Colorado Tax Legislation 2024

Colorado Tax Legislation 2024

This post summarizes Colorado Tax Legislation 2024. It was drafted with assistance from Wagner Morgan Strategies.

• 705 bills were introduced in the 2024 session, 472 in the House and 233 in the Senate.
• This was one of the highest total bills introduced in recent sessions.
• Track the Governor’s action on all finalized bills HERE

2024 was the year of ‘the deal’ at the Capitol

• The 2024 Colorado legislative session made historic accomplishments on taxation, education support, transportation funding, energy development, and air quality, thanks in part to some creative deal-making.
• Reform of state income taxes and local property taxes were bipartisan efforts, while legislation on transportation and energy development was less so.
• The Democratic majority in both chambers drove legislation on land use, housing, and gun control. However, that did not guarantee that those bills passed in the same form as initially envisioned by their sponsors or that all those Democratic bills passed.
• The biggest deals involved both chambers of the legislature, members of both political parties, Gov. Jared Polis, and essential outside interest groups.

Here’s a quick look at tax issues

Local property taxes

• Introduced May 6 and finally passed in the waning hours of the last day of the session, SB 24–233 reduces valuations for residential and commercial property, makes other changes in the tax system, and creates separate valuation systems for school districts and all other local governments.
• Proponents hope the bill will mollify conservative interest groups pushing ballot measures that could damage state and local finances.

State taxes

• Polis has long advocated for reducing state income tax rates.
• Democratic legislators have resisted that idea while simultaneously devising creative ways to tap the TABOR surplus to fund policy goals through mechanisms such as tax credits.
• SB 24–228 tweaks the methods to pay TABOR refunds, starting with the 2023–24 surplus by reinstating a temporary income tax cut.
• For the 2024–25 surplus, there will be a temporary cut in state sales taxes.
• Other bills that passed will reduce the TABOR surplus.
• $136 million expansion of the earned income tax credit for lower-income taxpayers (HB 24–1134),
• $684 million for other credits for lower-income Coloradans with children (HB 24–1311).

Energy development and transportation funding

• Polis brokered a deal under which Democratic legislators killed several air quality bills the oil and gas industry opposed in exchange for the industry pulling the plug on some ballot measures.
• In exchange, lawmakers passed SB 24–229, which sets new emissions standards and industry regulation practices, and SB 24–230, which assesses fees on oil and gas production, which is projected to raise $109 million — to be used primarily for transportation projects, a top Polis priority.
• The latter bill may face legal challenges over whether there is a proper nexus between the fee and the use of the money for transit.

The Budget

• The budget included $42.88 billion in total spending, including $16 billion in GF, $11.52 billion in cash funds, and $12.52 billion in federal funds.
• Key takeaways from the budget include:
  • Almost two-thirds of the total increase was taken by HCPF and DHS.
  • Nearly $70 million was appropriated for competency evaluation and restoration.
  • 3 percent raises for state employees, along with approval of a step pay system
  • 2 percent increase in community provider rates, less than JBC originally approved
  • Higher education is funded at $132 million above the governor’s request
  • Resident tuition increases are capped at 3 percent
  • Non-resident tuition increases are capped at 4 percent.
• The JBC worked hard to fund its priorities, some of the governor’s pet projects, and the committee dug into the couch cushions to find the “change” to accomplish those things.
• As staff Director Craig Harper noted in a May 1 memo to the JBC:
  • The 2024–25 budget “uses approximately $457.8 million in one-time funding to support General Fund expenditures.
  • Assuming that the vast majority of the $457.8 million in one-time money is going to ongoing uses, backfilling that amount with ongoing revenues in FY 2025–26 and beyond will be challenging.”

Interim Work

• Interim committees authorized to meet during the 2024 interim include a few new ones and those that occur yearly. Note that these committees are separate from the year-round Committees, such as the Audit Committee or the Joint Budget Committee, all authorized to meet during the 2024 interim.
• Committees Authorized During the 2024 Session
  • American Indian Affairs Interim Study Committee
  • Cell Phone Connectivity Interim Study
  • Language Access Advisory Board
  • Artificial Intelligence Impact Task Force
  • Sales and Use Tax Simplification Task Force
  • Colorado Youth Advisory Council Committee
  • Statewide Health Care Review Committee
  • Legislative Oversight Committee Concerning Colorado Jail Standards
  • Legislative Oversight Committee Concerning Tax Policy & Task Force
  • Transportation Legislation Review Committee
  • Pension Review Commission
  • Treatment of Persons with Behavioral Health Disorders in the Criminal and Juvenile Justice Systems
  • Pension Review Subcommittee
  • Wildfire Matters Review Committee

Local Property Taxes

• Introduced May 6 and finally passed in the waning hours of the last day of the session, SB 24–233 reduces valuations for residential and commercial property, makes other changes in the tax system, and creates separate valuation systems for school districts and all other local governments.
• Proponents hope the bill will mollify conservative interest groups pushing ballot measures that could damage state and local finances.
• Leaders of those groups have said they are keeping their options open, and the time lawmakers reached no deal adjourned.

2024 Elections

• Approximately half of the Senate (the Senate staggers its seats) and the full House of Representatives is up for election each November.
• Approximately a quarter of the 100-member General Assembly is leaving.
• A number of members are term-limited this year, and those seats will also be on the ballot.

Legislation Championed by Enrolled Agents

• SB24–023 Hold Harmless for Error in GIS Database Data.
  • The Department of Revenue owns and maintains a GIS database provided to vendors to determine the jurisdictions to which taxis are owed, calculate appropriate sales, and use tax rates for individual addresses.
  • The bill establishes that any vendor that relies on the information in the GIS database to determine the local taxing jurisdictions to which tax is owed is held harmless in an audit by a local taxing jurisdiction for an underpayment of tax, charge, or fee liability that results solely from an error or omission in the GIS database data.
• SB24–024 Local Lodging Tax Reporting on Sales Return.
  • The bill requires local taxing jurisdictions, including any home rule city, to apply the same standards to an accommodation’s intermediary as to the marketplace facilitator obligated to collect and remit a local lodging tax.
  • The bill prohibits local taxing jurisdictions from requiring additional reporting information from an accommodation’s intermediary.
• SB24–025 Update Local Government Sales & Use Tax Collection
  • Requires local governments to notify the Department of Revenue of tax changes, designate liaisons with the department, establish a resolution process for disputes, and create a hold harmless provision for errors due to errors with the department’s GIS database data, among other provisions.

2024 Ballot Initiatives

• The ballot initiative development process is in full swing.
• Once the ballot title and submission clause are set and the Secretary of State approves the petition form, petitions for the proposal may be printed and circulated throughout the state to obtain the required number of signatures to get on the ballot.
• The signature requirement to be placed on the ballot is at least five percent of the votes cast for all candidates for the Office of Secretary of State at the previous general election.
• The number of valid signatures required for 2024 to get on the ballot is 124,238.
• In addition to this signature requirement, a proposal to change the Colorado constitution requires the signatures of at least 2 percent of registered electors in each of the 35 Colorado state senate districts.
• August 5, 2024, is the last day to submit signatures.

GOVERNOR’S ACTION ON BILLS — Sign or Veto?

• April 29th started the 30-Day Clock.
• This means any bill achieving final passage after that day has 30 days from adjournment to be acted on by the Governor — either signed or vetoed — or it automatically becomes law.
• The final action day on the 30-Day Clock is June 7th.
• Bills achieving final passage before that April 29th date had only ten days for action by the Governor before they would become law.
• So far, the Governor has yet to allow a bill to become law without his signature.
• You may use this report to track the Governor’s action on all finalized bills: SIGNED BILLS.

For more on Colorado Tax Legislation 2024 contact me today.