HB 25-1216
Fiscal Note
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
HB 25-1216: STATE AGENCIES IMPLEMENT ZERO-BASED BUDGETING
Prime Sponsors:
Rep. Brooks
Sen. Carson
Published for: House Appropriations
Drafting number: LLS 25-0802
Fiscal Analyst:
Emily Dohrman, 303-866-3687
Anna Gerstle, 303-866-4375
Version: Initial Fiscal Note
Date: February 26, 2025
Fiscal note status: The fiscal note reflects the introduced bill.
Summary Information
Overview. The bill requires that all state agencies implement zero-based budgeting for their budget
requests, on a schedule specified in the bill.
Types of impacts. The bill is projected to affect the following areas on an ongoing basis:
State Expenditures
Appropriations. The bill states that implementation shall not require further appropriations; however, for
FY 2025-26, this analysis estimates that the bill will increase state agency workload and costs, and thus
require an appropriation of $246,095 to multiple state agencies.
Table 1
State Fiscal Impacts
Type of Impact
1
Budget Year
FY 2025-26
Out Year
FY 2026-27
Out Year
FY 2027-28
State Revenue $0 $0 $0
State Expenditures $296,639 $2,155,472 $3,652,575
Transferred Funds $0 $0 $0
Change in TABOR Refunds $0 $0 $0
Change in State FTE 2.5 FTE 18.5 FTE 32.5 FTE
1
Fund sources for these impacts are shown in the tables below. Page 2
February 26, 2025 HB 25-1216
Table 1A
State Expenditures
Fund Source
Budget Year
FY 2025-26
Out Year
FY 2026-27
Out Year
FY 2027-28
General Fund $215,247 $1,735,949 $2,953,874
Cash Funds $30,848 $50,196 $50,196
Federal Funds $0 $0 $0
Centrally Appropriated $50,544 $369,327 $648,504
Total Expenditures $296,639 $2,155,472 $3,652,575
Total FTE 2.5 FTE 18.5 FTE 32.5 FTE
Summary of Legislation
The bill requires that all state agencies implement zero-based budgeting for their budget
requests beginning with budget requests submitted in FY 2027-28, except that the Department
of Revenue, Department of Education, and Department of Transportation begin in FY 2026-27.
Zero-based budgeting is a method in which all new and existing expenses must be justified and
every function must be analyzed for its needs and costs.
The bill also requires that:
the Office of State Planning and Budgeting develop and implement training on zero-based
budgeting, and annually report to the Joint Budget Committee (JBC) on the effectiveness of
zero-based budgeting;
the Office of the State Auditor (OSA) conduct an audit of each state agency to ensure
compliance with the zero-based budgeting requirements;
all budget requests that implement zero-based budgeting be published on the General
Assembly’s website; and
all work associated with the bill’s requirements occur without further appropriations.
Assumptions
The bill specifies that all work associated with implementing the bill must occur without further
appropriations; however, this analysis identifies additional expenditures that are required to
implement the bill. Appropriations are at the discretion of the General Assembly.
Independent judicial agencies are assumed to be excluded from the requirements, except that
the Office of Administrative Services for Independent Agencies in the Judicial Department is
assumed to be included. Page 3
February 26, 2025 HB 25-1216
State Expenditures
The bill increases state expenditures by about $297,000 in FY 2025-26 and $2.2 million in
FY 2026-27, and $3.7 million beginning in FY 2026-27. These costs will be incurred in all state
departments, as shown in Table 2 and described below. Costs are paid from the General Fund,
cash funds, and federal funds. A breakdown of individual agency costs is available upon request.
Table 2
State Expenditures
Department
Budget Year
FY 2025-26
Out Year
FY 2026-27
Out Year
FY 2027-28
FTE When Fully
Implemented
Agriculture - $56,866 $100,393 1.0
Corrections - $93,654 $150,589 1.5
Early Childhood - $56,866 $100,393 1.0
Education $93,654 $150,589 $150,589 1.5
Governor’s Office $109,331 $291,672 $449,266 4.0
Health Care Policy and Financing - $93,654 $150,589 1.5
Higher Education - $93,654 $150,589 1.5
Human Services - $93,654 $150,589 1.5
Judicial - $56,866 $100,393 1.0
Labor and Employment - $56,866 $100,393 1.0
Law - $56,866 $100,393 1.0
Local Affairs - $56,866 $100,393 1.0
Military Affairs - $36,788 $50,196 0.5
Natural Resources - $56,866 $100,393 1.0
Personnel and Administration - $56,866 $100,393 1.0
Public Health and Environment - $93,654 $150,589 1.5
Public Safety - $93,654 $150,589 1.5
Regulatory Agencies - $56,866 $100,393 1.0
Revenue $56,866 $100,393 $100,393 1.0
State - $36,788 $50,196 0.5
Transportation $36,788 $50,196 $50,196 0.5
Treasury - $36,788 $50,196 0.5
Legislative Department - JBC - $290,040 $619,972 6.0
Legislative Department - OSA - $88,500 $324,500 0.0
Total Costs
1
$296,639 $2,155,472 $3,652,575 32.5 FTE
1
Expenditure amounts include centrally appropriated costs. Page 4
February 26, 2025 HB 25-1216
State Department Budget Offices
All affected state departments will incur additional costs to implement zero-based budgeting
annually. The fiscal note assumes that costs begin in FY 2025-26 for the Department of Revenue,
Department of Education, and Department of Transportation, in advance of the November 2026
budget request deadline. For all other state departments, the fiscal note assumes that costs
begin in FY 2026-27, in advance of the November 2027 budget request deadline. Further, the
fiscal note assumes a half year impact in the first year of department costs.
Costs are summarized in Table 2 above. The fiscal note assumes that each state department falls
into one of three tiers, and assigns each tier a standard cost and FTE amount, based on a Budget
Analyst II position and standard operating and capital outlay costs:
small or with a less complex budget (about $50,000, or 0.5 FTE);
a medium level of budget size and complexity ($100,000, or 1.0 FTE); and
very complex budgets ($150,000, or 1.5 FTE).
Governor’s Office
The Office of State Planning and Budgeting in the Governor’s Office requires 1.0 FTE in
FY 2025-26 (prorated to reflect a January 2026 start date), 2.0 FTE in FY 2026-27, and 3.0 FTE
beginning in FY 2027-28 to develop and offer training to department staff on zero-based
budgeting, support departments in the development of more complex budgets. The FTE phases
in to develop the training and processes in FY 2025-26, support three departments in
implementing the new process and offer preemptive training to other agencies in FY 2026-27,
and support all state departments and report to the Joint Budget Committee beginning in
FY 2027-28.
The Governor’s Office also requires the costs associated with 1.0 FTE beginning in FY 2026-27, as
discussed in the other state departments section below, to prepare zero-based budgets for the
Office of Information Technology, the Office of Economic Development and International Trade,
and the Colorado Energy Office.
Legislative Department
Office of the State Auditor
The Office of the State Auditor will incur additional costs to audit all state departments to ensure
proper use of zero-based budgeting. Costs are estimated at $88,500 in FY 2026-27 and $324,500
per year beginning in FY 2027-28, based on 750 hours and 2,750 hours, respectively, at a
standard rate of $118 per hour.
Page 5
February 26, 2025 HB 25-1216
Joint Budget Committee Staff
The Joint Budget Committee Staff in the Legislative Department requires 3.0 FTE in FY 2026-27
and 6.0 FTE beginning in FY 2027-28 to review and analyze more detailed and complex
zero-based budget proposals for all state departments. Costs assume the current starting salary
for a JBC staff analyst, and standard operating capital outlay costs.
Legislative Council Staff
The bill also increases workload for Legislative Council Staff to post department budget
proposals on the General Assembly website. No change in appropriations is required.
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 1 above.
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming
no referendum petition is filed.
State Appropriations
The bill states that implementation shall not require further appropriations; however, for
FY 2025-26, the fiscal note estimates that the bill requires the following General Fund
appropriations:
$90,465 to Governor’s Office, and 0.9 FTE;
$77,815 to the Department of Education, and 0.8 FTE;
$46,967 to the Department of Revenue, and 0.5 FTE.
The bill also requires an appropriation of $30,848, and 0.3 FTE, to the Department of Transportation from
the State Highway Fund. Page 6
February 26, 2025 HB 25-1216
Departmental Difference
State departments estimated that the costs to implement the bill for each agency would range
from minimal, absorbable workload up to 8.0 FTE and a cost of $1.0 million, with significant
variation in the assumptions used. The fiscal note applies a standard methodology based on the
size and complexity of each department’s budget.
State and Local Government Contacts
All State Agencies
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.