024-25,
up to $62.2 million in FY 2025-26, and increasing amounts in future years.
Table 2
Conditional Tax Implementation Costs Under HB 24-1349
FY 2024-25 FY 2025-26
Department of Revenue
Personal Services $39,307 -
Operating Expenses $512 -
Capital Outlay Costs $6,670 -
GenTax Programming & Testing $177,708 -
Office of Research Analysis $7,392 $7,328
Legal Services $115,218 $115,218
Centrally Appropriated Costs
1
$8,285 -
FTE – Personal Services 0.4 FTE -
FTE – Legal Services 0.5 FTE 0.5 FTE
Total Cost $355,092 $122,546
Total FTE 0.9 FTE 0.5 FTE
1
Centrally appropriated costs are not included in the bill's appropriation.
Tax personnel. DOR requires 0.5 FTE tax conferee to answer taxpayer questions, review returns,
and work with taxpayers to resolve issues. Personnel needs are estimated based on the assumed
number of businesses impacted by the excise tax. Based on data reported by the Bureau of
Alcohol, Tobacco, Firearms, and Explosives, there is an estimated 2,250 businesses that would be
subject to this tax. Workload is expected to be absorbable in future years as the volume of
questions and errors decrease over time. Additional personnel will be required only from
October 2024 through June 2025.
Legal services. DOR requires general counsel from the Department of Law on rulemaking,
implementation, and the ongoing administration of the tax. Legal services needs are estimated
at 900 hours (0.5 FTE) in the first year to promulgate rulemaking and in future years to provide
legal representation for statutory interpretation questions raised by DOR and taxpayers. Page 5
March 21, 2024 HB 24-1349
GenTax Programming and Testing. DOR needs one-time funding in FY 2024-25 to create and
program forms and returns. GenTax programming is estimated to require 600 hours at $231.75
per hour, paid to the vendor, for a total cost of $139,050. In addition, required development and
testing work in support of GenTax programming is estimated to require 1,137 hours of work for
a total one-time cost of $38,658.
Office of Research Analysis. The Office of Research and Analysis within the Department of
Revenue will perform 231 hours of work at a rate of $32 per hour in FY 2024-25, and 228 hours
of work in future years, to update database fields and conduct ongoing reporting.
Victim and other services. Based on available revenue, expenditures will increase by up to
$15.6 million in FY 2024-25 and up to $62.2 million in FY 2025-26 and increasing amounts in
future years to provide crime victim and other services, based on the amounts and for the
purposes listed in the State Transfer section above. The Victim Services Fund and the Victims
and Witnesses Assistance and Law Enforcement Fund are continuously appropriated to the
Department of Public Safety and the Judicial Department, respectively. The Wildlife Cash Fund in
the Department of Natural Resources is subject to annual appropriation by the General
Assembly. The timing and amount of future expenditures may vary based on future agency
decisions and by appropriations made by the General Assembly through the annual budget
process.
Election expenditure impact — existing appropriations. This bill includes a referred question
that will appear before voters at the November 2024 general election. While no additional
appropriation is required, certain election costs are incurred by the state when ballot measures
are referred. These include reimbursing counties for certain election costs; publishing the text
and title of the measure in newspapers across the state; and preparing and mailing the ballot
information booklet.
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
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 2024-25.
Based on this fiscal note, the bill conditionally increases the amount of General Fund held in the
reserve by the amounts shown in Table 1, which decreases the amount of General Fund available
for other purposes. Page 6
March 21, 2024 HB 24-1349
Local Government
The proposed bill may make additional funding available to local governments and local law
enforcement agencies that provide services including crime victim and witness assistance; mass
tragedy response; and shooting range safety. Additional funding may also be available to local
governments eligible for grants from various programs administered by the Division of Criminal
Justice and Department of Natural Resources that would receive an allocation of the new excise
tax. Local law enforcement agencies would not have to pay the excise tax for firearms or
ammunition.
Technical Note
The Department of Revenue may not have sufficient time to create and program forms and
returns, register vendors, promulgate rules, and draft web guidance and other publications
before the April 1, 2025 implementation date. DOR is undertaking an upgrade to the GenTax
system starting in January 2025 which will limit the ability to make the necessary programming
changes before April 1, 2025.
Effective Date
The portion of the bill that refers a ballot measure to voters takes effect upon signature of the
Governor, or upon becoming law without his signature. The remainder of the bill takes effect
only if voters approve the ballot measure at the November 2024 election.
State Appropriations
If voters approve the ballot measure, for FY 2024-25, the bill requires a General Fund
appropriation of $346,807 to the Department of Revenue, and 0.9 FTE. Of this amount, $115,218
should be reappropriated to the Department of Law with an additional 0.5 FTE.
State and Local Government Contacts
Corrections Counties District Attorneys
Information Technology Judicial Local Affairs
Law Municipalities Natural Resources
Personnel Public Safety Revenue
Secretary of State Special Districts 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 the General Assembly website.