Treasury Department Proposes Sale of $125M Tax Credits to Boost State Budget

The Senate Appropriations Committee of the Colorado State Legislature convened on August 24, 2025, to discuss critical financial legislation, including House Bill 1004, which aims to authorize the sale of tax credits to bolster the state’s general fund revenue.

The meeting began with a focus on the implications of including S Corporations in the tax credit sale process. A senator raised concerns about the exclusion of these entities, arguing that opening the sale to a broader range of buyers could yield better financial outcomes. Senator Snyder responded, explaining that the complexity of S Corporations, which often have multiple owners, would significantly increase administrative costs and complicate the process for the Department of Revenue (DOR).

The discussion then shifted to the potential fiscal impact of the proposed tax credits. Senator Pelton inquired about the implications of tax credits on the state's revenue, particularly in relation to the Taxpayer's Bill of Rights (TABOR). Senator Marchman clarified that while tax credits would still exist, they might reduce the amount of refunds if the state’s revenue fell below the TABOR cap.

Leah Marvin Riley, the policy director for the Department of Treasury, presented the bill, highlighting that the sale of up to $125 million in insurance premium tax credits could generate approximately $100 million in revenue for the current fiscal year. This revenue is intended to address urgent budgetary needs while ensuring a transparent and competitive bidding process for the tax credits.

The committee also discussed the risks associated with short-term borrowing to cover general fund costs. Mr. Eek, the debt manager, noted that while there is inherent risk, the proposed amount is manageable and should not significantly impact the state's credit rating.

Following the presentations, the committee moved to witness testimony, where Natalie Menton expressed opposition to the bill, citing concerns about sound financial planning and the potential risks involved.

The committee then proceeded to review and pass several amendments to the bill, including adjustments to the cost recovery process for administering the tax credit sales and changes to the mandatory nature of the credit sale.

Ultimately, House Bill 1004, along with its amendments, was approved by a vote of 5 to 2, moving it forward to the Committee of the Whole for further consideration. The meeting concluded with the introduction of House Bill 1005, indicating ongoing legislative efforts to address the state's financial landscape.