Page 1
May 6, 2024 SB 24-126
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Revised Fiscal Note
(replaces fiscal note dated April 25, 2024)
Drafting Number:
Prime Sponsors:
LLS 24-0505
Sen. Will; Winter F.
Rep. Lukens; Lynch
Date:
Bill Status:
Fiscal Analyst:
May 6, 2024
House Second Reading
Louis Pino | 303-866-3556
louis.pino@coleg.gov
Bill Topic: CONSERVATION EASEMENT INCOME TAX CREDIT
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☒ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
The bill extends the Conservation Easement Oversight Commission and the program
for certifying conservation easement holders indefinitely and extends the conservation
easement tax credit and increases the maximum amount that may be certified
beginning in tax year 2025. It decreases state revenue beginning in FY 2025-26 and
increases state expenditures on an ongoing basis beginning in FY 2024-25.
Appropriation
Summary:
For FY 2024-25, the bill requires and includes an appropriation of $12,925 to the
Department of Regulatory Agencies.
Fiscal Note
Status:
The revised fiscal note reflects the reengrossed bill, as amended by the House
Agriculture, Water, and Natural Resources Committee, the House Finance Committee,
and the House Appropriations Committee.
Table 1
State Fiscal Impacts Under SB 24-126
Budget Year
FY 2024-25
Out Year
FY 2025-26
Out Year
FY 2026-27
Out Year
FY 2027-28
Revenue General Fund - ($250,000) ($3,500,000) ($3,000,000)
Cash Funds $33,900 $45,200 $45,200 $45,200
Total Revenue $33,900 ($204,800) ($3,454,800) ($2,954,804)
Expenditures Cash Funds $12,925 $25,850 $25,850 $25,850
Centrally Appropriated $3,585 $7,170 $7,170 $7,170
Total Expenditures $16,510 $33,020 $33,020 $33,020
Total FTE 0.2 FTE 0.4 FTE 0.4 FTE 0.4 FTE
Transfers - - - -
Other Budget Impacts TABOR Refunds $33,900 ($204,800) not estimated not estimated
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May 6, 2024 SB 24-126
Summary of Legislation
The bill makes modifications to the conservation easement tax credit program, extends the tax
years for which the credit is allowed, and increases the amount of the credit that can be issued,
as discussed below.
Extension of expiring provisions. The sections of state law that create the Conservation
Easement Oversight Commission and require the certification of conservation easement holders
are scheduled to expire on July 1, 2026. The bill extends these provisions indefinitely and
modifies commission membership.
Conservation easement tax credit. The bill allows the Department of Regulatory Agencies
(DORA) to issue $50 million in tax credit certificates for each tax year from 2025 and 2031. The
value of the credit is 90 percent of the value of the donated easement, as in current law. For tax
years 2027 and each year thereafter, the amount decreases to 80 percent of the value of the
donated easement. Beginning in tax year 2027, the bill removes the requirement that state
revenues exceed certain thresholds for taxpayers to claim a refundable tax credit and increases
the amount the tax may claim to $200,000 from $50,000 per tax year.
The bill directs DORA to prioritize and issue tax credit certificates in the order that claims are
received, and repeals the $15 million limit on the amount of tax credits that may be reserved
against future year caps. The bill also allows transferees to claim the credit against the insurance
premium tax, rather than the state income tax, subject to the same limitations that would
otherwise apply. Finally, beginning in tax year 2025, the holder of the conservation easement
may approve wind or solar energy facilities that are compatible with conservation values.
Background
Conservation easements. A conservation easement is a voluntary legal agreement between a
landowner and a charitable organization or government entity that permanently preserves
scenic or agricultural open space, natural habitat, or recreational areas for the benefit of the
public.
Tax credit. The state has offered a tax credit for the donation of conservation easements since
2000. Under current law, DORA can issue up to $45.0 million in tax credits through 2024. The tax
credit is nonrefundable, meaning that the amount claimed each year may not exceed the
taxpayer’s income tax liability. The excess may be carried forward to later tax years or transferred
(usually sold) to another taxpayer with greater tax liability.
The Division of Conservation in DORA reviews conservation easement donations and certifies tax
credits. Under current law enacted in House Bill 21-1233, tax credits are valued at 90 percent of
the value of the donated easement. The division may certify up to $45 million in credits in any
tax year, and certifications that would exceed one year’s cap may be reserved against future
caps. Demand for the credit increased significantly after the passage of HB 21-1233, and credits
are already reserved against the 2024, 2025, and 2026 caps. Page 3
May 6, 2024 SB 24-126
Conservation Easement Oversight Commission. The commission was created in
House Bill 08-1323 to advise the Division of Conservation and the Department of Revenue
(DOR) regarding conservation easement tax credits. The commission was extended in
House Bill 19-1264 following a 2017 sunset review, and is currently set to repeal on July 1, 2026.
Certification of conservation easement holders. HB 08-1323 also requires DORA to certify the
organizations that hold conservation easements through the application of qualifications and
identification of fraudulent holders. The certified holder program was extended in HB 19-1264
following a 2017 sunset review, and is currently set to repeal on July 1, 2026.
Assumptions
Based on the volume of certificate applications received since the passage of HB 21-1233, DORA
is expected to certify tax credits up to the allowed cap in each year for at least the first several
years for which the higher cap level established in this bill is in place. Under current law, the
reserve cap ($15 million) has already been reached through tax year 2026.
The Division of Conservation in DORA estimates it takes about two or three years for taxpayers
to claim the credit from the time the division receives an application from the taxpayer. This
includes the time for the application process to be completed and the period the taxpayer was
placed on the waitlist. The fiscal note assumes, on average, the additional credits certified under
this bill will be claimed beginning at least one year from when the division completes the
application. For example, credits applications approved by the division in calendar year 2025
will begin to be claimed by taxpayers beginning in tax year 2026.
Further, the fiscal note assumes for tax credits issued in tax years 2025 and 2026 will be claimed
at lower rates until tax year 2027, as taxpayers hold on to these credits for the larger refund
option allowed beginning on January 1, 2027. Credits for tax years 2027 and each year thereafter
will be claimed at higher rate, approximately 70 percent in first year of eligibility and the
remaining balance claimed in the second or third years.
State Revenue
On net, the bill increases state revenue by $33,900 in FY 2024-25 and decreases state revenue by
$204,800 in FY 2025-26, $3.5 million in FY 2026-27 and by similar amounts through at least
FY 2033-34. The bill decreases General Fund income tax revenue and increases Conservation
Cash Fund fee revenue as discussed below.
General Fund. Based on the assumptions above, the bill decreases income tax revenue, which is
subject to TABOR. Increasing the maximum amount of tax credits that may be certified annually
will decrease state revenue by $250,000 in FY 2025-26, $3.5 million in FY 2026-27, and by similar
amounts each year thereafter until at least FY 2033-34. The actual timing of revenue reductions
may vary across fiscal years depending on the pace of transfers and the timing when credits are
claimed. Page 4
May 6, 2024 SB 24-126
Fee impact on individuals and businesses. Colorado law requires legislative service agency
review of measures which create or increase any fee collected by a state agency. This bill
increases tax credit certification fees, with total revenue generate to the Conservation Cash Fund
based on the assumed number of new certifications each year. The fee revenue is subject to
TABOR. These fee amounts are estimates only, actual fees will be set administratively by DORA
based on cash fund balance, program costs, and the number of tax credit applications subject to
the fee. Table 2 below presents the fee impact of SB 24-126 for FY 2024-25 and FY 2025-26.
Table 2
Fee Impact of SB 24-126 on Individuals and Businesses
Fiscal Year Type of Fee
Current
Fee
Number
Newly
Affected Fee Impact
FY 2024-25 Tax Credit Certification Fee $11,300 3 $33,900
FY 2025-26 Tax Credit Certification Fee $11,300 4 $45,200
State Expenditures
The bill increases state expenditures in DORA by $16,500 in FY 2024-25, $33,000 in FY 2025-26,
and by similar amounts through FY 2031-32. Expenditures are paid from the Conservation Cash
Fund. Expenditures are shown in Table 3 and detailed below.
Table 3
Expenditures Under SB 24-126
FY 2024-25 FY 2025-26 FY 2026-27
Department of Regulatory Agencies
Personal Services $12,669 $25,338 $25,338
Operating Expenses $256 $512 $512
Centrally Appropriated Costs
1
$3,585 $7,170 $7,170
Total Costs $16,510 $33,020 $33,020
Total FTE 0.2 FTE 0.4 FTE 0.4 FTE
1
Centrally appropriated costs are not included in the bill's appropriation.
Department of Regulatory Agencies. The bill requires the addition of 0.4 FTE personnel in
DORA to review additional applications for tax credit certificates. Personal service costs in
FY 2024-25 are prorated to reflect an assumed January 1, 2025, start date, and include standard
operating expenses, and capital outlay costs are paid from the Conservation Cash Fund. Page 5
May 6, 2024 SB 24-126
Department of Revenue. Beginning in FY 2025-26, the bill increases department workload to
process tax credit claims. This workload increase is assessed as minimal and can be
accomplished within existing appropriations.
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 increase the amount of state revenue required to be
refunded to taxpayers by the amount shown in the State Revenue section above for FY 2024-25,
and decrease the amount expected to be refunded in FY 2025-26. This estimate assumes the
March 2024 LCS revenue forecast, and estimates are not available after FY 2025-26.
The bill decreases General Fund revenue subject to TABOR, which will decrease the amount of
General Fund revenue required to be refunded to taxpayers with no net impact on the amount
available for the General Fund budget. The bill also increases cash fund revenue subject to
TABOR, which will increase the amount of General Fund revenue required to be refunded to
taxpayers, correspondingly decreasing the amount available for the General Fund budget.
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 2024-25, the bill requires and includes an appropriation of $12,925 from the Conservation
Cash Fund to DORA, and 0.2 FTE.
State and Local Government Contacts
Agriculture Governor's Office of Boards and Commissions
Information Technology Natural Resources
Personnel Regulatory Agencies
Revenue
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