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<br />~ <br /> <br />" <br /> <br />Question 11. What is the impact ofthe Amendment on the utility occupation tax and franchise .. <br />charge? ., <br /> <br />Many municipalities impose a tax On certain types of utility occupations. In addition, <br />many municipalities impose franchise taxes or fees. Franchise taxes or fees are paid by those public <br />utilities required 10 obtain franchises to operate within municipal boundaries. The fee generally is <br />a percentage of the utility's gross receipts derived from business within the municipality. Public <br />utilities which are not required to obtain franchises often are charged a municipal occupation tax <br />which normally is a flat dollar amount or flat rate per account. <br /> <br />DOLA estimates the total local government revenue loss from these cuts to be <br />approximately $72 million in 2001. These fees and charges also are typically billed and collected <br />monthly. As discussed in Question 7, it is possible that the Amendment will require the tax cut to <br />be applied to each monthly bill. If so, these charges will be eliminated for most customers in 2001. <br /> <br />Question 12. Is the State obligated to replace revenue lost by local governments if the <br />Amendment passes? <br /> <br />The express language of the Amendment does not require the State to replace revenue <br />lost by local governments. Earlier versions of the Amendment filed by its proponents did have such <br />a requirement; however, despite the insistence of its drafter that revenue replacement is required, <br />the Amendment does not include this requirement. The only reference in the Amendment to State <br />replacement of local revenue says that if the State does replace revenue, it must do so within the .. <br />State's existing TABOR revenue limits (it may not be paid from surplus revenue). ., <br /> <br />One exception to this may be school districts. Under the current School Finance Act, <br />the Stale "backfills" the difference between a school district's local revenue and the total program <br />funding the district is allowed under the School Finance Act. If local property tax revenue are <br />reduced pursuant to the Amendment, the State's share of total program funding will increase. It is <br />possible that with reduced revenue as a result of the passage of the Amendment, the State could <br />lower total program funding to reduce its obligation to backfill. <br /> <br />Question 13. How do the terms ofthe Amendment interact with TABOR's existing revenue <br />limits? <br /> <br />The Amendment states that "8( d) tax cuts and state replacement oflocal revenue shall <br />not lower state or local excess revenue." This could mean that governments which have not already <br />debruced may be required to refund all of their excess revenue pursuant to Section 7( d) ofT ABOR <br />in addition to the required tax cuts. Local governments could be required to maintain fmancial <br />records which will track "phantom" income as if the tax cuts had not occurred in order to determine <br />the proper amount of TABOR refunds. Local governments may avoid this by holding debrucing <br />elections. <br /> <br />6 <br /> <br />e <br />