Staff Working Document – Does Not Represent Committee Decision

STAFF FIGURE SETTING FY 2021-22

DEPARTMENT OF REVENUE (Executive Director's Office and Taxation Business Group)

JBC WORKING DOCUMENT - SUBJECT TO CHANGE STAFF RECOMMENDATION DOES NOT REPRESENT COMMITTEE DECISION

PREPARED BY: ALFREDO KEMM, JBC STAFF MARCH 3, 2021

JOINT BUDGET COMMITTEE STAFF 200 E. 14TH AVENUE, 3RD FLOOR · DENVER · COLORADO · 80203 TELEPHONE: (303) 866-2061 · TDD: (303) 866-3472 https://leg.colorado.gov/agencies/joint-budget-committee CONTENTS Department Overview ...... 1 Summary of Staff Recommendations ...... 2 Description of Incremental Changes ...... 2 Major Differences from the Request ...... 5 Decision Items Affecting Multiple Divisions ...... 5  R2 Sales and Use Tax Simplification System Support and Maintenance ...... 5 (1) Executive Director’s Office ...... 9 Decision Items - Executive Director’s Office ...... 9  R4 Savings from Adopting Virtual Government ...... 9 (A) Administration And Support ...... 11 (B) Hearings Division ...... 27 (3) Taxation Business Group ...... 30 Decision Items - Taxation Business Group ...... 30  R7 Budget Savings – Taxation Business Group ...... 30  BA1 Proposition EE Funding ...... 32 Line Item Detail - Taxation Business Group ...... 33 (A) Administration ...... 33 (B) Taxation Services ...... 36 (D) (C) Tax Conferee ...... 42 (E) (D) Special Purpose ...... 43 (B) (E) Taxation and Compliance Division ...... 46 (C) (F) Taxpayer Service Division ...... 50 Long Bill Footnotes and Requests for Information ...... 56 Indirect Cost Assessments ...... 57 Numbers Pages ...... 59 (1) Executive Director’s Office ...... 59 (3) Taxation Business Group ...... 64 Appendix A: JTC Letter to JBC on R2 SUTS Request ...... 71 HOW TO USE THIS DOCUMENT

The Department Overview contains a table summarizing the staff recommended incremental changes followed by brief explanations of each incremental change. A similar overview table is provided for each division, but the description of incremental changes is not repeated, since it is available under the Department Overview. More details about the incremental changes are provided in the sections following the Department Overview and the division summary tables.

Decision items, both department-requested items and staff-initiated items, are discussed either in the Decision Items Affecting Multiple Divisions or at the beginning of the most relevant division. Within a section, decision items are listed in the requested priority order, if applicable. STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

DEPARTMENT OVERVIEW

The Department of Revenue administers the state’s tax laws and collects taxes, administers motor vehicle registration and titling and driver's licensing, regulates and enforces state laws for selected industries, and operates the State Lottery. The Department is divided into six divisions or business groups, four of which provide direct services to the citizens of the State, and two that provide support for the four direct-service providers.

The following Divisions are included in this figure setting document:

THE EXECUTIVE DIRECTOR'S OFFICE: • Provides central budgeting and fiscal note coordination, accounting and internal auditing, purchasing and contract administration, human resources, project management, and facilities safety and security; • Includes a Citizen’s Advocate who assists citizens and taxpayers with problems, grievances or inquiries, a Communications Director who is the primary contact for all media queries and requests for information, and a Legislative Liaison who directs all legislative matters for the Department; • Includes a Hearings Division for Department administrative hearings processes; • Supports the Office of Research and Analysis that develops analytical data and reports, including the Department’s annual report and monthly and quarterly sales tax reports, and estimates State of Colorado excess revenues under Article X, Section 20 of the State Constitution (TABOR); and • Is funded through direct and indirect costs charged to divisions.

THE TAXATION BUSINESS GROUP: • Is responsible for the administration, collection, and enforcement of individual and corporate income taxes, sales and use taxes, gasoline and special fuel taxes, severance taxes, and all other taxes collected by the state; • Collects local sales taxes on behalf of counties, many cities, and special districts; • Provides assistance and information to taxpayers about compliance with Colorado’s tax laws; • Attempts to resolve taxpayer disputes before they reach the court system; and • Administers several pass-through fund distributions to local governments.

The remaining four divisions (THE INFORMATION TECHNOLOGY DIVISION, THE DIVISION OF MOTOR VEHICLES, THE ENFORCEMENT BUSINESS GROUP, AND THE STATE LOTTERY DIVISION) are included in a separate figure setting document.

3-Mar-21 1 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

SUMMARY OF STAFF RECOMMENDATIONS

DEPARTMENT OF REVENUE TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $165,571,703 $112,481,090 $45,663,858 $6,390,242 $1,036,513 579.4 Other legislation (1,292,899) (727,167) (563,617) (2,115) 0 1.5 TOTAL $164,278,804 $111,753,923 $45,100,241 $6,388,127 $1,036,513 580.9

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $164,278,804 $111,753,923 $45,100,241 $6,388,127 $1,036,513 580.9 R2 Sales and use tax simplification system support 2,169,705 2,169,705 0 0 0 4.6 R3 Information Technology reorganization & streamlining 1,245,942 839,428 406,514 0 0 0.0 R4 Saving from adopting virtual government (749,976) (558,353) (191,623) 0 0 (5.0) R5 Realign DMV spending 0 0 0 0 0 0.0 R6 Realign Specialized Business Group spending 0 0 0 0 0 0.0 R7 Budget savings - Taxation Business Group (420,722) (420,722) 0 0 0 (0.0) BA1 Proposition EE funding 50,206 50,206 0 0 0 0.9 Non-prioritized requests (472,963) 440,917 (913,880) 0 0 (5.0) Annualize prior year budget actions 3,458,425 3,022,125 436,300 0 0 7.0 Annualize prior year legislation 3,144,059 1,355,312 1,786,628 2,115 4 11.3 Technical adjustments 273,907 176,827 97,080 0 0 0.0 Indirect cost assessment 51,351 (1,460,452) 51,351 1,460,452 0 0.0 Centrally appropriated line items (11,555,957) (3,661,142) (7,909,289) (9,685) 24,159 0.0 TOTAL $161,472,781 $113,707,774 $38,863,322 $7,841,009 $1,060,676 594.7

INCREASE/(DECREASE) ($2,806,023) $1,953,851 ($6,236,919) $1,452,882 $24,163 13.8 Percentage Change (1.7%) 1.7% (13.8%) 22.7% 2.3% 2.4%

FY 2021-22 EXECUTIVE REQUEST $160,644,995 $113,521,550 $38,225,194 $7,840,782 $1,057,469 595.2 Request Above/(Below) Recommendation ($827,786) ($186,224) ($638,128) ($227) ($3,207) 0.5

DESCRIPTION OF INCREMENTAL CHANGES

R2 SALES AND USE TAX SIMPLIFICATION SYSTEM SUPPORT: The recommendation includes an increase of $2.2 million General Fund and 4.6 FTE for ongoing support and maintenance of the Sales and Use Tax Simplification System (SUTS). SUTS was funded in S.B. 19-006. This request was referred to the Joint Technology Committee (JTC) for review; the JTC recommends approval.

R3 INFORMATION TECHNOLOGY REORGANIZATION & STREAMLINING: The recommendation is pending. The request includes an increase of $1.2 million total funds, including an increase of $839,428 General Fund, for an adjustment included in the Executive Director's Office. This request will be addressed in the second JBC staff figure setting for the Department scheduled for Thursday, March 11th.

R4 SAVING FROM ADOPTING VIRTUAL GOVERNMENT: The recommendation includes a decrease of $749,976 total funds, including a decrease of $558,353 General Fund, and a decrease of 5.0 FTE, related to a request to allow hearings to be conducted virtually. The recommendation includes legislation to allow tax hearings to be conducted virtually.

3-Mar-21 2 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

R5 REALIGN DMV SPENDING: The recommendation in the EDO is for no adjustment to POTS appropriations. The recommendation for this request is pending and will be addressed in the second JBC staff figure setting for the Department scheduled for Thursday, March 11th.

R6 REALIGN SPECIALIZED BUSINESS GROUP SPENDING: The recommendation in the EDO is for no adjustment to POTS appropriations. The recommendation for this request is pending and will be addressed in the second JBC staff figure setting for the Department scheduled for Thursday, March 11th.

R7 BUDGET SAVINGS - TAXATION BUSINESS GROUP: The recommendation includes a decrease of $420,722 General Fund. The Department's request comprises a reorganization and consolidation of two subdivisions, including Taxation and Compliance and Taxpayer Services, into a single, Taxation Services subdivision. The savings reflect efficiencies anticipated to be gained by the consolidation.

BA1 PROPOSITION EE FUNDING: The recommendation includes an increase of $50,206 General Fund and 0.9 FTE for one Tax Examiner I position to manage policy changes related to Proposition EE – Taxes on Nicotine Products.

NON-PRIORITIZED REQUESTS: The recommendation includes adjustments related to budget requests made by other departments that affect the Department of Revenue in FY 2021-22, which are summarized in the following table.

NON-PRIORITIZED REQUESTS TOTAL GENERAL CASH FTE FUNDS FUND FUNDS NP2 DOR printing and mail migration to DPA-IDS $428,886 $771,445 ($342,559) (5.0) NP4 OIT FY22 budget request package (901,849) (330,528) (571,321) 0.0 TOTAL ($472,963) $440,917 ($913,880) (5.0)

ANNUALIZE PRIOR YEAR BUDGET ACTIONS: The recommendation includes a net increase of $3,458,425 total funds, including an increase of $3,022,125 General Fund, for prior year budget actions, summarized in the following table.

ANNUALIZE PRIOR YEAR BUDGET ACTIONS TOTAL GENERAL CASH FTE FUNDS FUND FUNDS FY20-21 GF HLD reduction $2,032,254 $2,032,254 $0 0.0 FY19-20 R-01 GenTax support enhancements 896,656 889,551 7,105 7.0 FY19-20 S2 Leased space for 2019 special bills 498,960 100,320 398,640 0.0 FY21-22 R4 Driver's license documents 30,555 0 30,555 0.0 TOTAL $3,458,425 $3,022,125 $436,300 7.0

ANNUALIZE PRIOR YEAR LEGISLATION: The recommendation includes a net increase of $3,144,059 total funds, including an increase of $1,355,312 General Fund, to reflect the FY 2021-22 impact of bills passed in previous sessions, summarized in the following table.

ANNUALIZE PRIOR YEAR LEGISLATION TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FTE FUNDS FUND FUNDS FUNDS FUNDS HB20-1379 Suspend PERA DD FY20-21 $2,143,176 $829,713 $1,311,348 $2,115 $0 0.0 HB20-1420 Adjust Tax Expenditures for State 499,830 499,830 0 0 0 8.4

3-Mar-21 3 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

ANNUALIZE PRIOR YEAR LEGISLATION TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FTE FUNDS FUND FUNDS FUNDS FUNDS HB20-1001 Nicotine Product Reg 314,988 0 314,988 0 0 0.8 HB20-1153 Colorado Partnership 186,855 0 186,855 0 0 1.2 HB19-1159 Modify Motor Vehicle Income Tax 51,478 51,478 0 0 0 0.9 HB20-1236 Health Care Coverage 28,372 28,372 0 0 0 0.0 HB20-1024 Net Operating Loss Deduction 22,859 22,859 0 0 0 0.0 SB18-200 PERA unfunded liability 618 252 362 0 4 0.0 SB20-218 CDPHE Hazardous Substance (39,643) (39,643) 0 0 0 0.0 HB20-1293 Emergency Telephone Service (18,930) 0 (18,930) 0 0 0.0 SB20B-001 COVID-19 Relief Small & Min Bus Arts Orgs (13,775) (13,775) 0 0 0 0.0 HB18-1208 Expand Childcare Income Tax Credit (11,040) (11,040) 0 0 0 0.0 HB19-1230 Marijuana Hospitality (7,995) 0 (7,995) 0 0 0.0 HB18-1267 Income Tax Credit Retrofitting (6,444) (6,444) 0 0 0 0.0 HB18-1202 Income Tax Credit Organ Donation (6,290) (6,290) 0 0 0 0.0 TOTAL $3,144,059 $1,355,312 $1,786,628 $2,115 $4 11.3

TECHNICAL ADJUSTMENTS: The recommendation includes technical adjustments, summarized in the following table.

TECHNICAL ADJUSTMENTS TOTAL GENERAL CASH FTE FUNDS FUND FUNDS GenTax (FAST Enterprises) contract escalator $171,433 $171,433 $0 0.0 Revenue forecast adjustment 102,474 0 102,474 0.0 Indirect-related refinancing 0 5,394 (5,394) 0.0 TOTAL $273,907 $176,827 $97,080 0.0

INDIRECT COST ADJUSTMENT: The recommendation includes net adjustments to indirect costs across the Department and a refinancing of General Fund from indirect cost recoveries.

CENTRALLY APPROPRIATED LINE ITEMS: The recommendation includes a net decrease of $11,555,957 total funds including a decrease of $3,661,142 General Fund related to employee benefits and other centrally appropriated items. This total includes the following changes:

CENTRALLY APPROPRIATED LINE ITEMS TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FTE FUNDS FUND FUNDS FUNDS FUNDS Salary survey adjustment $2,697,763 $1,071,541 $1,607,042 $1,263 $17,917 0.0 Leased space adjustment 260,966 33,389 227,577 0 0 0.0 Payment to risk management and property funds 152,305 58,087 94,218 0 0 0.0 PERA Direct Distribution 113,221 89,629 8,982 (1,011) 15,621 0.0 Health, life, and dental adjustment 69,405 620,071 (545,095) (5,063) (508) 0.0 Annual fleet vehicle request 52,853 11,367 41,486 0 0 0.0 ALJ adjustment 11,365 0 11,365 0 0 0.0 Payments to OIT adjustment (11,735,583) (4,300,638) (7,434,945) 0 0 0.0 Capitol Complex leased space adjustment (1,414,343) (527,136) (887,207) 0 0 0.0 Legal services adjustment (848,673) (500,285) (348,388) 0 0 0.0 CORE adjustment (356,265) (135,874) (220,391) 0 0 0.0 DPA Document management (271,862) (271,862) 0 0 0 0.0 Workers’ compensation adjustment (148,059) (56,467) (91,592) 0 0 0.0 AED adjustment (52,964) 123,358 (169,599) (2,394) (4,329) 0.0 SAED adjustment (52,964) 123,358 (169,599) (2,394) (4,329) 0.0 Shift differential adjustment (21,892) 0 (21,892) 0 0 0.0

3-Mar-21 4 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

CENTRALLY APPROPRIATED LINE ITEMS TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FTE FUNDS FUND FUNDS FUNDS FUNDS Short-term disability adjustment (11,230) 320 (11,251) (86) (213) 0.0 TOTAL ($11,555,957) ($3,661,142) ($7,909,289) ($9,685) $24,159 0.0

MAJOR DIFFERENCES FROM THE REQUEST

The total difference for staff recommendations relative to the request identified in the Department table above for the EDO and Taxation Business Group is $827,786 total funds, including $186,224 General Fund, $638,128 cash funds, $227 reappropriated funds, and $3,207 federal funds, and -0.5 FTE.

• Staff recommendations exclude all POTS adjustments in the R2, R4, R5, R6, and NP2 request items. These recommendations increase appropriations relative to the request by $480,555 total funds, including $77,816 General Fund and $402,739 cash funds.

• The Committee's statewide compensation action on Salary Survey increases appropriations relative to the request by $506,226 total funds, including $207,427 General Fund, $295,019 cash funds, $250 reappropriated funds, and $3,530 federal funds.

• Committee action on operating common policies, non-prioritized requests, a tobacco revenue adjustment, and the annualization of S.B. 18-200 decrease appropriations relative to the request by $122,122 total funds, including decreases of $62,146 General Fund, $59,630 cash funds, $23 reappropriated funds, and $323 federal funds.

• Staff recommendations for the R2 and BA1 requests decrease FTE relative to the requests by 0.4 FTE and by 0.1 FTE respectively.

DECISION ITEMS AFFECTING MULTIPLE DIVISIONS

 R2 SALES AND USE TAX SIMPLIFICATION SYSTEM SUPPORT AND MAINTENANCE REQUEST: The Department requests funding for ongoing support and maintenance of the Sales and Use Tax Simplification System (SUTS) created in S.B. 19-006 Electronic Sales and Use Tax Simplification System totaling $2.2 million General Fund and 5.0 FTE for FY 2020-21 and future years.

RECOMMENDATION: Staff recommends that the Committee approve the R2 request with modifications to the appropriations as included in staff's analysis.

ANALYSIS: SUTS was created in S.B. 19-006 Electronic Sales and Use Tax Simplification System. Appropriations provided for SUTS in S.B. 19-106 totaled $18.75 million General Fund over FY 2019-20 and FY 2020- 21. Actual expenditures reported by the Department in its 7/8/20 final report totals $7.8 million. The report identifies reversions totaling $10.6 million, excluding a contingency amount of $368,000;

3-Mar-21 5 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

however, including the contingency amount as unspent, expenditures generate total savings of $10.9 million.

The Legislative Council Staff (LCS) Fiscal Note for S.B. 19-106, based on responses to the RFI received by the Department pursuant to H.B. 18-1022, identified annual ongoing operating cost of between $5 million and $8 million. This cost represents an annual operating and maintenance cost of 26.7 to 42.7 percent on the original $18.75 million appropriation. While the LCS Fiscal Note was based on costs identified in an RFI, as a general rule, annual ongoing operating costs should reflect about 10-20 percent of project development cost. It is also more typical that vendor-provided, customized off-the-shelf and software-as-service systems, will tend to have higher annual operating costs than self-developed systems.

The request for $2.2 million in annual operating and maintenance costs represents a cost of 28.2 percent on the Department's total project cost figure of $7.8 million. Regardless, the cost figures are lower than those anticipated in the fiscal note on a dollar cost basis and is close the lower percentage cost basis of 26.7 percent. Additionally, the external vendor costs alone, total $1.8 million, reflecting an annual operating percentage cost of 23.1 percent.

The most recent update, provided to the Joint Technology Committee (JTC) on December 2nd, suggests that the various stakeholders involved in the SUTS system – the Department, local governments, and the business community – are generally satisfied and impressed with the speed and efficiency of the rollout of the system. Based on the testimony provided at the December 2nd JTC meeting, staff is not concerned about the general reasonableness of this request.

Staff recommended at the JBC budget briefing for the Department on December 9th that the Committee refer the request to the JTC for review. The review was requested to determine if the JTC agreed with the Department's request stating its readiness to move this IT Capital project into the operating budget for ongoing annual maintenance and support, as well as a review of the plan for ongoing maintenance and support and associated costs.

The February 19th JTC letter to the JBC (attached as Appendix A) regarding this request expressed the JTC's recommendation of the Department request as submitted.

Based on JTC's recommendation and based on staff's review of this request, staff recommends that the Committee approve the R2 request with modified appropriations. The following table outlines the Department's request and staff's recommended appropriations for the R2 request along with recommended annualization amounts for out years.

R2 SUTS SUPPORT AND MAINTENANCE FY 2021-22 FY 2021-22 FY 2022-23 REQUEST RECOMMENDATION ANNUALIZATION FTE Cost FTE Approp FTE Cost Department Staff SUTS Product Owner Personal Services 1.0 $80,000 0.9 $82,332 1.0 $89,817 POTS 25,559 0 18,127 Operating Expenses 5,653 7,550 1,350 subtotal - SUTS Product Owner 1.0 $111,212 0.9 $89,882 1.0 Tax Examiner I 4.0 233,807 Personal Services 4.0 165,600 3.7 170,623 4.0 186,134

3-Mar-21 6 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

R2 SUTS SUPPORT AND MAINTENANCE FY 2021-22 FY 2021-22 FY 2022-23 REQUEST RECOMMENDATION ANNUALIZATION FTE Cost FTE Approp FTE Cost POTS 68,207 0 56,842 Operating Expenses 22,612 30,200 5,400 subtotal - Tax Examiner I 4.0 $256,419 3.7 $200,823 4.0 $248,376 subtotal - Department Staff 5.0 $367,631 4.6 $290,705 5.0 $839,853

Taxpayer Service Div - PS 5.0 $245,600 4.6 $252,955 5.0 $275,951 Taxpayer Service Div - OE (subtotal) $28,265 $37,750 $6,750

Vendor and OIT Support Vendor #1 - Tax Filing System Support $855,000 $855,000 $855,000 Vendor #2 - GIS Support 500,000 500,000 500,000 Vendor #2 - GIS Hosting 464,000 464,000 464,000 State IT Support - OIT 60,000 60,000 60,000 subtotal - Vendor and OIT Support $1,879,000 $1,879,000 $1,879,000

Taxpayer Service Div - OE (subtotal) $1,879,000 $1,879,000 $1,879,000

Total - R2 SUTS Support and Maint. 5.0 $2,246,631 4.6 $2,169,705 5.0 $2,718,853

Taxpayer Service Div - OE (total) $1,907,265 $1,916,750 $1,885,750

The Department's request includes 4.0 FTE of Tax Examiner I and 1.0 FTE of Program Management I to function as the SUTS Product Owner for the Department. The Department's request includes appropriations for POTS and uses rounded figures for classification salaries and adjusted figures for standard operating expenses for staff.

Staff has recommended modified appropriations based on Legislative Council Staff (LCS) Fiscal Note standards based on JBC policy for new FTE. Additionally, the Department's request includes the salary and FTE at a full year, however these positions are General Funded and therefore need to be adjusted for the pay date shift. Staff's modified recommendations include 4.6 FTE rather than 5.0 FTE included in the request for this reason.

Staff recommends funding for Vendor and OIT Support as requested. Additionally, staff includes annualization adjustments consistent with LCS Fiscal Note and JBC policy.

 TECHNICAL NOTE ON POTS ADJUSTMENTS INCLUDED IN DEPARTMENT REQUESTS: Staff recommends for all Department request items with requests for additional FTE that the Committee deny all POTS-related increase adjustments. JBC policy is that POTS are to be excluded from first-year appropriations for new FTE, with an exception provided for increases of at least 20 new FTE.

The Department has submitted two request for new FTE: the R2 request above that includes an additional 5.0 FTE and the BA1 request in the Taxation Business Group division for an additional 1.0 FTE. As noted above in the decision item narrative (and to follow), consistent with Committee policy, staff recommends the Committee deny the requests for POTS adjustments.

3-Mar-21 7 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

However, the Department has also submitted three additional request items and one non-prioritized request item tied to a request item for the Department of Personnel, which reduce POTS appropriations. Committee policy does not address a requested decrease in FTE or a requested decrease in POTS with no decrease in FTE.

At this time, staff recommends that the Committee deny all POTS-related negative adjustments included in Department request items for the following reasons:

• It is likely that the requests for FTE reductions include identifying and eliminating only vacant FTE included in budget totals; i.e., these are likely not currently filled staff positions with employees who will lose their positions due to this budget action. Over time, it is not unusual for identified FTE in the budget to include vacant or "shell" positions as state agencies choose not to fill funded positions in order to use existing salary base for other purposes. Over time, this practice has the effect of creating incremental vacant or "shell" FTE in the budget relative to actual FTE.

However, the statewide compensation department templates, upon which statewide compensation policies are estimated and set by JBC action, generate recommended POTS appropriations only for currently filled positions (and positions to be added in the year from legislation and budget actions) – i.e. the actual "payroll footprint". The templates do not appropriate POTS appropriations for vacant FTE positions included in FTE totals reflected in the Long Bill budget. Therefore, making negative adjustments to POTS appropriations will have the effect of inaccurately and inappropriately shorting appropriations for occupied positions.

Supplemental criteria include "a technical error in calculating the original appropriation". As they relates to vacant FTE, each request for POTS adjustments generates a technical error in the appropriation. While the Committee could choose to take these requested negative adjustments to achieve random budget savings, there is not a justified and appropriately calculated budget reason to make negative adjustments to POTS appropriations for vacant FTE.

• One of the requests, R6 Align Spending with Revenue at SBG, includes no decrease in FTE with a request for a decrease in POTS appropriations. The Department states that the request is to cut spending authority to various line items to better align spending authority with anticipated cash fund revenue. If budget savings are necessary to achieve balance or sustainability for a cash fund, those budget savings need to be secured within the direct program costs themselves and not in the POTS appropriations. The POTS appropriations are accurately budgeted for the number of active positions on the payroll paid from that cash fund. Negative POTS appropriations should only be made in a case in which active staff are being laid off due to a program reduction or in the case of a transfer of staff to another department budget. Again, this is a request that generates a technical error in the appropriation.

It appears that the Department may have attempted to achieve budget savings based on OSPB budget request guidance to executive branch agencies. It is staff's opinion that the requested reductions were likely made in order to achieve savings on paper for vacant FTE – based on a misunderstanding of the POTS appropriations process relative to vacant FTE – but are budget policy actions that lead to inaccurate budgeting for state employee benefits.

3-Mar-21 8 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

(1) EXECUTIVE DIRECTOR’S OFFICE

The Executive Director’s Office provides central budgeting, fiscal note coordination, revenue and expenditure accounting, purchasing and contract administration, human resources, internal auditing, project management, facilities safety, and security, and a hearings division for the Department. The office is funded through direct and indirect costs charged to divisions. Additionally, the Executive Director’s Office supports the Office of Research and Analysis that develops reports, such as the Department’s annual report and monthly and quarterly sales tax reports. They also develop analytical data and estimate the refunding of State of Colorado excess revenues under Article X, Section 20 of the State Constitution.

EXECUTIVE DIRECTOR'S OFFICE TOTAL GENERAL CASH REAPPROPRIATED FEDERAL

FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 Appropriation HB 20-1360 (Long Bill) $85,432,305 $36,642,702 $42,532,348 $6,072,874 $184,381 170.8 Other legislation (1,416,175) (829,713) (584,347) (2,115) 0 1.5 TOTAL $84,016,130 $35,812,989 $41,948,001 $6,070,759 $184,381 172.3

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $84,016,130 $35,812,989 $41,948,001 $6,070,759 $184,381 172.3 R2 Sales and use tax simplification system support 0 0 0 0 0 0.0 R3 Information Technology reorganization & streamlining 1,245,942 839,428 406,514 0 0 0.0 R4 Saving from adopting virtual government (749,976) (558,353) (191,623) 0 0 (5.0) R5 Realign DMV spending 0 0 0 0 0 0.0 R6 Realign Specialized Business Group spending 0 0 0 0 0 0.0 Non-prioritized requests (4,848,607) (3,934,727) (913,880) 0 0 (5.0) Annualize prior year budget actions 3,458,425 3,022,125 436,300 0 0 7.0 Annualize prior year legislation 2,655,712 844,235 1,809,358 2,115 4 2.0 Technical adjustments 0 0 0 0 0 0.0 Indirect cost assessment 50,438 (1,460,452) 50,438 1,460,452 0 0.0 Centrally appropriated line items (11,284,095) (3,389,280) (7,909,289) (9,685) 24,159 0.0 TOTAL $74,543,969 $31,175,965 $35,635,819 $7,523,641 $208,544 171.3

INCREASE/(DECREASE) ($9,472,161) ($4,637,024) ($6,312,182) $1,452,882 $24,163 (1.0) Percentage Change (11.3%) (12.9%) (15.0%) 23.9% 13.1% (0.6%)

FY 2021-22 EXECUTIVE REQUEST $73,781,784 $30,952,868 $35,100,165 $7,523,414 $205,337 171.3 Request Above/(Below) Recommendation ($762,185) ($223,097) ($535,654) ($227) ($3,207) 0.0

DECISION ITEMS - EXECUTIVE DIRECTOR’S OFFICE

 R4 SAVINGS FROM ADOPTING VIRTUAL GOVERNMENT REQUEST: The Department requests a decrease of $803,477 total funds, including a decrease of $611,854 General Fund, and a decrease of 5.0 FTE. The request includes a reduction of 4.0 FTE in the EDO and a reduction of 1.0 FTE in the Hearings Division. Savings are anticipated to be generated by allowing virtual tax hearings. Therefore the request includes a legislation request to allow tax hearings to be conducted virtually.

3-Mar-21 9 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

RECOMMENDATION: Staff recommends that the Committee approve the request as submitted, excluding the POTS adjustments. Staff also recommends that the Committee pursue legislation to allow the Department to conduct tax hearings virtually.

The staff recommendation includes a decrease of $749,976 total funds, including decreases of $558,353 General Fund and $191,623 cash funds, and a decrease of 5.0 FTE.

ANALYSIS: For taxpayers unwilling to accept the Department's administrative decisions on their tax matters, the Department holds hearings with the taxpayer, conducted by the Hearings Division, pursuant to Section 39-21-103, C.R.S. These hearings are administrative court proceedings, with findings of fact, arguments about the facts' relationship to law, and an order from the administrative hearings authority. Appeals to the hearings order may be made pursuant to Section 39-21-105, C.R.S., which are conducted by district courts.

Section 39-21-103 (4), C.R.S., generally requires that Department administrative hearings be held in the City and County of Denver and that they must be live and in-person. The statute makes an exception for sales and use tax or for disputed amounts of $200 or less.

In prior years, the Department held approximately six to twelve hearings per year in the Capitol Annex building. The Department has vacated the Capitol Annex building. The Department states that they currently occupy no real estate in the City and County of Denver and would have to acquire a location in Denver in order to hold hearings in compliance with current statute.

The Department states that with the low volume of hearings, it is not necessarily a concern of cost, but rather customer service impacts that are caused due to the statutory requirement for hearings to be held in Denver. The Department's proposed statutory change would provide consistency across all types of tax hearings to be conducted at locations in counties located in the larger Denver metropolitan area or by video conference. The Department proposes the following statutory changes:

39-21-103. Hearings. (4) The executive director of the department of revenue shall notify the taxpayer in writing of the time and place for such hearing thirty days prior thereto. In all cases where the disputed deficiency involves gift taxes or exceeds two hundred dollars and does not involve sales and use taxes, tThe hearing shall be held in Denver, Colorado AT A LOCATION DESIGNATED BY THE EXECUTIVE DIRECTOR IN ADAMS, ARAPAHOE, BOULDER, BROOMFIELD, DENVER, DOUGLAS, OR JEFFERSON COUNTY, COLORADO OR, AT THE ELECTION OF THE TAXPAYER, BY VIDEO CONFERENCE; EXCEPT THAT . If IF the TAXPAYER RESIDES OR HAS THEIR PRINCIPAL PLACE OF BUSINESS IN COLORADO AND THE disputed deficiency does not involve gift taxes, is two hundred dollars or less, or involves sales and use taxes regardless of the amount, THEN the hearing may be held, at the election of the taxpayer, in the district office of the department nearest to the place where the taxpayer resides or has his principal place of business within Colorado. If the taxpayer does not reside or have a place of business in Colorado, the hearing shall be held in the city and county of Denver.

Staff recommends that the Committee pursue legislation to provide flexibility for tax hearings as requested by the Department. Staff recommends this change to achieve long-term operating

3-Mar-21 10 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

efficiencies gained by the reduction in office space experienced over the last year as well as safeguarding and improving public safety and public access through the provision of virtual access to the tax hearings process.

The Department states that the requested budget reductions are possible due to a reevaluation of workflow and the permanent elimination of vacant positions. The Department identifies reductions in EDO Administration, Office of Budget and Financial Services, and Administrative Offices Division that include full-time and temporary staff funding. Additional reductions are requested in utilities, vehicle lease payments, leased space, and postage line items. The Department states that reductions are based on operational changes and will not severely impact the delivery of services.

It is staff's best understanding of this request as consisting of two components: the request for legislation; and a package of budget savings that are both related to the tax hearings process and that are otherwise available or identified as savings related to the reduction in leased space and Capitol Complex leased space.

Because the budget savings requested are generally unrelated or at least not closely or directly related to the tax hearings process, staff is not able to analyze the requested reductions as they relate to the legislation request. However, staff accepts the Department's assessment of efficiencies and budget savings available due to the tax hearings process change and due to the reduced leased space footprint of the Department.

On this basis, staff recommends that the Committee approve the budget reductions requested, except for the POTS adjustments as described in the Technical Note in the first department overview section of the document.

(A) ADMINISTRATION AND SUPPORT

PERSONAL SERVICES This line item pays for program staff salary and contract services. The staff are responsible for the Department’s administration, auditing, accounting, budgeting, personnel management, and research functions. Typical adjustments that occur each year include annualization of salary increases and performance awards granted in the prior fiscal year and common policy base reductions.

STATUTORY AUTHORITY: Sections 24-50-101 et seq., C.R.S.

REQUEST: The Department requests an appropriation of $12,899,310 total funds, including $4,548,525 General Fund, $841,859 cash funds, and $7,508,599 reappropriated funds, $327 federal funds, and 138.0 FTE.

The request includes the following annualization adjustments: • FY 2019-20 R1 GenTax support enhancements; • H.B. 19-1159 Modify Motor Vehicle Income Tax; • H.B. 20-1024 Net Operating Loss Deduction; • H.B. 20-1153 Colorado Partnership; • H.B. 20-1420 Adjust Tax Expenditures for State; and

3-Mar-21 11 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

• S.B. 18-200 PERA unfunded liability.

The request includes indirect cost recoveries refinancing; non-prioritized request NP2 DOR Printing and Mail Migration to DPA-IDS; and the Department's R4 request item.

RECOMMENDATION: Staff recommends appropriating $12,852,745 total funds, including $4,529,534 General Fund, $814,631 cash funds, and $7,508,576 reappropriated funds, $4 federal funds, and 138.0 FTE. Adjustments are outlined in the following table. The recommendation includes approval of the R4 request item with adjustments and is consistent with the Committee's statewide compensation decision for the S.B. 18-200 PERA Unfunded Liability annualization.

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, PERSONAL SERVICES TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $12,605,285 $5,858,777 $698,384 $6,048,124 $0 138.8 TOTAL $12,605,285 $5,858,777 $698,384 $6,048,124 $0 138.8

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $12,605,285 $5,858,777 $698,384 $6,048,124 $0 138.8 Annualize prior year budget actions 636,011 636,011 0 0 0 7.0 Annualize prior year legislation 130,897 14,522 116,371 0 4 1.2 Indirect cost assessment 0 (1,460,452) 0 1,460,452 0 0.0 R4 Saving from adopting virtual government (268,227) (268,103) (124) 0 0 (4.0) Non-prioritized requests (251,221) (251,221) 0 0 0 (5.0) TOTAL $12,852,745 $4,529,534 $814,631 $7,508,576 $4 138.0

INCREASE/(DECREASE) $247,460 ($1,329,243) $116,247 $1,460,452 $4 (0.8) Percentage Change 2.0% (22.7%) 16.6% 24.1% 0.0% (0.6%)

FY 2021-22 EXECUTIVE REQUEST $12,899,310 $4,548,525 $841,859 $7,508,599 $327 138.0 Request Above/(Below) Recommendation $46,565 $18,991 $27,228 $23 $323 0.0

HEALTH, LIFE, AND DENTAL This line item provides funding for the employer's share of the cost of group benefit plans providing health, life, and dental insurance for state employees. The reappropriated funds portion of this line item corresponds to the health, life, and dental benefits of employees whose salaries are included in the indirect cost recovery plan.

STATUTORY AUTHORITY: Sections 24-50-609, 24-50-611, and 24-50-104 (1) (a) (II), C.R.S.

REQUEST: The Department requests an appropriation of $16,695,050 total funds, including $6,495,696 General Fund, $10,082,754 cash funds, $8,002 reappropriated funds, and $108,598 federal funds.

The request includes annual Health, Life, and Dental base adjustments and annualization of the following prior year budget actions: • FY 2019-20 R1 GenTax Support Enhancements; • FY 2020-21 General Fund HLD Reduction; and

3-Mar-21 12 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

• H.B. 20-1001 Nicotine Product Reg.

The request includes Department request for POTS adjustments for R2, R4, R5, R6, and NP2 request items.

RECOMMENDATION: Staff recommends appropriating $16,992,741 total funds, including $6,547,644 General Fund, $10,328,497 cash funds, $8,002 reappropriated funds, and $108,598 federal funds. The recommendation reflects Committee action on statewide compensation and includes staff recommendation to deny POTS adjustments included in Department request items. Adjustments are outlined in the following table.

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, HEALTH, LIFE, AND DENTAL TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $14,626,634 $3,833,915 $10,670,548 $13,065 $109,106 0.0 Other legislation $180,166 $0 $180,166 $0 $0 0.0 TOTAL $14,806,800 $3,833,915 $10,850,714 $13,065 $109,106 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $14,806,800 $3,833,915 $10,850,714 $13,065 $109,106 0.0 Annualize prior year budget actions 2,093,658 2,093,658 0 0 0 0.0 Centrally appropriated line items 69,405 620,071 (545,095) (5,063) (508) 0.0 Annualize prior year legislation 22,878 0 22,878 0 0 0.0 R2 Sales and use tax simplification system support 0 0 0 0 0 0.0 R4 Saving from adopting virtual government 0 0 0 0 0 0.0 Non-prioritized requests 0 0 0 0 0 0.0 Technical adjustments 0 0 0 0 0 0.0 R5 Realign DMV spending 0 0 0 0 0 0.0 R6 Realign Specialized Business Group spending 0 0 0 0 0 0.0 TOTAL $16,992,741 $6,547,644 $10,328,497 $8,002 $108,598 0.0

INCREASE/(DECREASE) $2,185,941 $2,713,729 ($522,217) ($5,063) ($508) 0.0 Percentage Change 14.8% 70.8% (4.8%) (38.8%) (0.5%) 0.0%

FY 2021-22 EXECUTIVE REQUEST $16,695,050 $6,495,696 $10,082,754 $8,002 $108,598 0.0 Request Above/(Below) Recommendation ($297,691) ($51,948) ($245,743) $0 $0 0.0

SHORT-TERM DISABILITY This line item provides funding for the employer's share of the state employees' short-term disability insurance premiums.

STATUTORY AUTHORITY: Sections 24-51-701 and 24-50-104(1) (a) (II), C.R.S.

REQUEST: The Department requests an appropriation of $154,730 total funds, including $68,460 General Fund, $85,159 cash funds, $73 reappropriated funds, and $1,038 federal funds.

The request includes annual Short Term Disability base adjustments and annualization of the following prior year budget actions: • FY 2019-20 R1 GenTax Support Enhancements; and

3-Mar-21 13 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

• H.B. 20-1001 Nicotine Product Reg.

The request includes Department request for POTS adjustments for R2, R4, R5, R6, and NP2 request items.

RECOMMENDATION: Staff recommends appropriating $163,013 total funds, including $73,427 General Fund, $88,470 cash funds, $74 reappropriated funds, and $1,042 federal funds. The recommendation reflects Committee action on statewide compensation and includes staff recommendation to deny POTS adjustments included in Department request items. Adjustments are outlined in the following table.

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, SHORT-TERM DISABILITY TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $159,629 $61,023 $97,191 $160 $1,255 0.0 Other legislation $2,010 $0 $2,010 $0 $0 0.0 TOTAL $161,639 $61,023 $99,201 $160 $1,255 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $161,639 $61,023 $99,201 $160 $1,255 0.0 Annualize prior year budget actions 12,084 12,084 0 0 0 0.0 Annualize prior year legislation 520 0 520 0 0 0.0 R2 Sales and use tax simplification system support 0 0 0 0 0 0.0 R4 Saving from adopting virtual government 0 0 0 0 0 0.0 Non-prioritized requests 0 0 0 0 0 0.0 R5 Realign DMV spending 0 0 0 0 0 0.0 R6 Realign Specialized Business Group spending 0 0 0 0 0 0.0 Centrally appropriated line items (11,230) 320 (11,251) (86) (213) 0.0 TOTAL $163,013 $73,427 $88,470 $74 $1,042 0.0

INCREASE/(DECREASE) $1,374 $12,404 ($10,731) ($86) ($213) 0.0 Percentage Change 0.9% 20.3% (10.8%) (53.8%) (17.0%) 0.0%

FY 2021-22 EXECUTIVE REQUEST $154,730 $68,460 $85,159 $73 $1,038 0.0 Request Above/(Below) Recommendation ($8,283) ($4,967) ($3,311) ($1) ($4) 0.0

S.B. 04-257 AMORTIZATION EQUALIZATION DISBURSEMENT This line item provides funding for an amortization payment to increase the funded status of the Public Employees' Retirement Association (PERA).

STATUTORY AUTHORITY: Section 24-51-411, C.R.S.

REQUEST: The Department requests an appropriation of $4,687,873 total funds, including $1,968,671 General Fund, $2,684,363 cash funds, $2,301 reappropriated funds, and $32,538 federal funds.

The request includes annual AED base adjustments and annualization of the following prior year budget actions: • FY 2019-20 R1 GenTax Support Enhancements; and • H.B. 20-1001 Nicotine Product Reg.

3-Mar-21 14 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

RECOMMENDATION: Staff recommends appropriating $4,796,153 total funds, including $1,987,698 General Fund, $2,773,463 cash funds, $2,311 reappropriated funds, and $32,681 federal funds. The recommendation reflects Committee action on statewide compensation and includes staff recommendation to deny POTS adjustments included in Department request items. Adjustments are outlined in the following table.

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, S. B. 04-257 AMORTIZATION EQUALIZATION DISBURSEMENT TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $4,719,304 $1,800,739 $2,876,850 $4,705 $37,010 0.0 Other legislation $59,107 $0 $59,107 $0 $0 0.0 TOTAL $4,778,411 $1,800,739 $2,935,957 $4,705 $37,010 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $4,778,411 $1,800,739 $2,935,957 $4,705 $37,010 0.0 Annualize prior year budget actions 70,706 63,601 7,105 0 0 0.0 R2 Sales and use tax simplification system support 0 0 0 0 0 0.0 R4 Saving from adopting virtual government 0 0 0 0 0 0.0 Non-prioritized requests 0 0 0 0 0 0.0 R5 Realign DMV spending 0 0 0 0 0 0.0 Technical adjustments 0 0 0 0 0 0.0 R6 Realign Specialized Business Group spending 0 0 0 0 0 0.0 Centrally appropriated line items (52,964) 123,358 (169,599) (2,394) (4,329) 0.0 TOTAL $4,796,153 $1,987,698 $2,773,463 $2,311 $32,681 0.0

INCREASE/(DECREASE) $17,742 $186,959 ($162,494) ($2,394) ($4,329) 0.0 Percentage Change 0.4% 10.4% (5.5%) (50.9%) (11.7%) 0.0%

FY 2021-22 EXECUTIVE REQUEST $4,687,873 $1,968,671 $2,684,363 $2,301 $32,538 0.0 Request Above/(Below) Recommendation ($108,280) ($19,027) ($89,100) ($10) ($143) 0.0

S.B. 06-235 SUPPLEMENTAL AMORTIZATION EQUALIZATION DISBURSEMENT This line item provides funding for an amortization payment to increase the funded status of the Public Employees' Retirement Association (PERA).

STATUTORY AUTHORITY: Section 24-51-411, C.R.S.

REQUEST: The Department requests an appropriation of $4,687,873 total funds, including $1,968,671 General Fund, $2,684,363 cash funds, $2,301 reappropriated funds, and $32,538 federal funds.

The request includes annual SAED base adjustments and annualization of the following prior year budget actions: • FY 2019-20 R1 GenTax Support Enhancements; and • H.B. 20-1001 Nicotine Product Reg.

RECOMMENDATION: Staff recommends appropriating $4,796,153 total funds, including $1,987,698 General Fund, $2,773,463 cash funds, $2,311 reappropriated funds, and $32,681 federal funds. The

3-Mar-21 15 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

recommendation reflects Committee action on statewide compensation and includes staff recommendation to deny POTS adjustments included in Department request items. Adjustments are outlined in the following table.

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, S. B. 06-235 SUPPLEMENTAL AMORTIZATION EQUALIZATION DISBURSEMENT TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $4,778,411 $1,800,739 $2,935,957 $4,705 $37,010 0.0 Annualize prior year budget actions 63,601 63,601 0 0 0 0.0 Annualize prior year legislation 7,105 0 7,105 0 0 0.0 R2 Sales and use tax simplification system support 0 0 0 0 0 0.0 R4 Saving from adopting virtual government 0 0 0 0 0 0.0 Non-prioritized requests 0 0 0 0 0 0.0 Technical adjustments 0 0 0 0 0 0.0 R6 Realign Specialized Business Group spending 0 0 0 0 0 0.0 R5 Realign DMV spending 0 0 0 0 0 0.0 Centrally appropriated line items (52,964) 123,358 (169,599) (2,394) (4,329) 0.0 TOTAL $4,796,153 $1,987,698 $2,773,463 $2,311 $32,681 0.0

INCREASE/(DECREASE) $17,742 $186,959 ($162,494) ($2,394) ($4,329) 0.0 Percentage Change 0.4% 10.4% (5.5%) (50.9%) (11.7%) 0.0%

FY 2021-22 EXECUTIVE REQUEST $4,687,873 $1,968,671 $2,684,363 $2,301 $32,538 0.0 Request Above/(Below) Recommendation ($108,280) ($19,027) ($89,100) ($10) ($143) 0.0

PERA DIRECT DISTRIBUTION This line item is included as a common policy allocation payment for the state portion of the PERA Direct Distribution created in Section 24-51-414, C.R.S., enacted in S.B. 18-200.

STATUTORY AUTHORITY: Section 24-51-414, (2) C.R.S.

REQUEST: The Department requests an appropriation of $2,256,397 total funds, including $918,741 General Fund, $1,320,948 cash funds, $1,103 reappropriated funds, and $15,605 federal funds.

RECOMMENDATION: Staff recommends appropriating $2,256,397 total funds, including $919,342 General Fund, $1,320,330 cash funds, $1,104 reappropriated funds, and $15,621 federal funds. The recommendation reflects Committee action on statewide compensation.

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, PERA DIRECT DISTRIBUTION TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $2,143,176 $829,713 $1,311,348 $2,115 $0 0.0 Other legislation (2,143,176) (829,713) (1,311,348) (2,115) 0 0.0

3-Mar-21 16 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, PERA DIRECT DISTRIBUTION TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE TOTAL $0 $0 $0 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $0 $0 $0 $0 $0 0.0 Annualize prior year legislation 2,143,176 829,713 1,311,348 2,115 0 0.0 Centrally appropriated line items 113,221 89,629 8,982 (1,011) 15,621 0.0 TOTAL $2,256,397 $919,342 $1,320,330 $1,104 $15,621 0.0

INCREASE/(DECREASE) $2,256,397 $919,342 $1,320,330 $1,104 $15,621 0.0 Percentage Change 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $2,256,397 $918,741 $1,320,948 $1,103 $15,605 0.0 Request Above/(Below) Recommendation $0 ($601) $618 ($1) ($16) 0.0

SALARY SURVEY This line item funds salary increases. Salary survey increases may include across-the-board increases, movement to minimum related to salary range adjustments, and specified classification increases.

STATUTORY AUTHORITY: Section 24-50-104, C.R.S.

REQUEST: The Department requests an appropriation of $2,233,516 total funds, including $881,868 General Fund, $1,335,920 cash funds, $1,035 reappropriated funds, and $14,693 federal funds.

RECOMMENDATION: Staff recommends appropriating $2,697,763 total funds, including $1,071,541 General Fund, $1,607,042 cash funds, $1,263 reappropriated funds, and $17,917 federal funds. The recommendation reflects Committee action on statewide compensation for a 2.5 percent across-the- board salary survey increase.

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, SALARY SURVEY TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $0 $0 $0 $0 $0 0.0 TOTAL $0 $0 $0 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $0 $0 $0 $0 $0 0.0 Centrally appropriated line items 2,697,763 1,071,541 1,607,042 1,263 17,917 0.0 TOTAL $2,697,763 $1,071,541 $1,607,042 $1,263 $17,917 0.0

INCREASE/(DECREASE) $2,697,763 $1,071,541 $1,607,042 $1,263 $17,917 0.0 Percentage Change 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $2,233,516 $881,868 $1,335,920 $1,035 $14,693 0.0 Request Above/(Below) Recommendation ($464,247) ($189,673) ($271,122) ($228) ($3,224) 0.0

3-Mar-21 17 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

SHIFT DIFFERENTIAL This line item pays for the incremental costs associated with higher compensation rates for employees who work beyond regular working hours.

STATUTORY AUTHORITY: Section 24-50-104, C.R.S.

REQUEST: The Department requests an appropriation of $102,026 cash funds. The request includes an adjustment for an appropriation equal to the FY 2019-20 actual expenditure for this line item.

RECOMMENDATION: Staff recommends appropriating $102,026 cash funds. The recommendation reflects Committee action on statewide compensation. Adjustments are outlined in the following table.

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, SHIFT DIFFERENTIAL TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $123,918 $0 $123,918 $0 $0 0.0 TOTAL $123,918 $0 $123,918 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $123,918 $0 $123,918 $0 $0 0.0 Centrally appropriated line items (21,892) 0 (21,892) 0 0 0.0 TOTAL $102,026 $0 $102,026 $0 $0 0.0

INCREASE/(DECREASE) ($21,892) $0 ($21,892) $0 $0 0.0 Percentage Change (17.7%) 0.0% (17.7%) 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $102,026 $0 $102,026 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

WORKERS' COMPENSATION This line item pays the Department's estimated share for inclusion in the State's worker's compensation program for state employees.

STATUTORY AUTHORITY: Section 24-30-150.7, C.R.S.

REQUEST: The Department requests an appropriation of $568,552 total funds, including $207,766 General Fund, and $360,786 cash funds.

RECOMMENDATION: Staff recommends appropriating $544,854 total funds, including $207,799 General Fund, and $337,055 cash funds. The recommendation reflects Committee action on common policies. Adjustments are outlined in the following table.

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, WORKERS' COMPENSATION TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $692,913 $264,266 $428,647 $0 $0 0.0 TOTAL $692,913 $264,266 $428,647 $0 $0 0.0

3-Mar-21 18 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, WORKERS' COMPENSATION TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $692,913 $264,266 $428,647 $0 $0 0.0 Centrally appropriated line items (148,059) (56,467) (91,592) 0 0 0.0 TOTAL $544,854 $207,799 $337,055 $0 $0 0.0

INCREASE/(DECREASE) ($148,059) ($56,467) ($91,592) $0 $0 0.0 Percentage Change (21.4%) (21.4%) (21.4%) 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $568,552 $207,766 $360,786 $0 $0 0.0 Request Above/(Below) Recommendation $23,698 ($33) $23,731 $0 $0 0.0

OPERATING EXPENSES This line item funds operating expenses for the Executive Director's Office, including office supplies and materials, telecommunications, travel, training, printing, variable vehicle expenses including maintenance, fuel and insurance for the Department's assigned fleet vehicles, information technology updates and equipment maintenance and replacement, and capital outlay.

STATUTORY AUTHORITY: Section 24-35-105, C.R.S.

REQUEST: The Department requests an appropriation of $3,248,139 total funds, including $2,098,377 General Fund and $1,149,762 cash funds.

The request includes annualization adjustments for the following: • FY 2019-20 R1 GenTax Support Enhancements; and • H.B. 20-1153 Colorado Partnership.

The request includes the Department's R3 request item.

RECOMMENDATION: The recommendation is pending Committee consideration of the R3 request item at the later Department figure setting. Staff requests permission to adjust appropriations based on the Committee decision. Adjustments are outlined in the following table.

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, OPERATING EXPENSES TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $2,342,449 $1,608,261 $734,188 $0 $0 0.0 TOTAL $2,342,449 $1,608,261 $734,188 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $2,342,449 $1,608,261 $734,188 $0 $0 0.0 R3 Information Technology reorganization & streamlining 1,245,942 839,428 406,514 0 0 0.0 Annualize prior year legislation 9,060 0 9,060 0 0 0.0 Annualize prior year budget actions 6,650 6,650 0 0 0 0.0 Non-prioritized requests (355,962) (355,962) 0 0 0 0.0 TOTAL $3,248,139 $2,098,377 $1,149,762 $0 $0 0.0

3-Mar-21 19 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, OPERATING EXPENSES TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE INCREASE/(DECREASE) $905,690 $490,116 $415,574 $0 $0 0.0 Percentage Change 38.7% 30.5% 56.6% 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $3,248,139 $2,098,377 $1,149,762 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

POSTAGE Due to the volume of mail that it handles, the Department operates its own mail center. The Department mails a wide variety of items to taxpayers and licensees, including tax forms, motor vehicle titles, driver license renewal applications, reminders, bill, refund warrants, inquiries, licenses, hearing notices, tax booklets, and other miscellaneous documents. This line item was added in FY 2014-15.

STATUTORY AUTHORITY: Section 24-35-105, C.R.S.

REQUEST: The Department requests an appropriation of $97,272 total funds, including $52,165 General Fund and $45,107 cash funds.

The request includes an annualization adjustment for the FY 2021-22 R4 DMV Driver's License Documents budget item.

The request includes adjustments for the Department's NP2 and R4 requests.

RECOMMENDATION: Staff recommends appropriating $97,272 total funds, including $52,165 General Fund and $45,107 cash funds. The recommendation is consistent with the Committee's decision related to NP2 and includes staff's recommended approval of the R4 request.

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, POSTAGE TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $3,224,512 $2,848,606 $375,906 $0 $0 0.0 TOTAL $3,224,512 $2,848,606 $375,906 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $3,224,512 $2,848,606 $375,906 $0 $0 0.0 Annualize prior year budget actions 30,555 0 30,555 0 0 0.0 Non-prioritized requests (3,089,000) (2,746,441) (342,559) 0 0 0.0 R4 Saving from adopting virtual government (68,795) (50,000) (18,795) 0 0 0.0 TOTAL $97,272 $52,165 $45,107 $0 $0 0.0

INCREASE/(DECREASE) ($3,127,240) ($2,796,441) ($330,799) $0 $0 0.0 Percentage Change (97.0%) (98.2%) (88.0%) 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $97,272 $52,165 $45,107 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

3-Mar-21 20 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

LEGAL SERVICES This line item provides funding for the Department to purchase legal services from the Department of Law.

STATUTORY AUTHORITY: Section 24-31-101, C.R.S.

REQUEST: The Department requests an appropriation of $5,271,419 total funds, including $2,644,877 General Fund and $2,626,542 cash funds.

RECOMMENDATION The staff recommendation is pending the Committee common policy decision for this line item. Staff requests permission to reflect Committee action.

ADMINISTRATIVE LAW JUDGE SERVICES This line item provides funding for the Department to purchase Administrative Law Judge services from the Office of Administrative Courts in the Department of Personnel.

STATUTORY AUTHORITY: Sections 24-30-1001 (3) and 24-30-1002, C.R.S.

REQUEST: The Department requests an appropriation of $13,073 cash funds.

RECOMMENDATION: Staff recommends appropriating $12,770 cash funds. The recommendation reflects Committee action on common policies. Adjustments are outlined in the following table.

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, ADMINISTRATIVE LAW JUDGE SERVICES TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $1,405 $0 $1,405 $0 $0 0.0 TOTAL $1,405 $0 $1,405 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $1,405 $0 $1,405 $0 $0 0.0 Centrally appropriated line items 11,365 0 11,365 0 0 0.0 TOTAL $12,770 $0 $12,770 $0 $0 0.0

INCREASE/(DECREASE) $11,365 $0 $11,365 $0 $0 0.0 Percentage Change 808.9% 0.0% 808.9% 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $13,073 $0 $13,073 $0 $0 0.0 Request Above/(Below) Recommendation $303 $0 $303 $0 $0 0.0

STATEWIDE TRAINING This line item requested by the Department of Personnel would provide funding for the Department's share of statewide training from the Department of Personnel.

STATUTORY AUTHORITY: Section 24-30-1510 and 24-30-1510.5, C.R.S.

3-Mar-21 21 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

REQUEST: The Department requests an appropriation of $25,415 General Fund.

RECOMMENDATION: Staff will not include this line item in the Long Bill. The recommendation reflects Committee action on common policies.

PAYMENT TO RISK MANAGEMENT AND PROPERTY FUNDS This line item provides funding for the Department's share of liability and property insurance from Risk Management in the Department of Personnel.

STATUTORY AUTHORITY: Section 24-30-1510 and 24-30-1510.5, C.R.S.

REQUEST: The Department requests an appropriation of $412,311 total funds including $150,671 General Fund and $261,640 cash funds.

RECOMMENDATION: Staff recommends appropriating $425,411 total funds, including $162,245 General Fund, and $263,166 cash funds. The recommendation reflects Committee action on common policies. Adjustments are outlined in the following table.

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, PAYMENT TO RISK MANAGEMENT AND PROPERTY FUNDS TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $273,106 $104,158 $168,948 $0 $0 0.0 TOTAL $273,106 $104,158 $168,948 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $273,106 $104,158 $168,948 $0 $0 0.0 Centrally appropriated line items 152,305 58,087 94,218 0 0 0.0 TOTAL $425,411 $162,245 $263,166 $0 $0 0.0

INCREASE/(DECREASE) $152,305 $58,087 $94,218 $0 $0 0.0 Percentage Change 55.8% 55.8% 55.8% 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $412,311 $150,671 $261,640 $0 $0 0.0 Request Above/(Below) Recommendation ($13,100) ($11,574) ($1,526) $0 $0 0.0

VEHICLE LEASE PAYMENTS This line item provides funding for payments to Fleet Management in the Department of Personnel for the cost of lease-purchase payments for Department vehicles.

STATUTORY AUTHORITY: Section 24-30-1104 (2), C.R.S.

REQUEST: The Department requests an appropriation of $855,591 total funds, including $136,320 General Fund and $719,271 cash funds.

The request includes a common policy base adjustment and annualizations for the following bills:

3-Mar-21 22 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

• H.B. 19-1230 Marijuana Hospitality Establishments; and • H.B. 20-1001 Nicotine Product Reg.

The request includes the Department's R4 request.

RECOMMENDATION: Staff recommends appropriating $838,511 total funds, including $130,204 General Fund, and $708,307 cash funds. The recommendation reflects Committee action on common policies and includes staff recommendation for approval of R4. Adjustments are outlined in the following table.

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, VEHICLE LEASE PAYMENTS TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $739,688 $159,087 $580,601 $0 $0 0.0 Other legislation $69,450 $0 $69,450 $0 $0 0.0 TOTAL $809,138 $159,087 $650,051 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $809,138 $159,087 $650,051 $0 $0 0.0 Centrally appropriated line items 52,853 11,367 41,486 0 0 0.0 Annualize prior year legislation 16,770 0 16,770 0 0 0.0 R4 Saving from adopting virtual government (40,250) (40,250) 0 0 0 0.0 TOTAL $838,511 $130,204 $708,307 $0 $0 0.0

INCREASE/(DECREASE) $29,373 ($28,883) $58,256 $0 $0 0.0 Percentage Change 3.6% (18.2%) 9.0% 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $855,591 $136,320 $719,271 $0 $0 0.0 Request Above/(Below) Recommendation $17,080 $6,116 $10,964 $0 $0 0.0

LEASED SPACE This line item funds leasing costs for more than 80 office locations throughout the state, mostly for Driver's License Offices and State Lottery Offices.

STATUTORY AUTHORITY: Section 24-35-105, C.R.S.

REQUEST: The Department requests an appropriation of $6,973,403 total funds, including $1,016,711 General Fund and $5,956,692 cash funds.

The request includes the following annualization and technical adjustments: • FY 2019-20 R1 GenTax Support Enhancements; • FY 2019-20 S2 Leased Space for 2019 Special Bills; and • Lease contract escalator.

The request includes the Department's R4 request item.

3-Mar-21 23 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

RECOMMENDATION: Staff recommends appropriating $6,973,403 total funds, including $1,016,711 General Fund and $5,956,692 cash funds. The recommendation includes approval of R4. Adjustments are outlined in the following table.

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, LEASED SPACE TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $6,226,697 $1,036,802 $5,189,895 $0 $0 0.0 Other legislation $124,740 $0 $124,740 $0 $0 0.0 TOTAL $6,351,437 $1,036,802 $5,314,635 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $6,351,437 $1,036,802 $5,314,635 $0 $0 0.0 Annualize prior year budget actions 545,160 146,520 398,640 0 0 0.0 Centrally appropriated line items 260,966 33,389 227,577 0 0 0.0 Annualize prior year legislation 15,840 0 15,840 0 0 0.0 R4 Saving from adopting virtual government (200,000) (200,000) 0 0 0 0.0 TOTAL $6,973,403 $1,016,711 $5,956,692 $0 $0 0.0

INCREASE/(DECREASE) $621,966 ($20,091) $642,057 $0 $0 0.0 Percentage Change 9.8% (1.9%) 12.1% 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $6,973,403 $1,016,711 $5,956,692 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

CAPITOL COMPLEX LEASED SPACE This line item pays for the Department's share of costs for space in the Department of Personnel's, Capitol Complex property management program.

STATUTORY AUTHORITY: Section 24-30-1104 (4), C.R.S.

REQUEST: The Department requests an appropriation of $898,482 total funds, including $328,333 General Fund and $570,149 cash funds.

The request includes common policy base adjustments, which includes the Department vacating the Capitol Annex building in the Capitol Complex. The request also includes the Department's R4 request item, reflected as a zero dollar adjustment in this line item; the R4 request item refers to savings generated from vacating the Capitol Annex building as contingent upon approval of the R4 request.

RECOMMENDATION: Staff recommends appropriating $902,495 total funds, including $336,367 General Fund, and $566,128 cash funds. The recommendation reflects Committee action on common policies and staff's recommendation for approval of R4. Adjustments are outlined in the following table.

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, CAPITOL COMPLEX LEASED SPACE TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $2,316,838 $863,503 $1,453,335 $0 $0 0.0

3-Mar-21 24 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, CAPITOL COMPLEX LEASED SPACE TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE TOTAL $2,316,838 $863,503 $1,453,335 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $2,316,838 $863,503 $1,453,335 $0 $0 0.0 R4 Saving from adopting virtual government 0 0 0 0 0 0.0 Centrally appropriated line items (1,414,343) (527,136) (887,207) 0 0 0.0 TOTAL $902,495 $336,367 $566,128 $0 $0 0.0

INCREASE/(DECREASE) ($1,414,343) ($527,136) ($887,207) $0 $0 0.0 Percentage Change (61.0%) (61.0%) (61.0%) 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $898,482 $328,333 $570,149 $0 $0 0.0 Request Above/(Below) Recommendation ($4,013) ($8,034) $4,021 $0 $0 0.0

PAYMENTS TO OIT This line item represents payments to the Governor’s Office of Information Technology for information technology services.

STATUTORY AUTHORITY: Section 24-37.5-104, C.R.S.

REQUEST: The Department requests an appropriation of $7,633,717 total funds, including $7,033,868 General Fund and $599,849 cash funds.

The request includes an OIT base adjustment request, an OIT non-prioritized request, and the Department's NP2 request.

STAFF RECOMMENDATION: The base appropriation adjustment is pending the Committee common policy decision for this line item. The OIT non-prioritized request is also pending. Staff requests permission to include adjustments based on Committee action. Requested adjustments are outlined in the following table.

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, PAYMENTS TO OIT TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $20,521,724 $11,915,609 $8,606,115 $0 $0 0.0 TOTAL $20,521,724 $11,915,609 $8,606,115 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $20,521,724 $11,915,609 $8,606,115 $0 $0 0.0 Centrally appropriated line items (11,735,583) (4,300,638) (7,434,945) 0 0 0.0 Non-prioritized requests (1,152,424) (581,103) (571,321) 0 0 0.0 TOTAL $7,633,717 $7,033,868 $599,849 $0 $0 0.0

INCREASE/(DECREASE) ($12,888,007) ($4,881,741) ($8,006,266) $0 $0 0.0 Percentage Change (62.8%) (41.0%) (93.0%) 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $7,633,717 $7,033,868 $599,849 $0 $0 0.0

3-Mar-21 25 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, PAYMENTS TO OIT TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

CORE OPERATIONS This line item provides funds for the Department’s share of the operational costs of Colorado Operations Resource Engine (CORE), the statewide accounting system.

STATUTORY AUTHORITY: Section 24-30-209, C.R.S.

REQUEST: The Department requests an appropriation of $1,115,759 total funds, including $407,733 General Fund and $708,026 cash funds.

RECOMMENDATION: Staff recommends appropriating $987,111 total funds, including $376,468 General Fund, and $610,643 cash funds. The recommendation reflects Committee action on common policies. Adjustments are outlined in the following table.

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, CORE OPERATIONS TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $1,343,376 $512,342 $831,034 $0 $0 0.0 TOTAL $1,343,376 $512,342 $831,034 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $1,343,376 $512,342 $831,034 $0 $0 0.0 Centrally appropriated line items (356,265) (135,874) (220,391) 0 0 0.0 TOTAL $987,111 $376,468 $610,643 $0 $0 0.0

INCREASE/(DECREASE) ($356,265) ($135,874) ($220,391) $0 $0 0.0 Percentage Change (26.5%) (26.5%) (26.5%) 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $1,115,759 $407,733 $708,026 $0 $0 0.0 Request Above/(Below) Recommendation $128,648 $31,265 $97,383 $0 $0 0.0

UTILITIES This line item provides funding to support the cost of utilities at the Department's state-owned facilities that include driver's license offices and gaming offices.

STATUTORY AUTHORITY: Section 24-35-105, C.R.S.

REQUEST: The Department requests an appropriation of $83,703 cash funds. The request includes the Department's R4 request item.

RECOMMENDATION: Staff recommends appropriating $83,703 cash funds. The recommendation includes approval of R4.

3-Mar-21 26 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

EXECUTIVE DIRECTOR'S OFFICE, ADMINISTRATION AND SUPPORT, UTILITIES TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $143,703 $0 $143,703 $0 $0 0.0 TOTAL $143,703 $0 $143,703 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $143,703 $0 $143,703 $0 $0 0.0 R4 Saving from adopting virtual government (60,000) 0 (60,000) 0 0 0.0 TOTAL $83,703 $0 $83,703 $0 $0 0.0

INCREASE/(DECREASE) ($60,000) $0 ($60,000) $0 $0 0.0 Percentage Change (41.8%) 0.0% (41.8%) 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $83,703 $0 $83,703 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

(B) HEARINGS DIVISION This division conducts hearings in a variety of areas including driver's license suspensions, revocations, probationary licenses, cancellation or denial of medical and physical disability, habitual traffic offenders, horse and dog racing licenses, and other actions that affect the licensing rights of citizens. The division also provides computer support and data analysis for public awareness programs related to traffic safety. Starting in FY 2016-17 the Hearings Division budget moved from the Enforcement Division to the Executive Director’s Office.

PERSONAL SERVICES This line item pays for the program staff, benefits, and contract services. Typical adjustments that occur each year include annualization of salary increases and performance awards granted in the prior fiscal year and common policy base reductions.

STATUTORY AUTHORITY: Sections 42-2-132, and 12-6-123, C.R.S.

REQUEST: The Department requests an appropriation of $2,503,848 cash funds and 33.3 FTE.

The request includes an annualization adjustment for H.B. 20-1001 Nicotine Product Reg and the Department's R4 request item.

RECOMMENDATION: Staff recommends appropriating $2,503,848 cash funds and 33.3 FTE. The recommendation includes approval of R4. Adjustments are outlined in the following table.

EXECUTIVE DIRECTOR'S OFFICE, HEARINGS DIVISION, PERSONAL SERVICES TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $2,460,747 $0 $2,460,747 $0 $0 32.0 Other legislation $96,012 $0 $96,012 $0 $0 1.5

3-Mar-21 27 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

EXECUTIVE DIRECTOR'S OFFICE, HEARINGS DIVISION, PERSONAL SERVICES TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE TOTAL $2,556,759 $0 $2,556,759 $0 $0 33.5

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $2,556,759 $0 $2,556,759 $0 $0 33.5 Annualize prior year legislation 59,793 0 59,793 0 0 0.8 R4 Saving from adopting virtual government (112,704) 0 (112,704) 0 0 (1.0) TOTAL $2,503,848 $0 $2,503,848 $0 $0 33.3

INCREASE/(DECREASE) ($52,911) $0 ($52,911) $0 $0 (0.2) Percentage Change (2.1%) 0.0% (2.1%) 0.0% 0.0% (0.6%)

FY 2021-22 EXECUTIVE REQUEST $2,503,848 $0 $2,503,848 $0 $0 33.3 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

OPERATING EXPENSES This line item funds operating costs, including telecommunications, general office supplies and printing costs.

STATUTORY AUTHORITY: Sections 42-2-132, 12-6-123, and 24-35-105, C.R.S.

REQUEST: The Department requests an appropriation of $110,412 cash funds.

The request includes an annualization adjustment for H.B. 20-1001 Nicotine Product Reg.

RECOMMENDATION: Staff recommends appropriating $110,412 cash funds. Adjustments are outlined in the following table.

EXECUTIVE DIRECTOR'S OFFICE, HEARINGS DIVISION, OPERATING EXPENSES TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $97,737 $0 $97,737 $0 $0 0.0 Other legislation $11,325 $0 $11,325 $0 $0 0.0 TOTAL $109,062 $0 $109,062 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $109,062 $0 $109,062 $0 $0 0.0 Annualize prior year legislation 1,350 0 1,350 0 0 0.0 TOTAL $110,412 $0 $110,412 $0 $0 0.0

INCREASE/(DECREASE) $1,350 $0 $1,350 $0 $0 0.0 Percentage Change 1.2% 0.0% 1.2% 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $110,412 $0 $110,412 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

3-Mar-21 28 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

INDIRECT COST ASSESSMENT This line item reflects the indirect cost assessment for this program, which is based on the Department and Statewide indirect cost allocation plans. This appropriation reflects administrative support costs for this division provided by the Executive Director's Office and statewide services which are not directly billed. Indirect cost assessments (1) offset General Fund and (2) reflect the full cost of cash- funded programs.

STATUTORY AUTHORITY: Section 24-75-1401, C.R.S

REQUEST: The Department requests an appropriation of $253,913 cash funds.

RECOMMENDATION: Staff recommends appropriating $253,913 cash funds, consistent with the Department's indirect cost plan.

EXECUTIVE DIRECTOR'S OFFICE, HEARINGS DIVISION, INDIRECT COST ASSESSMENT TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $203,475 $0 $203,475 $0 $0 0.0 TOTAL $203,475 $0 $203,475 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $203,475 $0 $203,475 $0 $0 0.0 Indirect cost assessment 50,438 0 50,438 0 0 0.0 TOTAL $253,913 $0 $253,913 $0 $0 0.0

INCREASE/(DECREASE) $50,438 $0 $50,438 $0 $0 0.0 Percentage Change 24.8% 0.0% 24.8% 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $253,913 $0 $253,913 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

3-Mar-21 29 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

(3) TAXATION BUSINESS GROUP

The Taxation Business Group is charged with the collection, administration, audit, and enforcement responsibilities pertaining to all taxes, fees, bonds, and licenses covered under Colorado’s tax laws. The business group is directed by an administrative section. Senior management, policy-making, and budgetary support for the division are contained in this section. This division is primarily funded with General Fund, but does receive some funding from the Highway Users Tax Fund (HUTF) and federal programs.

TAXATION BUSINESS GROUP TOTAL GENERAL CASH REAPPROPRIATED FEDERAL

FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 Appropriation HB 20-1360 (Long Bill) $80,139,398 $75,838,388 $3,131,510 $317,368 $852,132 408.6 Other legislation 123,276 102,546 20,730 0 0 0.0 TOTAL $80,262,674 $75,940,934 $3,152,240 $317,368 $852,132 408.6

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $80,262,674 $75,940,934 $3,152,240 $317,368 $852,132 408.6 R2 Sales and use tax simplification system support 2,169,705 2,169,705 0 0 0 4.6 R7 Budget savings - Taxation Business Group (420,722) (420,722) 0 0 0 (0.0) BA1 Proposition EE Funding 50,206 50,206 0 0 0 0.9 Non-prioritized requests 4,375,644 4,375,644 0 0 0 0.0 Annualize prior year legislation 488,347 511,077 (22,730) 0 0 9.3 Technical adjustments 273,907 176,827 97,080 0 0 0.0 Indirect cost assessment 913 0 913 0 0 0.0 Centrally appropriated line items (271,862) (271,862) 0 0 0 0.0 TOTAL $86,928,812 $82,531,809 $3,227,503 $317,368 $852,132 423.4

INCREASE/(DECREASE) $6,666,138 $6,590,875 $75,263 $0 $0 14.8 Percentage Change 8.3% 8.7% 2.4% 0.0% 0.0% 3.6%

FY 2021-22 EXECUTIVE REQUEST $86,863,211 $82,568,682 $3,125,029 $317,368 $852,132 423.9 Request Above/(Below) Recommendation ($65,601) $36,873 ($102,474) $0 $0 0.5

DECISION ITEMS - TAXATION BUSINESS GROUP

 R7 BUDGET SAVINGS – TAXATION BUSINESS GROUP REQUEST: The Department requests: 1 An ongoing decrease of $420,722 General Fund for the Tax Administration IT System (GenTax) Support line item in the Taxation Business Group; and 2 A consolidation of the (B) Taxation and Compliance Division and the (C) Taxpayer Service Division into the Taxation Services subdivision.

RECOMMENDATION: Staff recommends that the Committee approve both portions of the request. Additionally, staff recommends that the new Taxation Services subdivision be placed in the position of the second subdivision, to follow Administration and to precede Tax Conferee. The new subdivision Long Bill order will appear as follows: (A) Administration; (B) Taxation Services; (C) Tax Conferee; and (D) Special Purpose.

3-Mar-21 30 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

Consistent with this recommendation, staff has repositioned subdivisions in that order in this document, along with the former subdivisions (B) and (C) as (E) and (F) as follow: (E) Taxation and Compliance Division; and (F) Taxpayer Service Division.

ANALYSIS: GenTax Savings The Department states that as a result of an effort to preserve General Fund during the economic slowdown and revenue downturn, the Department negotiated a one-time forbearance of the annual inflationary contract escalator clause appropriated in FY 2020-21. The Department states that it is also reprioritizing planned work and deferring other GenTax programming and improvements. These actions result in the requested decrease of $420,722 General Fund.

Staff recommends that the Committee approve this portion of the request.

The Department has requested and generally received increases related to GenTax and FAST Enterprises over the years of the GenTax system. As the Department has taken increased ownership of the GenTax system relative to the vendor through Department initiatives over the last two to three budget cycles, this request is a positive sign that the Department is approaching its relationship with the vendor from a better position as it relates to cost containment in particular. Staff sees this as a positive sign in the cross-branch work on these issues over the last two to three budget cycles and supports the Department's request.

Taxation Services Consolidation The Department requests a budget neutral transfer of spending authority from the Taxation and Compliance Division and the Taxpayer Service Division into a consolidated Taxation Services subdivision.

The Taxation and Compliance Division is the collections and audit operations of the Taxation Business Group. The Taxpayer Service Division processes income tax returns, and processes severance, sales and use, withholding, and excise taxes assessed on alcohol, marijuana, cigarette, tobacco, and fuel. The Taxpayer Service Division operates a call center and five, walk-in customer service centers for taxpayer assistance in Denver, Fort Collins, Colorado Springs, Pueblo, and Grand Junction.

The Department states that the two Divisions fit together operationally through the full tax return process and both report to the Division Director of the Taxation Business Group. The Department states that the consolidated subdivision will be able to more seamlessly manage operations, allowing for more cross-training and an improved ability to respond to customer needs. The realignment will simplify management of the appropriations and result in a more efficient use of resources.

Personal services line items from both divisions, along with the Seasonal Tax Processing line item in the Taxpayer Service Division, will move into the consolidated personal services line item. As a result, the Seasonal Tax Processing line item will be eliminated entirely.

Operating expenses line items from both divisions will move into the consolidated operating expenses line item.

3-Mar-21 31 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

The Joint Audit Program and the Mineral Audit Program line items in the Taxation and Compliance Division will be transferred to the Taxation Services subdivision under the same names.

The Document Management, Fuel Tracking System, and Indirect Cost Assessment line items in the Taxpayer Service Division will be transferred to the Taxation Services subdivision under the same names.

Staff recommends that the Committee approve this portion of the request.

Since assuming responsibility for the Department in 2017, staff has held the opinion that the budget split and apparent operational split within the Taxation Business Group was likely not well-structured to capture process and general operating efficiencies due to the "silo" approach of the two, primary tax service divisions. However, staff prefers not to make recommendations for department operating budget restructuring to avoid getting involved in internal management of state agencies, and therefore focused on other budget priorities and never pursued this recommendation.

Staff appreciates the Department's request and believes that this consolidation will improve tax service operations at the Taxation Business Group. While the request does not anticipate budget savings, this consolidation will likely lead to opportunities for internal efficiencies and improved customer service.

 BA1 PROPOSITION EE FUNDING REQUEST: The Department requests an increase of $67,608 General Fund and 1.0 FTE to fund a Tax Examiner I position to manage policy changes related to Proposition EE – Taxes on Nicotine Products.

RECOMMENDATION: Staff recommends that the Committee approve an increase of $50,206 General Fund and 0.9 FTE to fund the Department's request.

ANALYSIS: House Bill 20-1427 Cigarette Tobacco and Nicotine Products Tax provided that Proposition EE was placed on the ballot for the 2020 General Election. The Legislative Council Services (LCS) Fiscal Note recognized that the Department would require additional resources to support the enactment of those tax policies if the proposition passed. Resources were not provided in the bill in the event the proposition did not pass. The Fiscal Note indicated that resources would be requested through the budget process. Request BA1 is the Department's request for that purpose.

Staff recommends that the Committee approve the BA1 request, with modifications as described and included in the table below.

The Department requests 1.0 FTE of a Tax Examiner I position to handle the additional responsibilities of managing tax policy changes related to Proposition EE. The request, entirely located in the personal services line item, appears to comprise the personal services, operating expenses, and, potentially, POTS appropriations, although this is not clearly stated in the request narrative. Additionally, it appears the request is made for a full, 1.0 FTE, although this position is General

3-Mar-21 32 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

Funded and therefore subject to a reduced appropriation in the first year to account for the pay date shift.

Staff recommens modified appropriations based on LCS Fiscal Note standards based on JBC policy for new FTE. Additionally, staff includes annualization adjustments consistent with LCS Fiscal Note and JBC policy.

The following table outlines the Department's request, staff's recommendation, and the annualization adjustment.

BA1 Proposition EE Funding FY 2021-22 FY 2021-22 FY 2022-23 Request Recommendation Annualization FTE Cost FTE Cost FTE Cost BA1 Proposition EE Funding Personal Services - Tax Examiner I 1.0 $67,608 0.9 $42,656 1.0 $46,533 POTS 0 0 14,210 Operating Expense 0 7,550 1,350 Total 1.0 $67,608 0.9 $50,206 1.0 $62,093

Taxpayer Services Division - PS 0.0 $67,608 0.0 $42,656 0.0 $46,533 Taxpayer Services Division - OE $0 $7,550 $1,350

LINE ITEM DETAIL - TAXATION BUSINESS GROUP

(A) ADMINISTRATION

STATUTORY AUTHORITY: Sections 24-50-101, et seq., and 24-35-101, et seq., C.R.S.

REQUEST: The Department requests an appropriation of $567,667 total funds, including $542,905 General Fund and $24,762 cash funds, and 5.0 FTE.

The request includes an indirect cost recoveries refinancing.

RECOMMENDATION: Staff recommends appropriating $567,667 total funds, including $542,905 General Fund and $24,762 cash funds, and 5.0 FTE. Adjustments are outlined in the following table.

TAXATION BUSINESS GROUP, ADMINISTRATION, PERSONAL SERVICES TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $567,667 $537,511 $30,156 $0 $0 5.0 TOTAL $567,667 $537,511 $30,156 $0 $0 5.0

3-Mar-21 33 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

TAXATION BUSINESS GROUP, ADMINISTRATION, PERSONAL SERVICES TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $567,667 $537,511 $30,156 $0 $0 5.0 Technical adjustments 0 5,394 (5,394) 0 0 0.0 TOTAL $567,667 $542,905 $24,762 $0 $0 5.0

INCREASE/(DECREASE) $0 $5,394 ($5,394) $0 $0 0.0 Percentage Change 0.0% 1.0% (17.9%) 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $567,667 $542,905 $24,762 $0 $0 5.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

OPERATING EXPENSES This line item funds general office expenses and the Group's share of a high volume printer that is capable of producing the forms and mass billings that the Group requires.

STATUTORY AUTHORITY: Section 24-35-105, C.R.S.

REQUEST: The Department requests a continuation appropriation of $12,543 General Fund.

RECOMMENDATION: Staff recommends appropriating $12,543 General Fund.

TAX ADMINISTRATION IT SYSTEM (GENTAX) SUPPORT This line item provides funding for the managed services contract that supports and maintains the Department's GenTax software tax collection and administration system. The GenTax software is the culmination of the Colorado Integrated Tax Architecture (CITA) project, a five-phase project to replace the Department of Revenue's tax collection systems. The project received $53.6 million of capital construction funding.

STATUTORY AUTHORITY: Section 24-35-101, et seq., C.R.S.

REQUEST: The Department requests an appropriation of $5,968,950 total funds, including $5,951,058 General Fund and $17,892 cash funds.

The request includes the following annualization and technical adjustments: • H.B. 18-1202 Income Tax Credit Organ Donation; • H.B. 18-1208 Expand Childcare Income Tax Credit; • H.B. 18-1267 Income Tax Credit Retrofitting; • H.B. 19-1159 Modify Motor Vehicle Income Tax; • H.B. 19-1230 Marijuana Hospitality Establishments; • S.B. 20-218 CDPHE Hazardous Substance; • H.B. 20-1001 Nicotine Product Reg; • H.B. 20-1024 Net Operating Loss Deduction; • H.B. 20-1236 Health Care Coverage;

3-Mar-21 34 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

• H.B. 20-1293 Emergency Telephone Service; • H.B. 20-1420 Adjust Tax Expenditures for State; and • A GenTax – FAST Enterprises Contract Escalator.

The request includes the Department's R7 request item.

RECOMMENDATION: Staff recommends appropriating $5,968,950 total funds, including $5,951,058 General Fund and $17,892 cash funds. The recommendation includes approval of R7 and an annualization for S.B. 20B-001 COVID-19 Relief Small & Minority Business Arts Orgs. Adjustments are outlined in the following table.

TAXATION BUSINESS GROUP, ADMINISTRATION, TAX ADMINISTRATION IT SYSTEM (GENTAX) SUPPORT TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $6,172,324 $6,152,432 $19,892 $0 $0 0.0 Other legislation $81,755 $61,025 $20,730 $0 $0 0.0 TOTAL $6,254,079 $6,213,457 $40,622 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $6,254,079 $6,213,457 $40,622 $0 $0 0.0 Technical adjustments 171,433 171,433 0 0 0 0.0 R7 Budget savings - Taxation Business Group (420,722) (420,722) 0 0 0 0.0 Annualize prior year legislation (35,840) (13,110) (22,730) 0 0 0.0 TOTAL $5,968,950 $5,951,058 $17,892 $0 $0 0.0

INCREASE/(DECREASE) ($285,129) ($262,399) ($22,730) $0 $0 0.0 Percentage Change (4.6%) (4.2%) (56.0%) 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $5,968,950 $5,951,058 $17,892 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

IDS PRINT PRODUCTION This new line item provides funding for consolidated printing and mail services provided by Integrated Document Solutions in the Department of Personnel. This item was requested as a non-prioritized request by the Department of Revenue. The Committee approved the Department of Personnel's request for this item at the appropriation included in the recommendation.

Savings across affected line items in the Department total $3.9 million General Fund and $342,559 cash funds for this item approved for a first-year appropriation of $4.6 million General Fund in this new line item. The NP2 Printing and Mail Migration to Integrated Document Solutions request item narrative states that "the costs associated with the transfer will require a minor increase in appropriations at the Department of Revenue in the first year." In the narrative, the out-year appropriation is identified as $3.9 million.

STATUTORY AUTHORITY: Sections 24-30-1104 and 24-35-105, C.R.S.

REQUEST: The Department requests an appropriation of $4,631,256 General Fund.

3-Mar-21 35 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

RECOMMENDATION: Staff recommends appropriating $4,624,048 General Fund. This recommendation is consistent with Committee action on NP2. Adjustments are outlined in the following table.

TAXATION BUSINESS GROUP, ADMINISTRATION, IDS PRINT PRODUCTION TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $0 $0 $0 $0 $0 0.0 TOTAL $0 $0 $0 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $0 $0 $0 $0 $0 0.0 Non-prioritized requests $4,624,048 $4,624,048 $0 $0 $0 0.0 TOTAL $4,624,048 $4,624,048 $0 $0 $0 0.0

INCREASE/(DECREASE) $4,624,048 $4,624,048 $0 $0 $0 0.0 Percentage Change 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $4,631,256 $4,631,256 $0 $0 $0 0.0 Request Above/(Below) Recommendation $7,208 $7,208 $0 $0 $0 0.0

(B) TAXATION SERVICES Taxation Services is the requested consolidation of the Taxation and Compliance Division and the Taxpayer Service Division in the Department's R7 request item. The Department's request creates this new subdivision as subdivision (F). Staff's recommendation is to re-order the request to place the new subdivision in the same Long Bill order within the Taxation Business Group division as the previously split subdivisions (B) Taxation and Compliance Division and (C) Taxpayer Service Division.

The Taxation and Compliance Division utilizes various methods to assist in the collection of monies due the State including: filing bankruptcy claims; recording and releasing tax liens and judgments; garnishment of wages and bank accounts; income tax distraint warrants; resolution of taxpayer disputes; and the utilization of private collection agencies. The Division also audits or examines Colorado tax returns both at the Department through its Discovery Program and at business locations through its Field Audit program. Audits are also conducted for the purpose of ascertaining whether royalties have been properly submitted to the State from operating and royalty mineral interests in Colorado.

This division conducts more than 7,000 field audits each year, primarily for retail sales tax, consumer use tax, corporate income tax, and mineral royalties. Tax agents are located in Denver and in six district offices around Colorado, as well as out-of-state offices located in the New York City metro area, Chicago, Houston, Dallas, Los Angeles, and San Francisco. The Division also manages the Joint Audit Program, the Joint Federal/State Motor Fuel Tax program and the Mineral Audit Program.

The Taxpayer Service Division (TPS) administers the State’s tax programs and provides assistance and information to Colorado taxpayers. The Division maintains five service centers in Colorado Springs, Denver, Fort Collins, Grand Junction, and Pueblo, as well as a tax information call center. The Division produces public information campaigns, administers tax classes to promote voluntary

3-Mar-21 36 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

compliance, and distributes information to the public to explain the State’s tax laws and policies. TPS also issues licenses and permits, processes tax forms and requests for refunds, resolves taxpayer problems, and intercepts income tax refunds for payment of debts owed to other State agencies and the Internal Revenue Service.

The Division also collects local sales taxes on behalf of non-home-rule cities, counties, and special districts. The division administers the property tax/rent heat/fuel grant program; severance taxes; the gasoline, special fuel, and aviation fuel environmental response surcharge; the International Fuel Tax Agreement; cigarette, tobacco, liquor and marijuana excise taxes; public utility assessments; and food service licensing.

PERSONAL SERVICES This line item pays for program staff salary and contract services. Typical adjustments that occur each year include annualization of salary increases and performance awards granted in the prior fiscal year and common policy base reductions. Prior to consolidation, the Seasonal Tax Processing line item was added in FY 2014-15 and funds the seasonal processing expenses that occur during the individual income tax filing season.

STATUTORY AUTHORITY: Sections 24-50-101, et seq., and 24-35-101 et seq., C.R.S.

REQUEST: The Department requests an appropriation of $29,448,746 total funds, including $28,065,913 General Fund, $1,228,748 cash funds, and $154,085 reappropriated funds, and 393.6 FTE.

The request includes the transfer of personal services appropriations from the Taxation and Compliance Division and the Taxpayer Service Division and the appropriation from the Seasonal Tax Processing line item in the Taxpayer Service Division, as included in the Department's R7 request item. The request also includes the Department's BA1 request item.

RECOMMENDATION: Staff recommends appropriating $29,402,046 total funds, including $28,019,213 General Fund, $1,228,748 cash funds, and $154,085 reappropriated funds, and 393.1 FTE. The recommendation includes approval of the Department's R7 and BA1 requests at modified amounts for the R2 and BA1 personal services appropriation requests as described in the decision item analysis. Adjustments are outlined in the following table.

TAXATION BUSINESS GROUP, TAXATION SERVICES, PERSONAL SERVICES TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $0 $0 $0 $0 $0 0.0 TOTAL $0 $0 $0 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $0 $0 $0 $0 $0 0.0 R7 Budget savings - Taxation Business Group 29,359,390 27,976,557 1,228,748 154,085 0 392.2 BA1 Proposition EE Funding 42,656 42,656 0 0 0 0.9 TOTAL $29,402,046 $28,019,213 $1,228,748 $154,085 $0 393.1

INCREASE/(DECREASE) $29,402,046 $28,019,213 $1,228,748 $154,085 $0 393.1

3-Mar-21 37 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

TAXATION BUSINESS GROUP, TAXATION SERVICES, PERSONAL SERVICES TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE Percentage Change 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $29,448,746 $28,065,913 $1,228,748 $154,085 $0 393.6 Request Above/(Below) Recommendation $46,700 $46,700 $0 $0 $0 0.5

OPERATING EXPENSES This line item funds the out-of-state travel needs of senior auditors, as well as providing the general office expenses for the subdivision and the expenses of five programs: Office Collection; Office Audit; Protest Resolution; Field Compliance; and Field Audit. A large expenditure in this line is for transaction fees (which are capped at $13,000 per month) for the automated call system. These fees are assessed per interactive voice response system call and web hits. It also funds general office supplies and expenses.

STATUTORY AUTHORITY: Section 24-35-105, C.R.S.

REQUEST: The Department requests an appropriation of $3,318,340 total funds, including $3,299,407 General Fund and $18,933 cash funds.

The request includes the transfer of operating expenses appropriations from the Taxation and Compliance Division and the Taxpayer Service Division, as included in the Department's R7 request item. The request also includes the Department's BA1 request item.

RECOMMENDATION: Staff recommends appropriating $3,335,375 total funds, including $3,316,442 General Fund and $18,933 cash funds. The recommendation includes approval of the Department's R7 and BA1 requests at modified amounts for the R2 and BA1 operating expenses appropriation requests as described in the decision item analysis. Adjustments are outlined in the following table.

TAXATION BUSINESS GROUP, TAXATION SERVICES, OPERATING EXPENSES TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $0 $0 $0 $0 $0 0.0 TOTAL $0 $0 $0 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $0 $0 $0 $0 $0 0.0 R7 Budget savings - Taxation Business Group $3,327,825 $3,308,892 $18,933 $0 $0 0.0 BA1 Proposition EE Funding 7,550 7,550 0 0 0 0.0 TOTAL $3,335,375 $3,316,442 $18,933 $0 $0 0.0

INCREASE/(DECREASE) $3,335,375 $3,316,442 $18,933 $0 $0 0.0 Percentage Change 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $3,318,340 $3,299,407 $18,933 $0 $0 0.0 Request Above/(Below) Recommendation ($17,035) ($17,035) $0 $0 $0 0.0

3-Mar-21 38 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

JOINT AUDIT PROGRAM This line item, previously included in the Taxation and Compliance Division, provides funding for the state's membership in the Multi-State Tax Commission (MTC). The MTC conducts audits on out-of- state businesses, which complements the Department's efforts in the Field Audit Program. The Department has had a partnership with the MTC for over 20 years.

STATUTORY AUTHORITY: Section 24-35-101, et seq., C.R.S.

REQUEST: The Department requests an appropriation of $131,244 General Fund.

The request includes the Department's R7 request item that includes the transfer of this line item. The requested appropriation represents a continuation appropriation.

RECOMMENDATION: Staff recommends appropriating $131,244 General Fund. The recommendation includes approval of R7. Adjustments are outlined in the following table.

TAXATION BUSINESS GROUP, TAXATION SERVICES, JOINT AUDIT PROGRAM TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $0 $0 $0 $0 $0 0.0 TOTAL $0 $0 $0 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $0 $0 $0 $0 $0 0.0 R7 Budget savings - Taxation Business Group $131,244 $131,244 $0 $0 $0 0.0 TOTAL $131,244 $131,244 $0 $0 $0 0.0

INCREASE/(DECREASE) $131,244 $131,244 $0 $0 $0 0.0 Percentage Change 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $131,244 $131,244 $0 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

MINERAL AUDIT PROGRAM This line item, previously located in the Taxation and Compliance Division, provides funding for the Mineral Audit Program. Pursuant to Section 24-35-115, C.R.S., the Department audits royalties associated with oil, gas, and mineral mining activity on federal, state, and private land. Audits are conducted by a work group in the Department, which statutorily can have no other duties. The majority of the funding comes from the federal government, with the remainder from the State Land Board and the Oil and Gas Conservation Commission (OGCC), both in the Department of Natural Resources. Federal funds are from the Federal Minerals Management Service (MMS) as the Department conducts audits on their behalf on lands under federal control.

STATUTORY AUTHORITY: Section 24-35-115, C.R.S.

REQUEST: The Department requests an appropriation of $918,132 total funds, including $66,000 reappropriated funds and $852,132 federal funds, and 10.2 FTE. The reappropriated funds are

3-Mar-21 39 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

comprised of $65,500 from the State Land Board and $500 from the Oil and Gas Conservation Commission.

The request includes the Department's R7 request item that includes the transfer of this line item. The requested appropriation represents a continuation appropriation.

RECOMMENDATION: Staff recommends appropriating $918,132 total funds, including $66,000 reappropriated funds and $852,132 federal funds, and 10.2 FTE. The recommendation includes approval of R7. Adjustments are outlined in the following table.

TAXATION BUSINESS GROUP, TAXATION SERVICES, MINERAL AUDIT PROGRAM TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $0 $0 $0 $0 $0 0.0 TOTAL $0 $0 $0 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $0 $0 $0 $0 $0 0.0 R7 Budget savings - Taxation Business Group $918,132 $0 $0 $66,000 $852,132 10.2 TOTAL $918,132 $0 $0 $66,000 $852,132 10.2

INCREASE/(DECREASE) $918,132 $0 $0 $66,000 $852,132 10.2 Percentage Change 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $918,132 $0 $0 $66,000 $852,132 10.2 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

DOCUMENT MANAGEMENT This line item, previously located in the Taxpayer Service Division, provides funding for the data entry services provided by the Department of Personnel to capture information from paper tax forms and from driver's license documentation, and image and store tax returns and related documentation primarily for audit purposes, account error resolutions, or taxpayer requests and inquiries.

STATUTORY AUTHORITY: Sections 24-30-1104 and 24-35-105, C.R.S.

REQUEST: The Department requests an appropriation of $4,634,987 total funds, including $4,596,468 General Fund and $38,519 cash funds.

The request includes the Department's R7 request item that includes the transfer of this line item.

RECOMMENDATION: Staff recommends appropriating $4,634,987 total funds, including $4,596,468 General Fund and $38,519 cash funds. The recommendation includes approval of R7. Adjustments are outlined in the following table.

3-Mar-21 40 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

TAXATION BUSINESS GROUP, TAXATION SERVICES, DOCUMENT MANAGEMENT TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $0 $0 $0 $0 $0 0.0 TOTAL $0 $0 $0 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $0 $0 $0 $0 $0 0.0 R7 Budget savings - Taxation Business Group $4,634,987 $4,596,468 $38,519 $0 $0 0.0 TOTAL $4,634,987 $4,596,468 $38,519 $0 $0 0.0

INCREASE/(DECREASE) $4,634,987 $4,596,468 $38,519 $0 $0 0.0 Percentage Change 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $4,634,987 $4,596,468 $38,519 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

FUEL TRACKING SYSTEM This line item, previously located in the Taxpayer Service Division, funds the Fuel Tracking System. Pursuant to Section 39-27-109, C.R.S., the Department of Revenue tracks the movement of gasoline and special fuel with the goal of expediting the collection of excise taxes. Most funding provides an electronic tracking system maintained by a third party. Funding for this program is from the Highway Users Trust Fund (not from HUTF Off-the-Top), pursuant to Section 43-4-201 (3) (a) (V), C.R.S.

STATUTORY AUTHORITY: Section 39-27-109.7, C.R.S.

REQUEST: The Department requests an appropriation of $501,145 total funds, including $126 General Fund and $501,019 cash funds and 1.5 FTE.

The request includes the Department's R7 request item that includes the transfer of this line item.

RECOMMENDATION: Staff recommends appropriating $501,145 total funds, including $126 General Fund and $501,019 cash funds and 1.5 FTE. The recommendation includes approval of R7. Adjustments are outlined in the following table.

TAXATION BUSINESS GROUP, TAXATION SERVICES, FUEL TRACKING SYSTEM TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $0 $0 $0 $0 $0 0.0 TOTAL $0 $0 $0 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $0 $0 $0 $0 $0 0.0 $501,145 $126 $501,019 $0 $0 1.5 R7 Budget savings - Taxation Business Group TOTAL $501,145 $126 $501,019 $0 $0 1.5

INCREASE/(DECREASE) $501,145 $126 $501,019 $0 $0 1.5 Percentage Change 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

3-Mar-21 41 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

TAXATION BUSINESS GROUP, TAXATION SERVICES, FUEL TRACKING SYSTEM TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2021-22 EXECUTIVE REQUEST $501,145 $126 $501,019 $0 $0 1.5 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

INDIRECT COST ASSESSMENT This line item reflects the indirect cost assessment for this Division, which is based on the Department and Statewide indirect cost allocation plans. This appropriation reflects administrative support costs for this division provided by the Executive Director's Office and statewide services which are not directly billed. Indirect cost assessments (1) offset General Fund and (2) reflect the full cost of cash- funded programs.

STATUTORY AUTHORITY: Section 24-75-1401, C.R.S

REQUEST: The Department requests an appropriation of $11,364 cash funds.

The request includes the Department's R7 request item that includes the transfer of this line item.

RECOMMENDATION: Staff recommends appropriating $11,364 cash funds. The recommendation includes approval of R7. Adjustments are outlined in the following table.

TAXATION BUSINESS GROUP, TAXATION SERVICES, INDIRECT COST ASSESSMENT TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $0 $0 $0 $0 $0 0.0 TOTAL $0 $0 $0 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $0 $0 $0 $0 $0 0.0 R7 Budget savings - Taxation Business Group $11,364 $0 $11,364 $0 $0 0.0 TOTAL $11,364 $0 $11,364 $0 $0 0.0

INCREASE/(DECREASE) $11,364 $0 $11,364 $0 $0 0.0 Percentage Change 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $11,364 $0 $11,364 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

(D) (C) TAX CONFEREE Although not requested by the Department, staff's R7 approval recommendation includes the re- ordering of this subdivision as subdivision (C) in the Long Bill in order to maintain the same Long Bill order as before consolidation of the (B) Taxation Services subdivision.

The Tax Conferee serves as an intermediary in the hearing process and acts as the Executive Director’s official designee for tax hearings. These can include tax assessment disputes and refund denials. Employees in this unit conduct reviews, legal research, investigations, interviews, and negotiations.

3-Mar-21 42 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

They also assist taxpayers in clarifying decisions. If a hearing with the Tax Conferee fails to achieve a successful resolution, then a formal hearing with the Executive Director is granted. Finally, if a feasible resolution is not attained, the aggrieved party may elevate the dispute to the judicial system. Under Section 29-2-106.1, C.R.S., Department staff may hear appeals of final decisions from home rule cities and counties.

PERSONAL SERVICES This line item pays for program staff salary and contract services. Typical adjustments that occur each year include annualization of salary increases and performance awards granted in the prior fiscal year and common policy base reductions. Reappropriated funds in this line item are from the Governor's Economic Development Commission – General Economic Incentives and Marketing line item.

STATUTORY AUTHORITY: Sections 39-21-103, 39-21-104, 29-2-106.1, and 24-50-101, et seq., C.R.S.

REQUEST: The Department requests a continuation appropriation of $1,574,018 total funds, including $1,476,735 General Fund and $97,283 reappropriated funds, and 13.6 FTE.

RECOMMENDATION: Staff recommends appropriating $1,574,018 total funds, including $1,476,735 General Fund and $97,283 reappropriated funds, and 13.6 FTE.

OPERATING EXPENSES This line item funds subscriptions to legal research materials and phone charges, plus general office supplies and expenses.

STATUTORY AUTHORITY: Sections 39-21-103, 39-21-104, 29-2-106.1, and 24-35-105, C.R.S.

REQUEST: The Department requests a continuation appropriation of $60,905 General Fund.

RECOMMENDATION: Staff recommends appropriating $60,905 General Fund.

(E) (D) SPECIAL PURPOSE Although not requested by the Department, staff's R7 approval recommendation includes the re- ordering of this subdivision as subdivision (D) in the Long Bill in order to maintain the same Long Bill order as before consolidation of the (B) Taxation Services subdivision.

This section of the Long Bill provides funding for five "pass-through" programs administered by the Department. The oversight costs are relatively small and are absorbed by other divisions within the Taxation Business Group.

CIGARETTE TAX REBATE Pursuant to Section 39-22-623, C.R.S., this program distributes 27 percent of the gross state revenue from state cigarette tax to incorporated cities and towns that levy taxes and adopt formal budgets as well as to counties. These distributions are made in proportion to the state sales taxes collected in the

3-Mar-21 43 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

jurisdiction to the total state sales taxes collected, which the Department of Revenue annually certifies to the State Treasurer. In order to qualify for the rebate, units of local government are prohibited from imposing fees, licenses, or taxes on cigarettes.

This appropriation is exempt from the limits on General Fund appropriations as set forth in Section 24-75-201.1 (1) (a) (II.5), C.R.S. and is included in the Long Bill for informational purposes.

STATUTORY AUTHORITY: Section 39-22-623, C.R.S.

REQUEST: The Department requests that $7,363,055 General Fund exempt from spending and appropriations limits be reflected in the Long Bill as the informational appropriation. This amount represents a continuation appropriation.

RECOMMENDATION: Staff recommends reflecting an appropriation based on the March 2021 economic forecast that the JBC adopts as its revenue forecast. Staff requests permission to reflect that estimate as the informational appropriation included in the Long Bill.

AMENDMENT 35 DISTRIBUTION TO LOCAL GOVERNMENTS House Bill 05-1262 implemented Amendment 35, passed by the voters in November 2004. Three percent of the total revenue and interest earned on proceeds deposited into the Tobacco Tax Cash Fund are earmarked for municipal and county governments to "compensate proportionately for tax Revenue reductions attributable to lower cigarette and tobacco sales resulting from implementation of the tax." This money is allocated to local governments according to the provisions set forth in Section 39-22-623, C.R.S. The Department of Revenue receives part of the 3 percent allocation to the General Fund (20%), the Old Age Pension Medical Fund (50%), and the Department of Revenue (30%).

This appropriation is authorized by Section 21 of Article X of the Colorado Constitution and thus, is not subject to the limitation on state fiscal year spending imposed by Section 20 of Article X of the State Constitution. The appropriation is included in the Long Bill for informational purposes.

STATUTORY AUTHORITY: Section 21, Article X, Colorado Constitution.

REQUEST: The Department requests an appropriation of $1,163,268 cash funds from the Tobacco Tax Cash Fund. This amount represents a continuation appropriation.

RECOMMENDATION: Staff recommends reflecting an appropriation of $1,265,742 cash funds, which represents Committee Action on Tobacco Revenue Allocation decisions. If the Committee makes any adjustments to the Tobacco Revenue Allocation, staff requests permission to reflect final action. Requested and recommended adjustments are outlined in the following table.

3-Mar-21 44 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

TAXATION BUSINESS GROUP, SPECIAL PURPOSE, AMENDMENT 35 DISTRIBUTION TO LOCAL GOVERNMENTS TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $1,163,268 $0 $1,163,268 $0 $0 0.0 TOTAL $1,163,268 $0 $1,163,268 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $1,163,268 $0 $1,163,268 $0 $0 0.0 Technical adjustments 102,474 0 102,474 0 0 0.0 TOTAL $1,265,742 $0 $1,265,742 $0 $0 0.0

INCREASE/(DECREASE) $102,474 $0 $102,474 $0 $0 0.0 Percentage Change 8.8% 0.0% 8.8% 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $1,163,268 $0 $1,163,268 $0 $0 0.0 Request Above/(Below) Recommendation ($102,474) $0 ($102,474) $0 $0 0.0

OLD AGE HEAT AND FUEL AND PROPERTY TAX ASSISTANCE GRANT Pursuant to Sections 39-31-101 and 104, C.R.S., the Department distributes heat, fuel, and property tax assistance grants to qualified low-income individuals age 65 and over or disabled. This appropriation is exempt from the limits on General Fund appropriations as set forth in Section 24- 75-201.1 (1) (a) (II.5), C.R.S. and is included in the Long Bill for informational purposes. Both the Governor’s Office of State Planning and Budgeting and Legislative Council often refer to this program as the "Aged Property Tax & Heating Credit".

STATUTORY AUTHORITY: Section 39-31-101, et seq., C.R.S.

REQUEST: The Department requests that $5,624,000 General Fund exempt from spending and appropriations limits be reflected in the Long Bill as the informational appropriation. This amount represents a continuation appropriation.

COMMERCIAL VEHICLE ENTERPRISE SALES TAX REFUND Section 42-1-225, C.R.S., requires the Department of Revenue to issue sales tax refunds for entities that paid sales taxes on qualified purchases or lease of commercial vehicles used for interstate commerce. The sales tax refund comes from the Commercial Vehicle Enterprise Tax Fund. Deposits into the cash fund are derived from a portion of the fines on overweight vehicles and pursuant to Section 42-1-225 (1), C.R.S., the fund is continuously appropriated to the Department of Revenue for the purpose of paying tax refunds.

STATUTORY AUTHORITY: Section 42-1-225, C.R.S.

3-Mar-21 45 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

REQUEST: The Department requests a continuation, informational appropriation of $120,524 cash funds from the Commercial Vehicle Enterprise Tax Fund.

RECOMMENDATION: Staff recommends reflecting an informational appropriation of $120,524 cash funds.

RETAIL MARIJUANA SALES TAX DISTRIBUTION TO LOCAL GOVERNMENTS This line item was added in FY 2013-14. Section 39-28.8-203 (1)(a)(V), C.R.S., requires that money apportioned to local governments (15.0 percent of the special sales tax) as a result of the Proposition AA 10.0 percent special sales tax on retail marijuana products be included for informational purposes in the Long Bill or in supplemental appropriation bills. Statute provides that this funding is exempt from the limits on General Fund appropriations as set forth in Section 24-75-201.1 (1) (a) (II.5), C.R.S.

STATUTORY AUTHORITY: Section 39-28.8-203, C.R.S.

REQUEST: The Department requests that $20,813,067 General Fund exempt from spending and appropriations limits be reflected in the Long Bill as the informational appropriation. This amount represents a continuation appropriation.

(B) (E) TAXATION AND COMPLIANCE DIVISION Taxation Services is the requested consolidation of the Taxation and Compliance Division and the Taxpayer Service Division in the Department's R7 request item. The Department's request creates this new subdivision as subdivision (F), retaining current subdivision (B) as the Taxation and Compliance Division. Staff's recommendation is to re-order the request to place the new subdivision in the same Long Bill order within the Taxation Business Group division as the previously split subdivisions (B) Taxation and Compliance Division and (C) Taxpayer Service Division. For historical budget purposes, Taxation and Compliance Division will be ordered as subdivision (E).

3-Mar-21 46 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

Chicago, Houston, Dallas, Los Angeles, and San Francisco. The Division also manages the Joint Audit Program, the Joint Federal/State Motor Fuel Tax program and the Mineral Audit Program.

STATUTORY AUTHORITY: Sections 24-50-101, et seq., and 24-35-101 et seq., C.R.S.

REQUEST: The Department requests the elimination of this appropriation with a transfer of spending authority to the new Taxation Services subdivision's personal services line item.

The request includes annualization adjustments for S.B. 20-218 CDPHE Hazardous Substance and H.B. 20-1420 Adjust Tax Expenditures for State, in addition to the Department's R7 request item.

RECOMMENDATION: Staff recommends approval of R7 and the elimination of this appropriation with a transfer of spending authority to the new Taxation Services personal services line item. Staff recommends a transfer of $18,481,078 total funds, including $17,472,906 General Fund, $854,087 cash funds, $154,085 reappropriated funds, and 228.4 FTE. Staff's Adjustments are outlined in the following table.

TAXATION BUSINESS GROUP, TAXATION AND COMPLIANCE DIVISION, PERSONAL SERVICES TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $18,340,096 $17,331,924 $854,087 $154,085 $0 226.1 Other legislation $33,180 $33,180 $0 $0 $0 0.0 TOTAL $18,373,276 $17,365,104 $854,087 $154,085 $0 226.1

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $18,373,276 $17,365,104 $854,087 $154,085 $0 226.1 Annualize prior year legislation 107,802 107,802 0 0 0 2.3 R7 Budget savings - Taxation Business Group (18,481,078) (17,472,906) (854,087) (154,085) 0 (228.4) TOTAL $0 $0 $0 $0 $0 (0.0)

INCREASE/(DECREASE) ($18,373,276) ($17,365,104) ($854,087) ($154,085) $0 (226.1) Percentage Change (100.0%) (100.0%) (100.0%) (100.0%) 0.0% (100.0%)

FY 2021-22 EXECUTIVE REQUEST $0 $0 $0 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

OPERATING EXPENSES This line item funds the out-of-state travel needs of its senior auditors, as well as providing the general office expenses for the Division, and the expenses of five programs supporting the Division: Office Collection; Office Audit; Protest Resolution; Field Compliance; and Field Audit.

STATUTORY AUTHORITY: Section 24-35-105, C.R.S.

3-Mar-21 47 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

REQUEST: The Department requests the elimination of this appropriation with a transfer of spending authority to the new Taxation Services operating expenses line item.

The request includes an annualization adjustment for H.B. 20-1420 Adjust Tax Expenditures for State and an adjustment for the Department's NP2 request, in addition to the Department's R7 request item.

TAXATION BUSINESS GROUP, TAXATION AND COMPLIANCE DIVISION, OPERATING EXPENSES TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $1,067,697 $1,053,967 $13,730 $0 $0 0.0 TOTAL $1,067,697 $1,053,967 $13,730 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $1,067,697 $1,053,967 $13,730 $0 $0 0.0 Annualize prior year legislation 19,300 19,300 0 0 0 0.0 R7 Budget savings - Taxation Business Group (980,752) (967,022) (13,730) 0 0 0.0 Non-prioritized requests (106,245) (106,245) 0 0 0 0.0 TOTAL $0 $0 $0 $0 $0 0.0

INCREASE/(DECREASE) ($1,067,697) ($1,053,967) ($13,730) $0 $0 0.0 Percentage Change (100.0%) (100.0%) (100.0%) 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $0 $0 $0 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

JOINT AUDIT PROGRAM This line item provides funding for the state's membership in the Multi-State Tax Commission (MTC). The MTC conducts audits on out-of-state businesses, which complements the Department's efforts in the Field Audit Program. The Department has had a partnership with the MTC for over 20 years.

STATUTORY AUTHORITY: Section 24-35-101, et seq., C.R.S.

REQUEST: The Department requests the elimination of this appropriation with a transfer of spending authority, equivalent to a continuation appropriation, to the new Taxation Services line item by the same name.

The request includes the Department's R7 request item.

RECOMMENDATION: Staff recommends approval of R7 and the elimination of this appropriation with a transfer of spending authority to the new Taxation Services Joint Audit Program line item. Staff recommends a transfer of $131,244 General Fund. Adjustments are outlined in the following table.

3-Mar-21 48 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

TAXATION BUSINESS GROUP, TAXATION AND COMPLIANCE DIVISION, JOINT AUDIT PROGRAM TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $131,244 $131,244 $0 $0 $0 0.0 TOTAL $131,244 $131,244 $0 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $131,244 $131,244 $0 $0 $0 0.0 R7 Budget savings - Taxation Business Group (131,244) (131,244) 0 0 0 0.0 TOTAL $0 $0 $0 $0 $0 0.0

INCREASE/(DECREASE) ($131,244) ($131,244) $0 $0 $0 0.0 Percentage Change (100.0%) (100.0%) 0.0% 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $0 $0 $0 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

MINERAL AUDIT PROGRAM Pursuant to Section 24-35-115, C.R.S., the Department audits royalties associated with oil, gas, and mineral mining activity on federal, state, and private land. Audits are conducted by a work group in the Department which statutorily can have no other duties. The majority of the funding comes from the federal government, with the remainder from the State Land Board and the Oil and Gas Conservation Commission (OGCC), both in the Department of Natural Resources. Federal funds are from the Federal Minerals Management Service (MMS) as the Department conducts audits on their behalf on lands under federal control.

STATUTORY AUTHORITY: Section 24-35-115, C.R.S.

The request includes the Department's R7 request item.

RECOMMENDATION: Staff recommends approval of R7 and the elimination of this appropriation with a transfer of spending authority to the new Taxation Services Mineral Audit Program line item. Staff recommends a transfer of $918,132 total funds, including $66,000 reappropriated funds, $852,132 federal funds, and 10.2 FTE. The reappropriated funds are comprised of $65,500 from the State Land Board and $500 from the Oil and Gas Conservation Commission. Adjustments are outlined in the following table.

TAXATION BUSINESS GROUP, TAXATION AND COMPLIANCE DIVISION, MINERAL AUDIT PROGRAM TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $918,132 $0 $0 $66,000 $852,132 10.2 TOTAL $918,132 $0 $0 $66,000 $852,132 10.2

3-Mar-21 49 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

TAXATION BUSINESS GROUP, TAXATION AND COMPLIANCE DIVISION, MINERAL AUDIT PROGRAM TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $918,132 $0 $0 $66,000 $852,132 10.2 R7 Budget savings - Taxation Business Group (918,132) 0 0 (66,000) (852,132) (10.2) TOTAL $0 $0 $0 $0 $0 0.0

INCREASE/(DECREASE) ($918,132) $0 $0 ($66,000) ($852,132) (10.2) Percentage Change (100.0%) 0.0% 0.0% (100.0%) (100.0%) (100.0%)

FY 2021-22 EXECUTIVE REQUEST $0 $0 $0 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

(C) (F) TAXPAYER SERVICE DIVISION The Taxpayer Service Division (TPS) administers the State’s tax programs and provides assistance and information to Colorado taxpayers. The Division maintains five service centers in Colorado Springs, Denver, Fort Collins, Grand Junction, and Pueblo, as well as a tax information call center. The Division produces public information campaigns, administers tax classes to promote voluntary compliance, and distributes information to the public to explain the State’s tax laws and policies. TPS also issues licenses and permits, processes tax forms and requests for refunds, resolves taxpayer problems, and intercepts income tax refunds for payment of debts owed to other State agencies and the Internal Revenue Service.

STATUTORY AUTHORITY: Sections 24-50-101, et seq., and 24-35-101 et seq., C.R.S.

REQUEST: The Department requests the elimination of this appropriation with a transfer of spending authority to the new Taxation Services subdivision's personal services line item.

The request includes the following annualization adjustments: • H.B. 18-1202 Income Tax Credit Leave of Absence Organ Donation; • H.B. 18-1208 Expand Childcare Income Tax Credit; • H.B. 18-1267 Income Tax Credit Retrofitting; • H.B. 19-1159 Modify Motor Vehicle Income Tax; • H.B. 20-1236 Health Care Coverage; and

3-Mar-21 50 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

• H.B. 20-1420 Adjust Tax Expenditures for State.

The request includes the Department's R2 and R7 request items.

RECOMMENDATION: Staff recommends approval of R7 and the elimination of this appropriation with a transfer of spending authority to the new Taxation Services personal services line item. Staff recommends a transfer of $10,581,921 total funds, including $10,207,260 General Fund, $374,661 cash funds, and 163.8 FTE. Staff recommends approval of R2 at a modified amount as included in the decision item analysis. Staff's Adjustments are outlined in the following table.

TAXATION BUSINESS GROUP, TAXPAYER SERVICE DIVISION, PERSONAL SERVICES TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $9,982,318 $9,607,657 $374,661 $0 $0 152.2 Other legislation $5,922 $5,922 $0 $0 $0 0.0 TOTAL $9,988,240 $9,613,579 $374,661 $0 $0 152.2

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $9,988,240 $9,613,579 $374,661 $0 $0 152.2 Annualize prior year legislation 340,726 340,726 0 0 0 7.0 R2 Sales and use tax simplification system support 252,955 252,955 0 0 0 4.6 R7 Budget savings - Taxation Business Group (10,581,921) (10,207,260) (374,661) 0 0 (163.8) TOTAL $0 $0 $0 $0 $0 (0.0)

INCREASE/(DECREASE) ($9,988,240) ($9,613,579) ($374,661) $0 $0 (152.2) Percentage Change (100.0%) (100.0%) (100.0%) 0.0% 0.0% (100.0%)

FY 2021-22 EXECUTIVE REQUEST $0 $0 $0 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

OPERATING EXPENSES The largest expenditure in this line is for transaction fees (which are capped at $13,000 per month) for the automated call system. These fees are assessed per interactive voice response system call and web hits. It also funds general office supplies and expenses.

STATUTORY AUTHORITY: Section 24-35-105, C.R.S.

REQUEST: The Department requests the elimination of this appropriation with a transfer of spending authority to the new Taxation Services operating expenses line item.

The request includes the following annualization adjustments: • H.B. 18-1202 Income Tax Credit Leave of Absence Organ Donation; • H.B. 18-1267 Income Tax Credit Retrofitting; • H.B. 19-1159 Modify Motor Vehicle Income Tax; and • H.B. 20-1420 Adjust Tax Expenditures for State.

The request includes the Department's R2, R7, and NP2 request items.

3-Mar-21 51 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

RECOMMENDATION: Staff recommends approval of R7 and the elimination of this appropriation with a transfer of spending authority to the new Taxation Services operating expenses line item. Staff recommends a transfer of $2,347,073 total funds, including $2,341,870 General Fund and $5,203 cash funds. Staff recommends approval of R2 at a modified amount as included in the decision item analysis. The recommendation includes Committee action on NP2. Adjustments are outlined in the following table.

TAXATION BUSINESS GROUP, TAXPAYER SERVICE DIVISION, OPERATING EXPENSES TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $525,128 $519,925 $5,203 $0 $0 0.0 TOTAL $525,128 $519,925 $5,203 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $525,128 $519,925 $5,203 $0 $0 0.0 R2 Sales and use tax simplification system support 1,916,750 1,916,750 0 0 0 0.0 Annualize prior year legislation 47,354 47,354 0 0 0 0.0 R7 Budget savings - Taxation Business Group (2,347,073) (2,341,870) (5,203) 0 0 0.0 Non-prioritized requests (142,159) (142,159) 0 0 0 0.0 TOTAL $0 $0 $0 $0 $0 0.0

INCREASE/(DECREASE) ($525,128) ($519,925) ($5,203) $0 $0 0.0 Percentage Change (100.0%) (100.0%) (100.0%) 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $0 $0 $0 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

SEASONAL TAX PROCESSING This line item was added in FY 2014-15 and funds the seasonal processing expenses that occur during the individual income tax filing season.

STATUTORY AUTHORITY: Section 24-35-101, et seq., C.R.S.

The request includes the Department's R7 request item.

TAXATION BUSINESS GROUP, TAXPAYER SERVICE DIVISION, SEASONAL TAX PROCESSING TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $296,391 $296,391 $0 $0 $0 0.0 TOTAL $296,391 $296,391 $0 $0 $0 0.0

3-Mar-21 52 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

TAXATION BUSINESS GROUP, TAXPAYER SERVICE DIVISION, SEASONAL TAX PROCESSING TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $296,391 $296,391 $0 $0 $0 0.0 R7 Budget savings - Taxation Business Group (296,391) (296,391) 0 0 0 0.0 TOTAL $0 $0 $0 $0 $0 0.0

INCREASE/(DECREASE) ($296,391) ($296,391) $0 $0 $0 0.0 Percentage Change (100.0%) (100.0%) 0.0% 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $0 $0 $0 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

DOCUMENT MANAGEMENT This line item provides funding for the data entry services provided by the Department of Personnel to capture information from paper tax forms and from driver's license documentation, and image and store tax returns and related documentation primarily for audit purposes, account error resolutions, or taxpayer requests and inquiries.

STATUTORY AUTHORITY: Sections 24-30-1104 and 24-35-105, C.R.S.

REQUEST: The Department requests the elimination of this appropriation with a transfer of spending authority to the new Taxation Services line item by the same name.

The request includes a Department of Personnel common policy base adjustment and the following annualization adjustments: • H.B. 18-1208 Expand Childcare Income Tax Credit; • H.B. 20-1024 Net Operating Loss Deduction; • H.B. 20-1236 Health Care Coverage; and • H.B. 20-1420 Adjust Tax Expenditures for State.

The request includes the Department's R7 request item.

RECOMMENDATION: Staff recommends approval of R7 and the elimination of this appropriation with a transfer of spending authority to the new Taxation Services Document Management line item. Staff recommends a transfer of $4,634,987 total funds, including $4,596,468 General Fund and $38,519 cash funds. The recommendation includes Committee action on common policies. Adjustments are outlined in the following table.

TAXATION BUSINESS GROUP, TAXPAYER SERVICE DIVISION, DOCUMENT MANAGEMENT TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $4,895,551 $4,857,032 $38,519 $0 $0 0.0 TOTAL $4,895,551 $4,857,032 $38,519 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION

3-Mar-21 53 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

TAXATION BUSINESS GROUP, TAXPAYER SERVICE DIVISION, DOCUMENT MANAGEMENT TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE FY 2020-21 Appropriation $4,895,551 $4,857,032 $38,519 $0 $0 0.0 Annualize prior year legislation 11,298 11,298 0 0 0 0.0 R7 Budget savings - Taxation Business Group (4,634,987) (4,596,468) (38,519) 0 0 0.0 Centrally appropriated line items (271,862) (271,862) 0 0 0 0.0 TOTAL $0 $0 $0 $0 $0 0.0

INCREASE/(DECREASE) ($4,895,551) ($4,857,032) ($38,519) $0 $0 0.0 Percentage Change (100.0%) (100.0%) (100.0%) 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $0 $0 $0 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

FUEL TRACKING SYSTEM Pursuant to Section 39-27-109, C.R.S., the Department of Revenue tracks the movement of gasoline and special fuel with the goal of expediting the collection of excise taxes. Most funding provides an electronic tracking system maintained by a third party. Funding for this program is from the Highway Users Trust Fund (not from HUTF Off the Top), pursuant to Section 43-4-201 (3) (a) (V), C.R.S.

STATUTORY AUTHORITY: Section 39-27-109.7, C.R.S.

The request includes an annualization for S.B. 20-218 CDPHE Hazardous Substance and the Department's R7 request item.

RECOMMENDATION: Staff recommends approval of R7 and the elimination of this appropriation with a transfer of spending authority to the new Taxation Services Fuel Tracking System line item. Staff recommends a transfer of $501,145 total funds, including $126 General Fund, $501,019 cash funds, and 1.5 FTE. Adjustments are outlined in the following table.

TAXATION BUSINESS GROUP, TAXPAYER SERVICE DIVISION, FUEL TRACKING SYSTEM TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $501,019 $0 $501,019 $0 $0 1.5 Other legislation $2,419 $2,419 $0 $0 $0 0.0 TOTAL $503,438 $2,419 $501,019 $0 $0 1.5

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $503,438 $2,419 $501,019 $0 $0 1.5 R7 Budget savings - Taxation Business Group (501,145) (126) (501,019) 0 0 (1.5) Annualize prior year legislation (2,293) (2,293) 0 0 0 0.0 TOTAL $0 $0 $0 $0 $0 0.0

INCREASE/(DECREASE) ($503,438) ($2,419) ($501,019) $0 $0 (1.5) Percentage Change (100.0%) (100.0%) (100.0%) 0.0% 0.0% (100.0%)

3-Mar-21 54 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

TAXATION BUSINESS GROUP, TAXPAYER SERVICE DIVISION, FUEL TRACKING SYSTEM TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2021-22 EXECUTIVE REQUEST $0 $0 $0 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

STATUTORY AUTHORITY: Section 24-75-1401, C.R.S

REQUEST: The Department requests the elimination of this appropriation with a transfer of spending authority to the new Taxation Services line item by the same name.

The request includes indirect cost assessment adjustments and the Department's R7 request item.

RECOMMENDATION: Staff recommends approval of R7 and the elimination of this appropriation with a transfer of spending authority to the new Taxation Services Indirect Cost Assessment line item. Staff recommends a transfer of $11,364 cash funds. The recommendation includes an adjustment consistent with the Department's indirect cost plan. Adjustments are outlined in the following table.

TAXATION BUSINESS GROUP, TAXPAYER SERVICE DIVISION, INDIRECT COST ASSESSMENT TOTAL GENERAL CASH REAPPROPRIATED FEDERAL FUNDS FUND FUNDS FUNDS FUNDS FTE

FY 2020-21 APPROPRIATION HB 20-1360 (Long Bill) $10,451 $0 $10,451 $0 $0 0.0 TOTAL $10,451 $0 $10,451 $0 $0 0.0

FY 2021-22 RECOMMENDED APPROPRIATION FY 2020-21 Appropriation $10,451 $0 $10,451 $0 $0 0.0 Indirect cost assessment 913 0 913 0 0 0.0 R7 Budget savings - Taxation Business Group (11,364) 0 (11,364) 0 0 0.0 TOTAL $0 $0 $0 $0 $0 0.0

INCREASE/(DECREASE) ($10,451) $0 ($10,451) $0 $0 0.0 Percentage Change (100.0%) 0.0% (100.0%) 0.0% 0.0% 0.0%

FY 2021-22 EXECUTIVE REQUEST $0 $0 $0 $0 $0 0.0 Request Above/(Below) Recommendation $0 $0 $0 $0 $0 0.0

3-Mar-21 55 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

LONG BILL FOOTNOTES AND REQUESTS FOR INFORMATION

LONG BILL FOOTNOTES

The 2020 Long Bill includes no footnotes specific to the Department of Revenue. Staff recommends no footnotes for the Department of Revenue for the 2021 Long Bill.

REQUESTS FOR INFORMATION

Staff recommends no requests for information for the Department of Revenue.

3-Mar-21 56 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

INDIRECT COST ASSESSMENTS

DESCRIPTION OF INDIRECT COST ASSESSMENT METHODOLOGY The Department of Revenue indirect cost assessment methodology is calculated based on three components: an “Indirect Cost Pool”, an “Indirect Cost Base”, and an “Indirect Cost Rate”.

The Indirect Cost Pool is comprised of personal services expenses in the Executive Director's Office. In addition, for business group and divisional indirect costs, the Indirect Cost Pool for those divisions consist of personal services and operating expenses in the administration section of those business groups.

The Indirect Cost Base is comprised of the appropriations for personal services in each business group or division.

The Indirect Cost Rate is calculated either based on the number of FTE and/or the workload, where it can be identified. Because each division and cash fund may have different rates based on the number of FTE or workload, the number of different variations is not included here.

Indirect cost methodology is necessarily based on estimating and allocating overhead costs for the year; i.e., indirect costs do not capture actual expenditures or true-up after the fact to actual expenditures but instead represent the best approximation of the budget year's estimated overhead expenses. On that basis, staff recommends approving the Department's requested indirect cost assessment plan rather than waiting for pending budget items and incremental differences that may be established in the final budget.

INDIRECT COST POOL The Indirect Cost Pool is based on the estimated personal services, operating, and utility line items for the requested budget year in the Executive Director's Office. For FY 2021-22, the Department’s Indirect Cost Pool as requested is $11,906,900.

Table 1 outlines which line items are included in the Department’s Indirect Cost Pool.

TABLE 1: DEPARTMENT OF REVENUE INDIRECT COST POOL

DIVISION REQUEST Executive Director's Office $11,906,900 FY 2021-22 Indirect Cost Pool $11,906,900

INDIRECT COST BASE The Indirect Cost Base is set equal to the Indirect Cost Pool. Table 2 summarizes the Department’s Indirect Cost Base by division.

3-Mar-21 57 DOR1-fig STAFF WORKING DOCUMENT – DOES NOT REPRESENT COMMITTEE DECISION

TABLE 2: DEPARTMENT OF REVENUE INDIRECT COST BASE

DIVISION AND LINE ITEM REQUEST (1) EDO (A) Admin, Personal Services $984,986 (1) EDO, (B) Hearings, Personal Services 251,674 (3) TBG, (A) Admin., Personal Services 37,563 (3) TBG, (B) TAC, Personal Services 1,698,614 (3) TBG, (B) TAC, Mineral Audit 76,629 (3) TBG, (C) TPS, Personal Services 1,143,428 (3) TBG, (C) TPS, Fuel Tracking System 11,269 (3) TBG, (D) Tax Conferee, Personal Services 102,172 (4) DMV, (A) Admin., Personal Services 374,882 (4) DMV, (B) Driver Services, Personal Services 3,295,807 (4) DMV, (B) Driver Services, Ignition Interlock 51,837 (4) DMV, (C) Vehicle Services, Personal Services 359,857 (4) DMV, (C) VS, Motorist Information Database 7,513 (4) DMV, (C) VS, Emissions 112,690 (5) EBG, (A) Admin., Personal Services 82,639 (5) EBG, (B) Gaming, Personal Services 796,343 (5) EBG, (C) Liquor & Tobacco, Personal Services 374,882 (5) EBG, (D) Racing, Personal Services 57,848 (5) EBG, (F) Dealer Board, Personal Services 242,659 (5) EBG, (G) Marijuana, Personal Services 1,076,565 (6) Lottery, Personal Services 767,043 Total $11,906,900

INDIRECT COST REQUEST For FY 2021-22 the Department has requested $11,906,90 for indirect cost assessments. This amount is equal to the Indirect Cost Pool. Table 3 shows the FY 2021-22 Department indirect cost assessment based on the November 1 request for each division.

TABLE 3: DEPARTMENT OF REVENUE INDIRECT COST REQUEST GENERAL CASH DIVISION TOTAL FUND FUND (1) EDO (A) Admin, Personal Services $984,986 $0 $984,986 (1) EDO, (B) Hearings, Personal Services 0 251,674 251,674 (3) TBG, (A) Admin., Personal Services 35,910 1,653 37,563 (3) TBG, (B) TAC, Personal Services 1,619,656 78,958 1,698,614 (3) TBG, (B) TAC, Mineral Audit 76,629 0 76,629 (3) TBG, (C) TPS, Personal Services 1,100,531 42,897 1,143,428 (3) TBG, (C) TPS, Fuel Tracking System 0 11,269 11,269 (3) TBG, (D) Tax Conferee, Personal Services 102,172 0 102,172 (4) DMV, (A) Admin., Personal Services 47,330 327,552 374,882 (4) DMV, (B) DS, Personal Services 372,403 2,923,404 3,295,807 (4) DMV, (B) DS, Ignition Interlock 0 51,837 51,837 (4) DMV, (C) VS, Personal Services 68,816 291,041 359,857 (4) DMV, (C) VS, MIIDB 0 7,513 7,513 (4) DMV, (C) VS, Emissions 0 112,690 112,690 (5) EBG, (A) Admin., Personal Services 26,369 56,270 82,639 (5) EBG, (B) Gaming, Personal Services 0 796,343 796,343 (5) EBG, (C) Liquor & Tobacco, Personal Services 16,453 358,429 374,882 (5) EBG, (D) Racing, Personal Services 0 57,848 57,848 (5) EBG, (F) Dealer Board, Personal Services 0 242,659 242,659 (5) EBG, (G) Marijuana, Personal Services 0 1,076,565 1,076,565 (6) Lottery, Personal Services 0 767,043 767,043 Total $4,451,255 $7,455,645 $11,906,900

3-Mar-21 58 DOR1-fig JBC Staff Figure Setting - FY 2021-22 Staff Working Document - Does Not Represent Committee Decision Appendix A: Numbers Pages

FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2021-22 Actual Actual Appropriation Request Recommendation

DEPARTMENT OF REVENUE Mark Ferrandino, Executive Director (1) EXECUTIVE DIRECTOR'S OFFICE (A) Administration and Support Personal Services 8,614,777 9,220,635 12,605,285 12,899,310 12,852,745 * FTE 126.1 136.5 138.8 138.0 138.0 General Fund 3,301,111 3,877,533 5,858,777 4,548,525 4,529,534 Cash Funds 220,433 300,778 698,384 841,859 814,631 Reappropriated Funds 5,093,233 5,042,324 6,048,124 7,508,599 7,508,576 Federal Funds 0 0 0 327 4

Health, Life, and Dental 12,699,520 13,409,236 14,806,800 16,695,050 16,992,741 * General Fund 5,065,441 5,275,428 3,833,915 6,495,696 6,547,644 Cash Funds 7,615,882 8,002,942 10,850,714 10,082,754 10,328,497 Reappropriated Funds 18,197 34,422 13,065 8,002 8,002 Federal Funds 0 96,444 109,106 108,598 108,598

Short-term Disability 137,500 147,347 161,639 154,730 163,013 * General Fund 56,646 57,479 61,023 68,460 73,427 Cash Funds 80,688 88,393 99,201 85,159 88,470 Reappropriated Funds 166 258 160 73 74 Federal Funds 0 1,217 1,255 1,038 1,042

3-Mar-21 59 DOR1-fig JBC Staff Staff Figure Setting - FY 2021-22 Staff Working Document - Does Not Represent Committee Decision

FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2021-22 Actual Actual Appropriation Request Recommendation

S.B. 04-257 Amortization Equalization Disbursement 4,042,418 4,360,113 4,778,411 4,687,873 4,796,153 * General Fund 1,666,122 1,695,426 1,800,739 1,968,671 1,987,698 Cash Funds 2,371,409 2,621,010 2,935,957 2,684,363 2,773,463 Reappropriated Funds 4,887 7,631 4,705 2,301 2,311 Federal Funds 0 36,046 37,010 32,538 32,681

S.B. 06-235 Supplemental Amortization Equalization Disbursement 4,042,418 4,360,113 4,778,411 4,687,873 4,796,153 * General Fund 1,666,122 1,695,426 1,800,739 1,968,671 1,987,698 Cash Funds 2,371,409 2,621,010 2,935,957 2,684,363 2,773,463 Reappropriated Funds 4,887 7,631 4,705 2,301 2,311 Federal Funds 0 36,046 37,010 32,538 32,681

PERA Direct Distribution 0 2,218,686 0 2,256,397 2,256,397 * General Fund 0 849,711 0 918,741 919,342 Cash Funds 0 1,346,314 0 1,320,948 1,320,330 Reappropriated Funds 0 3,959 0 1,103 1,104 Federal Funds 0 18,702 0 15,605 15,621

Salary Survey 2,582,782 2,798,869 0 2,233,516 2,697,763 * General Fund 1,083,134 1,067,127 0 881,868 1,071,541 Cash Funds 1,496,461 1,703,284 0 1,335,920 1,607,042 Reappropriated Funds 3,187 4,972 0 1,035 1,263 Federal Funds 0 23,486 0 14,693 17,917

Shift Differential 126,584 114,613 123,918 102,026 102,026 Cash Funds 126,584 114,613 123,918 102,026 102,026

3-Mar-21 60 DOR1-fig JBC Staff Staff Figure Setting - FY 2021-22 Staff Working Document - Does Not Represent Committee Decision

FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2021-22 Actual Actual Appropriation Request Recommendation

Workers' Compensation 1,085,724 939,970 692,913 568,552 544,854 General Fund 430,129 364,681 264,266 207,766 207,799 Cash Funds 655,595 575,289 428,647 360,786 337,055

Operating Expenses 1,926,833 1,439,497 2,342,449 3,248,139 3,248,139 * General Fund 1,433,876 1,141,897 1,608,261 2,098,377 2,098,377 Cash Funds 492,957 297,600 734,188 1,149,762 1,149,762

Postage 2,895,425 2,662,721 3,224,512 97,272 97,272 * General Fund 2,623,439 2,469,257 2,848,606 52,165 52,165 Cash Funds 271,986 193,464 375,906 45,107 45,107

Legal Services 4,370,044 6,258,994 5,871,769 5,271,419 5,271,419 General Fund 2,627,857 3,482,635 3,145,162 2,644,877 2,644,877 Cash Funds 1,742,187 2,776,359 2,726,607 2,626,542 2,626,542

Administrative Law Judge Services 4,158 2,099 1,405 13,073 12,770 Cash Funds 4,158 2,099 1,405 13,073 12,770

Statewide training 0 0 0 25,415 0 * General Fund 0 0 0 25,415 0

Payment to Risk Management and Property Funds 293,248 310,447 273,106 412,311 425,411 General Fund 116,175 120,609 104,158 150,671 162,245 Cash Funds 177,073 189,838 168,948 261,640 263,166

Vehicle Lease Payments 566,568 529,808 809,138 855,591 838,511 * General Fund 134,954 160,623 159,087 136,320 130,204 Cash Funds 431,614 369,185 650,051 719,271 708,307

3-Mar-21 61 DOR1-fig JBC Staff Staff Figure Setting - FY 2021-22 Staff Working Document - Does Not Represent Committee Decision

FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2021-22 Actual Actual Appropriation Request Recommendation

Leased Space 4,604,929 5,090,250 6,351,437 6,973,403 6,973,403 * General Fund 610,265 825,857 1,036,802 1,016,711 1,016,711 Cash Funds 3,994,664 4,264,393 5,314,635 5,956,692 5,956,692

Capitol Complex Leased Space 2,330,327 2,156,289 2,316,838 898,482 902,495 * General Fund 1,649,646 1,497,525 863,503 328,333 336,367 Cash Funds 680,681 658,764 1,453,335 570,149 566,128

Payments to OIT 15,798,988 15,081,936 20,521,724 7,633,717 7,633,717 * General Fund 10,388,686 10,522,374 11,915,609 7,033,868 7,033,868 Cash Funds 5,410,302 4,559,562 8,606,115 599,849 599,849 Reappropriated Funds 0 0 0 0 0

CORE Operations 902,422 783,059 1,343,376 1,115,759 987,111 General Fund 357,507 298,793 512,342 407,733 376,468 Cash Funds 544,915 484,266 831,034 708,026 610,643

Utilities 70,251 68,683 143,703 83,703 83,703 * Cash Funds 70,251 68,683 143,703 83,703 83,703

SUBTOTAL - (A) Administration and Support 67,094,916 71,953,365 81,146,834 70,913,611 71,675,796 FTE 126.1 136.5 138.8 138.0 138.0 General Fund 33,211,110 35,402,381 35,812,989 30,952,868 31,175,965 Cash Funds 28,759,249 31,237,846 39,078,705 32,231,992 32,767,646 Reappropriated Funds 5,124,557 5,101,197 6,070,759 7,523,414 7,523,641 Federal Funds 0 211,941 184,381 205,337 208,544

3-Mar-21 62 DOR1-fig JBC Staff Staff Figure Setting - FY 2021-22 Staff Working Document - Does Not Represent Committee Decision

FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2021-22 Actual Actual Appropriation Request Recommendation

(B) Hearings Division Personal Services 2,144,360 2,178,429 2,556,759 2,503,848 2,503,848 * FTE 29.6 32.0 33.5 33.3 33.3 General Fund 0 0 0 0 0 Cash Funds 2,144,360 2,178,429 2,556,759 2,503,848 2,503,848

Operating Expenses 89,875 85,747 109,062 110,412 110,412 Cash Funds 89,875 85,747 109,062 110,412 110,412

Indirect Cost Assessment 163,491 168,054 203,475 253,913 253,913 Cash Funds 163,491 168,054 203,475 253,913 253,913

SUBTOTAL - (B) Hearings Division 2,397,726 2,432,230 2,869,296 2,868,173 2,868,173 FTE 29.6 32.0 33.5 33.3 33.3 General Fund 0 0 0 0 0 Cash Funds 2,397,726 2,432,230 2,869,296 2,868,173 2,868,173

TOTAL - (1) Executive Director's Office 69,492,642 74,385,595 84,016,130 73,781,784 74,543,969 FTE 155.7 168.5 172.3 171.3 171.3 General Fund 33,211,110 35,402,381 35,812,989 30,952,868 31,175,965 Cash Funds 31,156,975 33,670,076 41,948,001 35,100,165 35,635,819 Reappropriated Funds 5,124,557 5,101,197 6,070,759 7,523,414 7,523,641 Federal Funds 0 211,941 184,381 205,337 208,544

3-Mar-21 63 DOR1-fig JBC Staff Staff Figure Setting - FY 2021-22 Staff Working Document - Does Not Represent Committee Decision

FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2021-22 Actual Actual Appropriation Request Recommendation

(3) TAXATION BUSINESS GROUP (A) Administration Personal Services 524,362 387,272 567,667 567,667 567,667 FTE 5.0 5.0 5.0 5.0 5.0 General Fund 497,047 367,838 537,511 542,905 542,905 Cash Funds 27,315 19,434 30,156 24,762 24,762 Reappropriated Funds 0 0 0 0 0

Operating Expenses 9,597 10,350 12,543 12,543 12,543 General Fund 9,597 10,350 12,543 12,543 12,543

Tax Administration IT System (GenTax) Support 5,673,000 6,234,496 6,254,079 5,968,950 5,968,950 * General Fund 5,657,000 6,017,990 6,213,457 5,951,058 5,951,058 Cash Funds 16,000 216,506 40,622 17,892 17,892

IDS Print Production 0 0 0 4,631,256 4,624,048 * General Fund 0 0 0 4,631,256 4,624,048

SUBTOTAL - (A) Administration 6,206,959 6,632,118 6,834,289 11,180,416 11,173,208 FTE 5.0 5.0 5.0 5.0 5.0 General Fund 6,163,644 6,396,178 6,763,511 11,137,762 11,130,554 Cash Funds 43,315 235,940 70,778 42,654 42,654 Reappropriated Funds 0 0 0 0 0

3-Mar-21 64 DOR1-fig JBC Staff Staff Figure Setting - FY 2021-22 Staff Working Document - Does Not Represent Committee Decision

FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2021-22 Actual Actual Appropriation Request Recommendation

(B) Taxation Services Personal Services 0 0 0 29,448,746 29,402,046 * FTE 0.0 0.0 0.0 393.6 393.1 General Fund 0 0 0 28,065,913 28,019,213 Cash Funds 0 0 0 1,228,748 1,228,748 Reappropriated Funds 0 0 0 154,085 154,085

Operating Expenses 0 0 0 3,318,340 3,335,375 * General Fund 0 0 0 3,299,407 3,316,442 Cash Funds 0 0 0 18,933 18,933

Joint Audit Program 0 0 0 131,244 131,244 * General Fund 0 0 0 131,244 131,244

Mineral Audit Program 0 0 0 918,132 918,132 * FTE 0.0 0.0 0.0 10.2 10.2 Reappropriated Funds 0 0 0 66,000 66,000 Federal Funds 0 0 0 852,132 852,132

Document Management 0 0 0 4,634,987 4,634,987 * General Fund 0 0 0 4,596,468 4,596,468 Cash Funds 0 0 0 38,519 38,519

Fuel Tracking System 0 0 0 501,145 501,145 * FTE 0.0 0.0 0.0 1.5 1.5 General Fund 0 0 0 126 126 Cash Funds 0 0 0 501,019 501,019

3-Mar-21 65 DOR1-fig JBC Staff Staff Figure Setting - FY 2021-22 Staff Working Document - Does Not Represent Committee Decision

FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2021-22 Actual Actual Appropriation Request Recommendation

Indirect Cost Assessment 0 0 0 11,364 11,364 * Cash Funds 0 0 0 11,364 11,364

SUBTOTAL - (B) Taxation Services 0 0 0 38,963,958 38,934,293 FTE 0.0 0.0 0.0 405.3 404.8 General Fund 0 0 0 36,093,158 36,063,493 Cash Funds 0 0 0 1,798,583 1,798,583 Reappropriated Funds 0 0 0 220,085 220,085 Federal Funds 0 0 0 852,132 852,132

(C) Tax Conferee Personal Services 1,401,010 1,485,244 1,574,018 1,574,018 1,574,018 FTE 13.6 13.6 13.6 13.6 13.6 General Fund 1,401,010 1,485,244 1,476,735 1,476,735 1,476,735 Reappropriated Funds 0 0 97,283 97,283 97,283 Federal Funds 0 0 0 0 0

Operating Expenses 38,810 57,742 60,905 60,905 60,905 General Fund 38,810 57,742 60,905 60,905 60,905

SUBTOTAL - (C) Tax Conferee 1,439,820 1,542,986 1,634,923 1,634,923 1,634,923 FTE 13.6 13.6 13.6 13.6 13.6 General Fund 1,439,820 1,542,986 1,537,640 1,537,640 1,537,640 Reappropriated Funds 0 0 97,283 97,283 97,283 Federal Funds 0 0 0 0 0

3-Mar-21 66 DOR1-fig JBC Staff Staff Figure Setting - FY 2021-22 Staff Working Document - Does Not Represent Committee Decision

FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2021-22 Actual Actual Appropriation Request Recommendation

(D) Special Purpose Cigarette Tax Rebate 9,364,164 8,894,085 7,363,055 7,363,055 7,363,055 General Fund 9,364,164 8,894,085 7,363,055 7,363,055 7,363,055

Amendment 35 Distribution to Local Governments 1,205,766 1,184,931 1,163,268 1,163,268 1,265,742 Cash Funds 1,205,766 1,184,931 1,163,268 1,163,268 1,265,742

Old Age Heat and Fuel and Property Tax Assistance Grant 5,546,646 5,842,930 5,624,000 5,624,000 5,624,000 General Fund 5,546,646 5,842,930 5,624,000 5,624,000 5,624,000

Commercial Vehicle Enterprise Sales Tax Refund 14,619 86,752 120,524 120,524 120,524 Cash Funds 14,619 86,752 120,524 120,524 120,524

Retail Marijuana Sales Tax Distribution to Local Governments 19,324,469 22,640,528 20,813,067 20,813,067 20,813,067 General Fund 19,324,469 22,640,528 20,813,067 20,813,067 20,813,067

SUBTOTAL - (D) Special Purpose 35,455,664 38,649,226 35,083,914 35,083,914 35,186,388 FTE 0.0 0.0 0.0 0.0 0.0 General Fund 34,235,279 37,377,543 33,800,122 33,800,122 33,800,122 Cash Funds 1,220,385 1,271,683 1,283,792 1,283,792 1,386,266

3-Mar-21 67 DOR1-fig JBC Staff Staff Figure Setting - FY 2021-22 Staff Working Document - Does Not Represent Committee Decision

FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2021-22 Actual Actual Appropriation Request Recommendation

(E) Taxation and Compliance Division Personal Services 15,555,016 17,180,030 18,373,276 0 0 * FTE 234.9 235.3 226.1 0.0 0.0 General Fund 14,818,123 16,427,075 17,365,104 0 0 Cash Funds 591,288 608,260 854,087 0 0 Reappropriated Funds 145,605 144,695 154,085 0 0

Operating Expenses 981,336 955,451 1,067,697 0 0 * General Fund 969,256 942,111 1,053,967 0 0 Cash Funds 12,080 13,340 13,730 0 0

Joint Audit Program 131,244 131,244 131,244 0 0 * General Fund 131,244 131,244 131,244 0 0

Mineral Audit Program 824,388 838,132 918,132 0 0 * FTE 10.2 10.2 10.2 0.0 0.0 Reappropriated Funds 0 13,744 66,000 0 0 Federal Funds 824,388 824,388 852,132 0 0

SUBTOTAL - (E) Taxation and Compliance Division 17,491,984 19,104,857 20,490,349 0 0 FTE 245.1 245.5 236.3 NaN NaN General Fund 15,918,623 17,500,430 18,550,315 0 0 Cash Funds 603,368 621,600 867,817 0 0 Reappropriated Funds 145,605 158,439 220,085 0 0 Federal Funds 824,388 824,388 852,132 0 0

3-Mar-21 68 DOR1-fig JBC Staff Staff Figure Setting - FY 2021-22 Staff Working Document - Does Not Represent Committee Decision

FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2021-22 Actual Actual Appropriation Request Recommendation

(F) Taxpayer Service Division Personal Services 8,466,461 9,154,886 9,988,240 0 0 * FTE 137.6 154.9 152.2 0.0 0.0 General Fund 8,258,871 8,874,254 9,613,579 0 0 Cash Funds 207,590 280,632 374,661 0 0

Operating Expenses 488,819 508,406 525,128 0 0 * General Fund 485,376 505,102 519,925 0 0 Cash Funds 3,443 3,304 5,203 0 0

Seasonal Tax Processing 296,391 296,391 296,391 0 0 * General Fund 296,391 296,391 296,391 0 0

Document Management 4,055,506 5,260,588 4,895,551 0 0 * General Fund 4,055,506 5,260,588 4,857,032 0 0 Cash Funds 0 0 38,519 0 0

Fuel Tracking System 497,321 497,426 503,438 0 0 * FTE 1.5 1.5 1.5 0.0 0.0 General Fund 0 0 2,419 0 0 Cash Funds 497,321 497,426 501,019 0 0

Indirect Cost Assessment 9,075 8,674 10,451 0 0 * Cash Funds 9,075 8,674 10,451 0 0

SUBTOTAL - (F) Taxpayer Service Division 13,813,573 15,726,371 16,219,199 0 0 FTE 139.1 156.4 153.7 0.0 NaN General Fund 13,096,144 14,936,335 15,289,346 0 0 Cash Funds 717,429 790,036 929,853 0 0

3-Mar-21 69 DOR1-fig JBC Staff Staff Figure Setting - FY 2021-22 Staff Working Document - Does Not Represent Committee Decision

FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2021-22 Actual Actual Appropriation Request Recommendation

TOTAL - (3) Taxation Business Group 74,408,000 81,655,558 80,262,674 86,863,211 86,928,812 FTE 402.8 420.5 408.6 423.9 423.4 General Fund 70,853,510 77,753,472 75,940,934 82,568,682 82,531,809 Cash Funds 2,584,497 2,919,259 3,152,240 3,125,029 3,227,503 Reappropriated Funds 145,605 158,439 317,368 317,368 317,368 Federal Funds 824,388 824,388 852,132 852,132 852,132

TOTAL - Department of Revenue 143,900,642 156,041,153 164,278,804 160,644,995 161,472,781 FTE 558.5 589.0 580.9 595.2 594.7 General Fund 104,064,620 113,155,853 111,753,923 113,521,550 113,707,774 Cash Funds 33,741,472 36,589,335 45,100,241 38,225,194 38,863,322 Reappropriated Funds 5,270,162 5,259,636 6,388,127 7,840,782 7,841,009 Federal Funds 824,388 1,036,329 1,036,513 1,057,469 1,060,676

3-Mar-21 70 DOR1-fig Sen. Jeff Bridges, Chair Rep. Brianna Titone, Vice-Chair Sen. Chris Kolker Rep. Mark Baisley Sen. Kevin Priola Rep. Tracey Bernett

Joint Technology Committee

State Capitol Building, Room 029 Denver, Colorado 80203-1784 (303) 866-3521

February 19, 2021

Senator Dominick Moreno Chair, Joint Budget Committee 200 East 14th Avenue, Third Floor Denver, Colorado 80203

Dear Senator Moreno,

In a letter to the Joint Technology Committee (JTC), dated December 17, 2020, the Joint Budget Committee (JBC) requested that the JTC review the Department of Revenue’s FY 2021-22 R-02 operating budget request for the Sales and Use Tax Simplification (SUTS) system pursuant to Joint Rule 45 (a)(3)(B). The request is for $2.2 million General Fund and 5.0 FTE for FY 2021-22 and ongoing.

On February 18, 2021, the JTC met to review this request and voted to recommend fully funding the request as submitted. The JTC expresses its support and appreciation for the work that the department has done on the system, and believes that the department has selected the correct approach in choosing to use an off-the-shelf technology solution instead of building a more expensive custom solution. The JTC is looking forward to having the system officially launch on April 1, 2021, and will continue to receive updates from the department throughout the process.

If you have any questions or concerns about the JTC’s recommendations, please call Luisa Altmann, Legislative Council Staff, at 303-866-3518.

Sincerely,

Senator Bridges, Chair

c: Joint Budget Committee Members Joint Technology Committee Members Joint Technology Committee Staff Carolyn Kampman, Joint Budget Committee Staff Alfredo Kemm, Joint Budget Committee Staff Lauren Larson, Governor’s Office of State Planning and Budgeting Cooper Reveley, Colorado Department of Revenue

3-Mar-21 71 DOR1-fig