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April 23, 2024 SB 24-214
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 24-1175
Sen. Hansen
Rep. Amabile; McCormick
Date:
Bill Status:
Fiscal Analyst:
April 23, 2024
Senate Transportation & Energy
Matt Bishop | 303-866-4796
Emily Dohrman | 303-866-3687
Bill Topic: IMPLEMENT STATE CLIMATE GOALS
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☒ State Transfer
☒ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
The bill creates a new Office of Sustainability, modifies the Geothermal Energy Grant
Program and Energy Code Board administration, clarifies other existing tax credits,
and makes an adjustment to the flow of money between funds to pay for
administrative expenses for various tax credits. These changes increase state
expenditures, transfer money from the General Fund starting in FY 2024-25, and divert
money between cash funds starting in the current FY 2023-24.
Appropriation
Summary:
For FY 2024-25, the Colorado Energy Office requires an appropriation of $958,596. No
further appropriation is required, as costs are paid from continuously appropriated
cash funds. See State Appropriations section.
Fiscal Note
Status:
The fiscal note reflects the introduced bill.
Table 1
State Fiscal Impacts Under SB 24-214
Budget Year
FY 2024-25
Out Year
FY 2025-26
Revenue - -
Expenditures Sustainability Revolving Fund $540,230 -
Decarbonization Tax Cred. Admin. Cash Fund $1,022,807 -
Various Cash Funds ($1,022,807) -
Total Expenditures $540,230 -
Transfers General Fund ($540,230) -
Sustainability Revolving Fund $540,230 -
Net Transfer $0 -
Other Budget Impacts - -
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April 23, 2024 SB 24-214
Summary of Legislation
The bill creates a new Office of Sustainability, modifies the Geothermal Energy Grant Program
and Energy Code Board administration, clarifies some existing tax credits, and makes an
adjustment to the flow of money between funds to pay for administrative expenses for various
tax credits.
Office of Sustainability. The bill creates the Office of Sustainability in the Department of
Personnel and Administration to streamline sustainability practices across state agencies. This
includes developing baseline metrics for reducing negative environmental impacts, setting goals
for state government, tracking financial savings from implementing sustainability policies,
seeking federal funding to support sustainability practices, and facilitating sustainability
infrastructure projects with other state agencies. Such projects may include electric vehicle
charging infrastructure, energy efficiency, water use reduction, and waste diversion.
In FY 2024-25, the bill creates the Sustainability Revolving Fund for the office to replace the
state’s gas- and diesel-powered equipment located in the ozone nonattainment area on the
front range. It also creates the Inflation Reduction Act Elective Pay Cash Fund, which consists of
money received by DPA under the federal act’s elective pay provisions, and which may be used
to coordinate state agencies’ applications for elective pay funding and other administration of
the new office.
Geothermal Energy Grant Program. The bill modifies the provision of this existing grant
program administered by the Colorado Energy Office (CEO) by adjusting the grantmaking
priorities and allowing the CEO to use grant program money to support outreach activities.
Energy Code Board. House Bill 22-1362 established the Energy Code Board to develop model
codes for voluntary adoption by local governments and state agencies. This bill extends the
deadline for the board to produce a model low energy and carbon code from June 1, 2025, to
September 1, 2025, and reallocates existing transfers to the board’s cash fund by allowing the
board to spend an additional $125,000 on board costs instead of grants to local governments.
Industrial Clean Energy Tax Credit. The bill increases the maximum tax credit per taxpayer
from $5 million to $8 million, broadens the scope of industrial studies that are considered
qualified projects, clarifies that project developers may qualify for the credit, and disallows
taxpayers from receiving grant money from the industrial and manufacturing options clean air
grant program for the same project for which they received the tax credit.
The bill does not change the aggregate amount of tax credits allowed to be claimed, which is
limited to $16 million per year for tax years 2024 to 2028 and $24 million per year from 2029 to
2032.
Geothermal Expenditures Tax Credit. The bill removes the requirement that the tax credit may
not exceed 30 to 50 percent of qualifying expenditures made to evaluate and develop a
geothermal energy resource, and allows the CEO to determine the maximum credit amount. The
bill expands the type of project that is eligible for the credit to include studies, geothermal
workforce trainings, apprenticeships, and other strategic initiatives. Page 3
April 23, 2024 SB 24-214
The bill does not change the aggregate amount of tax credits allowed to be claimed, which is
limited to $35 million in all years the tax credit is allowed.
Geothermal Production Tax credit. The bill removes the maximum tax credit amount of
$1 million per year per taxpayer, allows the CEO to modify the size of the tax credit, and requires
the CEO to annually evaluate the effectiveness of the tax credit.
Heat pump technology and thermal energy network income tax credit. The bill allows the
CEO to modify or create tax credit maximums and removes the tax credit maximum for
nonresidential buildings, which allowed tax credits to be granted for each increment of four tons
of heat up to 100 tons.
Tax administration. Under current law, a portion of increased severance tax revenue from
changes made in House Bill 23-1272 is used to pay for administrative costs in the CEO and the
Department of Revenue (DOR), except that the departments may use other cash funds in
FY 2024-25 and those funds will be repaid by a diversion from the Decarbonization Tax Credits
Administration Cash Fund. This bill changes the deadline for this diversion by about a year, from
July 1, 2025, to June 30, 2024.
Background
The federal Inflation Reduction Act of 2022 created a number of tax credits related to energy
production, clean fuels, and carbon sequestration. Entities that claim the credits can use elective
pay to make the credits effectively refundable. This bill establishes a coordinating method for
state agencies to apply for elective pay and uses any such payments to fund the new office.
State Revenue
If the bill causes state agencies to receive more elective pay under the Inflation Reduction Act,
revenue will increase to the Inflation Reduction Act Elective Pay Cash Fund beginning in
FY 2024-25. The amount of revenue depends on tax credit-eligible projects pursued by state
agencies and cannot be estimated here.
By removing the limit of $1 million per taxpayer for the geothermal production tax credit, the
bill may reduce General Fund revenue beginning in FY 2029-30, when the first tax credits are
expected to be claimed.
The bill potentially increases state revenue to the Sustainability Revolving Fund and the Inflation
Reduction Act Elective Pay Cash Fund from gifts, grants, or donations; however, no sources have
been identified at this time. Gifts, grants, and donations are exempt from TABOR revenue limits.
State Transfers and Diversions
In FY 2024-25, the bill transfers $540,230 from the General Fund to the Sustainability Revolving
Fund. This transfer will occur on July 1, 2024. Page 4
April 23, 2024 SB 24-214
In addition, the bill diverts funds from the Decarbonization Tax Credits Administration Cash
Fund to various cash funds in the CEO and CDPHE sooner, in the current FY 2023-24, rather than
in FY 2025-26, by moving the date to repay the various cash funds to June 30, 2024 from the
current July 1, 2025. Based on the costs identified in the fiscal note for HB 23-1272, this
diversion is estimated to be $1.2 million. The bill eliminates an analogous diversion in
FY 2025-26.
State Expenditures
The bill increases expenditures by $540,230 in FY 2024-25 in DPA from the Sustainability
Revolving Fund. It also affects workload in the Colorado Energy Office. Expenditures are shown
in Table 2 and detailed below.
Table 2
Expenditures Under SB 24-214
FY 2024-25 FY 2025-26
Department of Personnel and Administration
Equipment Replacement $400,000 -
Administrative Costs $140,230 -
Total Cost $540,230 -
Department of Personnel and Administration. The bill includes funding to replace equipment
in the ozone nonattainment area and to administer the new office. Administrative costs include
personal services, standard operating and capital outlay costs, and employee benefits. Costs are
shown for FY 2024-25 only. However, expenditures may occur over multiple fiscal years as the
funds are continuously appropriated to the department, and additional funding will be required
in future years to fulfil the office’s other duties. This depends on departmental priorities and
how the office is organized, and will be addressed through the annual budget process.
Colorado Energy Office. The CEO currently receives funding of $1,022,807 and 3.1 FTE, which is
$958,596 plus centrally appropriated costs, for its role in tax credit administration. While this bill
does not change the overall expenditures, it requires that these costs be paid from the
Decarbonization Tax Credits Administration Cash Fund, which is subject to annual appropriation,
rather than from continuously appropriated sources since the bill will no longer repay those
funds via a diversion after the current FY 2023-24.
Modifications to the Geothermal Energy Grant Program and the Energy Code Board affect CEO’s
workload to administer these programs. As the bill does not affect the amount of funding
available for either program, any net change in workload is expected to be minimal.
Local Government
Revenue and expenditures may decrease in local governments to the extent that less grant
funding is available from the Energy Code Board. Page 5
April 23, 2024 SB 24-214
Effective Date
The bill takes effect upon signature of the Governor, or upon becoming law without his
signature.
State Appropriations
The bill requires an appropriation of $958,596 from the Decarbonization Tax Credits
Administration Cash Fund to the Colorado Energy Office, and 3.1 FTE. This represents
expenditures that would otherwise be paid from cash funds continuously appropriated to the
office.
No further appropriation is required as the following cash funds are continuously appropriated:
the Sustainability Revolving Fund to the Department of Personnel and Administration;
the Inflation Reduction Act Elective Pay Cash Fund to the Department of Personnel and
Administration; and
the Energy Fund to the Colorado Energy Office.
State and Local Government Contacts
Colorado Energy Office Personnel Revenue
Treasury
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.