SB 25-307
Fiscal Note
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
SB 25-1054: DECARBONIZATION TAX CREDITS ADMIN CASH FUND
Prime Sponsors:
Sen. Amabile; Kirkmeyer
Rep. Bird; Sirota
Published for: Senate Appropriations
Drafting number: LLS 25-1054
Fiscal Analyst:
David Hansen, 303-866-2633
david.hansen@coleg.gov
Version: Initial Fiscal Note
Date: April 23, 2025
Fiscal note status: The fiscal note reflects the introduced bill, which was recommended by the Joint
Budget Committee.
Summary Information
Overview. The bill limits money credited to the Decarbonization Tax Credits Administration Fund to net
oil and gas severance tax collections in FY 2024-25 and FY 2025-26 and makes cash fund transfers in both
years.
Types of impacts. The bill is projected to affect the following areas on a one-time basis:
State Transfers
Appropriations. No appropriation is required.
Table 1
State Fiscal Impacts
Type of Impact
Current Year
FY 2024-25
Budget Year
FY 2025-26
Out Year
FY 2026-27
State Revenue $0 $0 $0
State Expenditures $0 $0 $0
Transferred Funds $2.5 million $2.5 million $0
Diverted Funds $5.0 million $0 $0
Change in TABOR Refunds $0 $0 $0
Change in State FTE 0.0 FTE 0.0 FTE 0.0 FTE
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April 23, 2025 SB 25-307
Table 1A
State Transfers
Fund Source
Current Year
FY 2024-25
Budget Year
FY 2025-26
Out Year
FY 2026-27
Energy and Carbon Management
Cash Fund
-$2.5 million $2.5 million $0
Decarbonization Tax Credits
Administration Fund
$2.5 million -$2.5 million $0
Net Transfer $0 $0 $0
Table 1B
State Diversion
1
Fund Source
Current Year
FY 2024-25
Budget Year
FY 2025-26
Out Year
FY 2026-27
General Fund (via the Decarbonization
Tax Credits Administration Fund)
-$5.0 million $0 $0
Various Severance Tax Cash Funds $5.0 million $0 $0
Net Transfer $0 $0 $0
1
The amount diverted from the Decarbonization Tax Credits Administration Fund is based on the
March 2025 LCS Economic and Revenue Forecast. The Joint Budget Committee is using the OSPB
March 2025 forecast for budget balancing purposes. Under that forecast, the bill will decrease the
amount of money allocated to the Decarbonization Tax Credits Administration Fund by $23.2 million in
FY 2024-25, and decrease the unexpended portion that spills over to the General Fund by about $21
million in the current FY 2024-25. No diversion is expected in FY 2025-26 under either forecast.
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April 23, 2025 SB 25-307
Summary of Legislation
For FY 2024-25 and FY 2025-26, the bill specifies that money credited to the Decarbonization
Tax Credits Administration (DTCA) Fund from severance tax revenue cannot exceed net oil and
gas severance tax revenues. The bill also transfers $2.5 million from the Energy and Carbon
Management Cash Fund to the DTCA Fund in FY 2024-25, then transfers an equal amount of
money from the DTCA Fund back to the Energy and Carbon Management Cash Fund in
FY 2025-26.
Background
Severance Tax on Oil and Natural Gas
Colorado imposes a severance tax on the value of oil and natural gas that is severed, or
removed, from the earth and sold. Taxpayers are allowed a nonrefundable credit against their
severance tax liability based on the amount of property taxes they pay. This credit is commonly
referred to as the ad valorem credit.
House Bill 23-1272
HB 23-1272 modified the severance tax ad valorem credit and created the DTCA Fund to offset
the cost of several income tax credits administered by the Colorado Energy Office. The bill
lowered the value of the ad valorem credit from tax year 2024 to tax year 2026, and required the
resulting increase in severance tax revenue to be distributed to the DTCA Fund. After paying for
administrative costs related to the bill’s income tax credits and accounting for a minimum
required fund balance, the unexpended money in the fund is transferred to the General Fund on
the last day of FY 2023-24, FY 2024-25, and FY 2025-26. Additional severance tax revenue
received after FY 2025-26 attributable to the decreased AV credit will remain in the cash fund
and be available for ongoing administrative expenses. Any amount remaining in the fund is
scheduled to be transferred to the General Fund on July 1, 2036. State law does not currently
specify what occurs in a situation where the incremental increase in severance tax revenue due
to the reduced ad valorem credit exceeds net oil and gas revenue in a fiscal year due to refunds
of prior year’s taxes.
OSPB Severance Tax Forecast
The JBC selected the March 2025 forecast from the Office of State Planning and Budgeting
(OSPB) for FY 2025-26 budget balancing. The OSPB forecast anticipates net oil and gas
severance tax revenue of just $0.3 million in FY 2024-25, excluding interest, and $23.5 million in
required distributions to the DTCA Fund due to the incremental increase in severance tax
revenue under HB 23-1272. Based on the forecast, current law would require the Department of
Revenue (DOR) to claw back funds from either the General Fund or other severance tax cash
funds in order to make the distribution. Page 4
April 23, 2025 SB 25-307
State Transfers
In FY 2024-25, the bill requires the Treasurer to transfer $2.5 million from the Energy and Carbon
Management Cash Fund to the DTCA Fund. In the following year FY 2025-26, $2.5 million is then
transferred back from the DTCA Fund back to the Energy and Carbon Management Cash Fund.
These transfers are shown in Table 1A above.
State Diversions
Based on the March 2025 Legislative Council Staff Revenue Forecast, net oil and gas severance
tax revenue is expected to total $18.6 million, less than the estimated $23.5 million increase in
severance tax revenue due to HB 23-1272’s reduction in the ad valorem credit. Limiting money
credited to the DTCA Fund to net oil and gas severance tax revenue will reduce the estimated
distribution of severance tax revenue to the fund in FY 2024-25 by about $5 million and increase
distributions to various other severance tax funds by an equivalent amount, as shown in
Table 1B above.
Because unexpended money in the fund must be transferred to the General Fund at the end of
FY 2024-25 under current law, reducing the distribution to the DTCA Fund will correspondingly
reduce this required General Fund transfer by $5 million. In FY 2025-26, net oil and gas
severance tax revenue is forecast to exceed money credited to the DTCA Fund, and no change in
distribution is expected.
Note: under the OSPB March 2025 Forecast, the bill will decrease the amount of money
allocated to the Decarbonization Tax Credits Administration Fund by $23.2 million in FY 2024-25,
and decrease the unexpended portion that spills over to the General Fund by about $21 million
in the current FY 2024-25. Under the OSPB forecast, the transfer from the Energy and Carbon
Management Cash Fund is necessary to pay administrative costs since the bill limited the
distribution to less than the expected costs supported from the Decarbonization Tax Credits
Administration Fund.
Effective Date
The bill takes effect upon signature of the Governor, or upon becoming law without his
signature.
State and Local Government Contacts
Office of State Planning and Budgeting Page 5
April 23, 2025 SB 25-307
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.