Temporary adjustment of rate of income tax - refund of excess state revenues - authority of executive director - definitions - repeal

(b) (I) The provisions of subsection (1)(a) of this section take effect only if the amount of excess state revenues required to be refunded for the specified state fiscal year, as outlined in subsection (1)(a)(II) of this section, exceeds the total of the amount of reimbursement for property tax exemptions plus the estimated amount by which state revenues would be decreased as the result of the applicable reduction in the state income tax rate.

(II) For any state fiscal year commencing on or after July 1, 2025, if the permanent state income tax rate then in effect is four and twenty-five one-hundredths percent or less of the federal taxable income of every individual, estate, trust, and corporation, any otherwise applicable temporary income tax rate reduction outlined in subsection (1)(a) of this section does not take effect; except that, if the amount of excess state revenues required to be refunded for the state fiscal year is equal to or greater than two billion dollars, the executive director shall temporarily reduce the state income tax rate to the extent necessary to refund all excess state revenues that would not otherwise be refunded by another method established by law other than the methods set forth in sections 39-22-2002 and 39-22-2003.

(c) For the income tax year beginning on January 1, 2024, the executive director shall temporarily reduce the state income tax rate from four and forty one-hundredths percent of the federal taxable income of every individual, estate, trust, and corporation, as specified in sections 39-22-104 (1.7) and 39-22-301 (1)(d)(I), to four and twenty-five one-hundredths percent of the federal taxable income of every individual, estate, trust, and corporation, as a method to refund excess state revenues that are required to be refunded pursuant to section 20 (7)(d) of article X of the state constitution for state fiscal year 2023-24.

(2) Except as otherwise provided in subsection (3) of this section, no later than October 1, 2024, and no later than each October 1 thereafter of any calendar year during which it is certified in accordance with the provisions of section 24-77-106.5 that state revenues exceed the limitation on state fiscal year spending imposed by section 20 (7)(a) of article X of the state constitution for the state fiscal year ending in that calendar year and exceed any amount that the voters statewide have authorized the state to retain and spend for the state fiscal year ending in that calendar year, the executive director shall estimate the amount by which state revenues would be decreased as the result of the applicable percentage reduction listed in subsection (1)(a)(II), (1)(b)(II), or (1)(c) of this section in the state income tax rate for the income tax year commencing during the calendar year in which the state fiscal year ended.

(3) If one or more ballot questions are submitted to the voters at a statewide election to be held in November of any given calendar year that seek authorization for the state to retain and spend all or any portion of the amount of excess state revenues for the state fiscal year ending during said calendar year, the executive director shall not reduce the state income tax rate until the results of said election are known so that the state income tax rate may be reduced only if, after the results of said election, the amount of excess state revenues required to be refunded for the state fiscal year exceeds the total of the amount of reimbursement for property tax exemptions plus the estimated amount by which state revenues would be decreased as a result of the applicable reduction in the state income tax rate pursuant to this section.

(4) In estimating the amount by which state revenues would be decreased as the result of a reduction in the state income tax rate in accordance with the provisions of this section, the executive director shall utilize the most recent data available from the staff of the legislative council regarding the estimate of state revenues generated by the state income tax for the applicable income tax year.

(5) (a) Upon estimating the amount by which state revenues would be decreased as the result of a reduction in the state income tax rate for any income tax year in accordance with the provisions of this section, the executive director shall notify in writing the executive committee of the legislative council created pursuant to section 2-3-301 (1), C.R.S., of any amount so estimated and the basis for such estimate. Such written notification shall be given within five working days after such estimate is completed, but such written notification shall be given no later than October 1 of the calendar year.

(b) It is the function of the executive committee of the legislative council to review and approve or disapprove such estimated amount within twenty days of receipt of such written notification from the executive director. Any estimate of the amount by which state revenues would be decreased as the result of a reduction in the state income tax rate as estimated pursuant to the provisions of this section that is not approved or disapproved by the executive committee within said twenty days shall be automatically approved; except that, if within said twenty days the executive committee schedules a hearing on such estimated amount by which state revenues would be decreased as the result of a reduction in the state income tax rate reduction, such automatic approval shall not occur unless the executive committee does not approve or disapprove such estimated amount after the conclusion of such hearing. Any hearing conducted by the executive committee pursuant to the provisions of this paragraph (b) shall be held no later than twenty-five days after receipt of such written notification from the executive director.

(c) (I) If the executive committee of the legislative council disapproves the estimated amount by which state revenues would be decreased as the result of a reduction in the state income tax rate as estimated by the executive director, the executive committee shall specify the estimated amount by which state revenues would be decreased as the result of a reduction in the state income tax rate so that the executive director can determine whether to implement the reduced state income tax rate. Any estimated amount by which state revenues would be decreased as the result of a reduction in the state income tax rate as specified by the executive committee pursuant to this subparagraph (I) shall be estimated in accordance with the provisions of this section.

(II) The executive director shall not adjust the state income tax rate until the estimated amount by which state revenues would be decreased as the result of a reduction in the state income tax rate estimate has been approved pursuant to the provisions of paragraph (b) of this subsection (5).