J_SRC_2020A 01/24/2020 07:32:37 AM Committee Summary

Jennifer Berman, OLLS, explained that the definition of "alternative fuel" was formerly part of the Colorado Clean Vehicle Fleet program created in section 25-7-106.8. However, in 2002, all other provisions of that statute were repealed. What remains is a stand-alone definition that is not referred to anywhere else in article 7 of title 25. Of course, the definition in 25-7-106.8 is cross-referenced in four other titles in statute. She recommended that the definition be moved from 25-7-106.8 into its new forever home, 24-30-1104, in a specific provision regarding the DPA motor vehicle fleet system. The bill updates the other cross-references to reference 24-30-1104 (and not 25-7-106.8).

Pierce Lively, OLLS, testified before the committee, explaining that, on the recommendation of the TEEISC, the bill ends the previous taxed income gain deduction for C-corporations as of January 1, 2021. He explained that under the deduction, C corporations, when calculating their Colorado taxable income, may deduct from their federal taxable income any income or gain that was taxed by Colorado prior to 1965, to the extent that such income or gain is included in their current federal taxable income. However, to claim this deduction, a C corporation must include the income or gain it intends to deduct in its current federal taxable income, and the C corporation must have been taxed by Colorado on the same income or gain prior to 1965. Therefore, it is unlikely that any C corporation could currently claim this deduction.

Pierce Lively, OLLS, testified before the committee, explaining that on the recommendation of the TEEISC, the bill repeals the pre-1987 net operating loss deduction. Per the statute, individuals, estates, and trusts were allowed to deduct Colorado pre-1987 net operating lossess carried forward from tax years beginning prior to January 1, 1987. However, the deduction was only available for 15 years; thus, no individual, estate, or trust has been able to claim the deduction since 2002.

Pierce Lively, OLLS, testified before the committee, explaining that, on the recommendation of the TEEISC, the bill repeals the residents of bordering states sales tax exemption because no one has been able to qualify for it in more than 50 years, since 1967.

Under the exemption, individuals who are from states that border Colorado and that do not have a retail sales tax are exempt from state sales tax. The OSA found that, at the time the exemption was put into law, Nebraska did not have a retail sales tax. They, however, do now. So no one can qualify for this exemption because all of the states that border Colorado have a retail sales tax.

Pierce Lively, OLLS, testified before the committee, explaining that, on the recommendation of the TEEISC, the bill repeals the nonprofit transit agency fuel excise tax exemption. Under the exemption, nonprofit transit agencies are exempt from the fuel excise tax on liquefied petroleum gas and natural gas for vehicles that are used for transit purposes and only use liquefied petroleum gas and natural gas. However, the OSA found that there are no vehicles that use liquefied petroleum gas in the United States, and only 15% of vehicles use natural gas or natural gas blends. Which likely explains why the exemption has never been claimed since it was enacted in 1994.

Pierce Lively, OLLS, testified before the committee, explaining that, on the recommendation of the TEEISC, the bill repeals the crop hail insurance premium tax exemption.

Nicole Myers, OLLS, testified before the committee, explaining that statute limits the amount of unlimited reserves that may remain in a cash fund at the end of a fiscal year. The definition of "unlimited reserves" excludes revenue credited to a cash fund that is estimated to be derived from non-fee sources. The statute further specifies that when calculating the estimated revenue from non-fee sources, the estimate is required to be an amount "equal to the portion of total revenues received from non-fee sources in the prior fiscal year." It's the phrase "prior fiscal year" that is causing confusion among executive branch agencies. Since the statute was enacted over 20 years ago, the Office of the State Controller has directed agencies to use "the closing fiscal year" when calculating this revenue; however, some agencies read the statute as "the year prior to the closing fiscal year." While OLLS interprets the statute to read as "the year prior to the closing fiscal year," but acknowledges that this has not been the prevailing interpretation. Staff also recognizes that the OSC's interpretation is more logical. The bill to incorporate OSC's change is meant to correct a defect in the law and to eliminate antiquated language and bring the statute into harmony with modern conditions.

Bob Jaros, the State Controller, also testified, explaining generally that statute dictates what is a fee and what is not. The fees in the non-fee sources are the fees set by the department. If, at the end of the prior fiscal year, a cash fund's reserve is above the limit, the department must reduce the fee or decrease expenditures.

Jane Ritter, OLLS, testified before the committee, explaining that the committee had previously authorized the drafting of an omnibus clean-up bill. The bill summary reflects the changes made in each section. Ms. Ritter suggested the committee update the title of the bill to make it clear that these changes are within the committee's statutory charge.

The committee had a robust discussion on the bill and suggested conceptual amendments to remove various sections of the bill.                     

The committee has no plans to meet again this session.