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April 20, 2024 HB 24-1349
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Revised Fiscal Note
(replaces fiscal note dated April 18, 2024)
Drafting Number:
Prime Sponsors:
LLS 24-0546
Rep. Duran
Date:
Bill Status:
Fiscal Analyst:
April 20, 2024
House Third Reading
Amanda Liddle | 303-866-5834
amanda.liddle@coleg.gov
Bill Topic: FIREARMS & 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 $383,027 to the
Department of Revenue.
Fiscal Note
Status:
This revised fiscal note reflects the engrossed bill.
Table 1
Conditional State Fiscal Impacts Under HB 24-1349
Budget Year
FY 2024-25
Out Year
FY 2025-26
Revenue Cash Funds $12.5 million $49.5 million
Total Revenue $12.5 million $49.5 million
Expenditures General Fund $383,027 -
Cash Funds up to $12.1 million up to $49.5 million
Centrally Appropriated $6,554 -
Total Expenditures up to $12.5 million up to $49.5 million
Total FTE 1.2 FTE 0.8 FTE
Transfers General Fund $383,027 -
Cash Funds ($12.5 million) ($49.3 million)
Cash Funds $12.1 million $49.3 million
Net Transfers $0 $0
Other Budget Impacts General Fund Reserve $57,454 - Page 2
April 20, 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 9 percent of net 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 to be used for the implementation
and administration of the excise tax annually before being distributed as follows:
the first $35 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 $10 million in each fiscal year is transferred to the School Disbursement Program
Cash fund and is subject to annual appropriation by the general assembly;
the next $5 million in each fiscal year is transferred to the Behavioral and Mental Health Cash
Fund for the continuation and expansion of access to behavioral health crisis response
system services for children and youth;
the next $5 million in each fiscal year is transferred to the Behavioral and mental Health Cash
Fund for the continuation and expansion of the veterans mental health services program;
and
any remaining money in each fiscal year must be transferred to the Victim Services Fund for
crime victim services grants.
The bill extends the School Security Disbursement Program Cash Fund, currently scheduled to
be repealed on July 1, 2024, through July 1, 2032. It also extends the Behavioral and Mental
Health Cash Fund, currently scheduled to be repealed on July 1, 2027, through July 1, 2032.
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, law enforcement agencies, and active duty military 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 excise
tax on firearms and ammunition, though Pennsylvania and some local governments levy
comparable excise taxes or surcharges on firearm sales.
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April 20, 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 $12.5 million in FY 2024-25, $49.5 million in
FY 2025-26, and $51.1 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 460,000 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 $4.5 million to revenue collections in
FY 2024-25, $18.1 million in FY 2025-26, and $19.3 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, after administrative and implementation costs are paid. The
amount of total transfers to each cash fund is dependent on the total revenue collected from
the excise tax per this bill.
It is assumed that administrative expenses will be paid from the General Fund in FY 2024-25 and
from the cash fund in later years. For FY 2024-25, the bill requires a transfer of about $380,000
from the cash fund to the General Fund to repay costs initially paid from the General Fund. The
remaining $12.1 million will be transferred to the Victim Services Fund.
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April 20, 2024 HB 24-1349
In FY 2025-26, the bill makes transfers estimated as follows:
$35.8 million to the Victim Services Fund for crime victim services grants;
$10.0 million to the School Security Disbursement Program Cash Fund; and
$3.5 million to the Behavioral and Mental Health Cash Fund.
State Expenditures
If voters approve the ballot measure, the bill increases state expenditures to administer the new
excise tax by about $390,000 in FY 2024-25 and $180,000 in FY 2025-26 and future years. These,
are summarized in Table 2 and discussed below. The costs are paid from the General Fund in
FY 2024-25 and reimbursed by the Firearm and Ammunition Cash Fund at the end of the fiscal
year. In FY 2025-26 and future years, costs are paid from the Firearm and Ammunition Cash
Fund. The bill will also increase other spending of the new tax revenue by up to $12.1 million in
FY 2024-25, up to $49.5 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 $20,845 -
Operating Expenses $512 -
Capital Outlay Costs $3,335 -
GenTax Programming & Testing $178,116 -
Office of Research Analysis $7,392 $7,328
Legal Services $172,827 $172,827
Centrally Appropriated Costs
1
$6,554 -
FTE – Personal Services 0.4 FTE -
FTE – Legal Services 0.8 FTE 0.8 FTE
Total Cost $389,581 $180,155
Total FTE 1.2 FTE 0.8 FTE
1
Centrally appropriated costs are not included in the bill's appropriation.
Tax personnel. DOR requires 0.5 FTE tax examiner 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. Page 5
April 20, 2024 HB 24-1349
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 1,350 hours (0.8 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. The bill
establishes a new registration process for firearms dealers and manufacturers and grants DOR
the ability to deny or revoke registrations; denial and revocation of registrations will be
addressed in district court, further driving DOR’s need for legal services.
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 1,149 hours of work for
a total one-time cost of $39,066.
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
$12.1 million in FY 2024-25 and up to $49.3 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 Behavioral
and Mental Health Cash Fund are continuously appropriated to the Department of Public Safety
and the Behavioral Health Administration, respectively. The School Security Disbursement
Program Cash Fund within the Department of Public Safety 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. Page 6
April 20, 2024 HB 24-1349
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.
Local Government
The proposed bill is anticipated to make additional funding available to local governments,
including local law enforcement agencies and school districts. Funding will be used to provide
services including crime victim and witness assistance; school security; and behavioral and
mental health crisis services. Additional funding may also be available to local governments
eligible for grants from various programs administered by the Division of Criminal Justice 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 $383,027 to the Department of Revenue, and 1.2 FTE. Of this amount, $172,827
should be reappropriated to the Department of Law with an additional 0.8 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
BHA Treasury Education
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.