The bill modifies existing laws to ensure that the tax credits remain available without hindering the general assembly's ability to allocate funds from the general fund. It clarifies that the adjustments to the income tax credits are intended to maintain financial stability while enhancing taxpayer support for families. An important aspect of the bill is that any increase in state revenue resulting from these modifications would be considered minimal and incidental, thereby exempting it from requiring voter approval under existing tax policy laws.
House Bill 1335 aims to modify the availability of certain income tax credits in Colorado, specifically the family affordability tax credit and the expanded earned income tax credit. Under the bill, the determination of whether these tax credits are available and the amounts accessible are contingent upon the compound annual growth rate (CAGR) of specified state revenue for the fiscal year 2024-25. This legislative measure was deemed necessary to ensure that revenue projections align with the original intent of the general assembly when the credits were created.
Discussions surrounding HB 1335 have elicited generally favorable opinions among supporters who view the modifications as crucial for bolstering family financial support through attainable tax credits. Advocates regarding fiscal responsibility emphasize that the adjustments will help prevent any unintended limitations on future appropriations by the legislature. Conversely, there may be concerns among stakeholders about the conditionality of the tax credits and the potential for complexity in future tax calculations.
One of the notable points of contention raised during discussions of the bill was the potential uncertainty regarding the future availability of the tax credits, dependent on revenue growth rates. Some critics worry that linking credit availability strictly to state revenue projections could leave some families at risk of losing financial assistance unexpectedly. Overall, while the intent is to facilitate better financial support mechanisms, the complexity of applying CAGR as a determining factor raises questions about its practical implications for taxpayers.