2023 Colorado Revised Statutes › Title 39 - TAXATION (§§ 39-1-101 — 39-37-301) › SPECIFIC TAXES (§§ 39-20-101 — 39-37-301) › GENERAL AND ADMINISTRATIVE (§§ 39-20-101 — 39-21-405) › Article 21 - Procedure and Administration (§§ 39-21-101 — 39-21-405) › Part 3 - TAX PROFILE AND EXPENDITURE REPORT (§§ 39-21-301 — 39-21-306) › Section 39-21-305 - Tax expenditure - state auditor evaluation

(1)
(a)
The state auditor shall evaluate the state's tax expenditures pursuant to the requirements in this section. In evaluating each tax expenditure, the state auditor shall consult with the intended beneficiaries or representatives of the intended beneficiaries of the tax expenditure. In addition, if the tax expenditure is intended to benefit a specific geographic region of the state, the state auditor shall consult with the intended beneficiaries in that specific geographic region of the state.
(b)
The state auditor's tax expenditure evaluation must include the following:
(I)
A summary description of the purpose, intent, or goal of the tax expenditure;
(II)
The intended beneficiaries of the tax expenditure;
(III)
Whether the tax expenditure is accomplishing its purpose, intent, or goal;
(IV)
An explanation of the intended economic costs and benefits of the tax expenditure, with analyses to support the evaluation if they are available or reasonably possible;
(V)
A comparison of the tax expenditure to other similar tax expenditures in other states;
(VI)
Whether there are other tax expenditures, federal or state spending, or other government, nonprofit, commercial, volunteer, or philanthropic programs, to the extent the information is readily available, that have the same or similar purpose, intent, or goal as the tax expenditure, how those all are coordinated, and if coordination could be improved, or whether any redundancies can be eliminated;
(VII)
If the evaluation of a particular tax expenditure's economic impact is made difficult because of data constraints, any suggestions for changes in administration or law that would facilitate such data collection; and
(VIII)
An explanation of the performance measures used to determine the extent to which the tax expenditure is accomplishing its purpose, intent, or goal. The performance measures must be clear and relevant to the specific tax expenditure being evaluated, should be measurable and track actionable goals, and can be assessable and reportable over time. The state auditor shall consider the original legislative intent as well as subsequent developments in the state's economy, the national economy, and any changes in national, state, or local fiscal policies and conditions.
(c)
To the extent it can be determined by the state auditor, the tax expenditure evaluation should also include the following:
(I)
The extent to which the tax expenditure is a cost-effective use of resources compared to other options for using the same resources to address the same purpose, intent, or goal;
(II)
An analysis of the tax expenditure's effect on competition and on business and stakeholder needs;
(III)
Whether there are any opportunities to improve the effectiveness of the tax expenditure in meeting its purpose, intent, or goal; and
(IV)
An analysis of the effect of the state tax policies connected to local taxing jurisdictions on the overall purpose, intent, or goal of the tax expenditure.
(c.5)
In addition to any other requirements in this section, the manner in which the state auditor evaluates the state's tax expenditures is governed by the following:
(I)
New tax expenditures will be evaluated in accordance with the schedule set by the state auditor in subsection (1)(d) of this section;
(II)
Tax expenditures that have been evaluated by the state auditor in accordance with this section do not need to be evaluated again, but the state auditor, in the state auditor's discretion, may reevaluate tax expenditures if there have been substantial changes to the tax expenditure;
(III)
Tax expenditures that are on the state auditor's schedule for evaluation but have been repealed or are set to repeal within a year of the evaluation do not need to be evaluated; and
(IV)
For a tax expenditure that is in effect for three years or less, the state auditor shall make the auditor's best effort to prepare a report for the tax expenditure using the best available data.
(d)
(I)
No later than September 15, 2017, the state auditor shall develop and publish a multi-year schedule that lists all tax expenditures in law as of July 1, 2017, and indicates the year when the evaluation report will be published for each tax expenditure. In developing the multi-year schedule the state auditor shall endeavor to review the oldest tax expenditures first and shall endeavor to review a tax expenditure with a statutory repeal date so that the evaluation report for such tax expenditure is available during the legislative session held in the calendar year before the tax expenditure is scheduled to repeal.
(II)
The state auditor may revise the schedule established in subsection (1)(d)(I) of this section so long as the state auditor continues to provide for a systematic evaluation of tax expenditures, including any new tax expenditures enacted by the general assembly since the publication of a previous evaluation report. In revising the schedule, the state auditor may consider when sufficient data is expected to be available in order to review a tax expenditure.
(e)
Notwithstanding section
2-3-103 (2)
, the state auditor shall present the results in the form of an evaluation report that the state auditor shall ensure is posted on the general assembly's website, and, notwithstanding section
24-1-136 (9)
, the state auditor shall deliver a copy of the report to the joint budget committee and the finance committees of the senate and the house of representatives. The state auditor shall ensure the first evaluation report is delivered and posted no later than September 14, 2018, and shall ensure subsequent evaluation reports are delivered and posted no later than June 30 of each year thereafter.
(2)
(a)
Any records, information, or documentation generated pursuant to this section are work papers of the state auditor and shall be open to public inspection only upon approval of a majority of members of the legislative audit committee created in section
2-3-101
, C.R.S. Only the specific work papers that the legislative audit committee votes to approve for disclosure shall be open to public inspection. Work papers that have not been specifically approved for disclosure by a majority vote of the legislative audit committee shall remain confidential. Under no circumstances shall the work papers be open to public inspection prior to a completed report being posted as specified in paragraph (e) of subsection (1) of this section.
(b)
The department of revenue must provide any requested information, analysis, or data, if available and under the control of the department, as requested by the state auditor; except that, if the request includes confidential information, such information must remain confidential in the hands of the state auditor, and the state auditor is subject to the same limitations specified in section
39-21-113
.
(c)
The state auditor's authority set forth in section
2-3-107
, C.R.S., applies to the state auditor's evaluation set forth in this section.
Amended by 2024 Ch. 375,§ 1, eff. 6/4/2024, app. to tax expenditure evaluation reports of the state auditor on or after 6/4/2024.
L. 2016: Entire section added, (SB 16-203), ch. 211, p. 817, § 3, effective August 10.