Repeal Decarbonization Tax Credits Administration Fund

HOUSE BILL 26-1362

BY REPRESENTATIVE(S) Sirota and Taggart, Brown, Ricks; also SENATOR(S) Bridges and Kirkmeyer, Amabile.

CONCERNING THE REPEAL OF THE DECARBONIZATION TAX CREDITS ADMINISTRATION CASH FUND.

Be it enacted by the General Assembly of the State of Colorado: SECTION 1. In Colorado Revised Statutes, 24-38.5-120, amend (3); and repeal (l)(c), (2), (3.5), (4), and (5) as follows: 24-38.5-120. Decarbonization tax credits administration cash fund - definitions - repeal. (1) As used in this section, unless the context otherwise requires: (c) "Fund" means the deeaibonization _tax credits administration cash fund et eated in subsection (2) of this section. (2) The deeaibonization tax credits administration cash fund is hereby et eated in the state treasury. The fund consists of money er edited to the fund pmsuant to section 39-29-108 (2)(e)(I) and any other money that

Capital letters or bold & italic numbers indicate new material added to existing law; dashes through words or numbers indicate deletions from existing law and such material is not part of the act.

the general assembly may appropriate or tr ans fer to the fund. (3) (a) Subjectto annual appropriation by the general assembly, For state fiscal years 2023-24 2027-2028 through 2034-35, THE GENERAL ASSEMBL y MA y APPROPRIATE MONEY TO the office and the department may expend money ft om the fund for THE direct and indirect costs associated with the implementation and administration of the decarbonization tax credits. (b) (I) Money in the fund may also be used to repay administrative costs to the respective cash funds. The state treasmer shall transfer money frnm the fund in the amount attributable to administ1 ati ve costs to the respecti'\I e cash funds so that all administ1 ativ e costs ate repaid to the respective cash funds on 01 before June 29, 2024. (II) As used in this subsection (3)(b), unless the context other wise reqmres. (A) "Administrative costs" means the amount of nroney expended ft om the rcspectiv e cash funds by the office and the department for the administration and implementation of certain income tax credits, as pt0'\lided for in sections 24-38.5-116 (6)(b)(II), 24-38.5-118 (7)(d), 24-3'8.5-506 (2)(b), artd of the temporary specific ownership tax rate reduction for electr ie rnediunr-dttty and hea ry-duty tr ttcks that are part of a fleet as pro'\lided for in section 25-7-1405 (2)(b). (D) "Respective cash funds" means the indust1 ial and manufoctu1 ing opet ations clean air gr ant pt ogr am cash fund ct eated in sectiort 24-3 8. 5-116 (6), the geothermal energy grant fund created in section 24-38.5-118 (7), the community access to electric bicycles cash fund created in section 24-38.5-506, and the electrifying school buses grant program cash fund created in section 25-7-1405. (3.5) (a) On January 1, 2026, the state treasurer shall transfer two million five hundt ed thousand dollars ft om the fund to the ene1 gy and carbon management cash fund created in section 34-60-122 (5). (b) This subsection (3.5) is repealed, effective July 1, 2026. (4)

The state tr easm er shall tr ans fer all unexpended and

uneneumbe1ed money in the fund on June 30, 2024, June 30, 2025, and June 30, 2026, to the general fund, exeept that the balanee of money 1emaining in the fund not ineluding expended and eneumbe1 ed money shall not be less than three hundred thousand dollars. (5) Notwithstanding subseetion (4) of this seetion, on July 1, 2036, the state t1 easm e1 shall transfer all money in the fund to the general fund.

SECTION 2. In Colorado Revised Statutes, 24-38.5-116, amend (6)(b )(II) as follows: 24-38.5-116. Industrial and manufacturing operations clean air grant program - creation - eligibility - fund created - gifts, grants, or donations - transfer - legislative declaration - definitions - reporting repeal. (6) Fund. (b) (II) For state fiscal years 2023-24 and 2024-25, the office and, subject to annual appropriation, the department of revenue may expend money from the fund for the administration and implementation of the industrial clean energy tax credit created in section 39-22-551 and the tax credit for sustainable aviation fuel production facility created in section 39-22-556. The office shall keep an accounting of all money expended from the fund pursuant to this subsection (6)(b )(II). for putposes of ealeulating the repayment of the administrative eosts requited by seetion 24-38.5-120 ffl

SECTION 3. In Colorado Revised Statutes, 24-38.5-118, amend (7)( d) as follows: 24-38.5-118. Geothermal energy grant program - creation procedures - fund - report- definitions - legislative declaration - repeal. (7) Fund. (d) For state fiscal years 2023-24 and 2024-25, the office and, subject to annual appropriation, the department of revenue may expend money in the fund for the administration and implementation of the tax credit for expenditures made in connection with a geothermal energy project

created in section 39-22-552, the geothermal electricity generation production tax credit created in section 39-22-553, and the heat pump technology and thermal energy network tax credit created in section 39-22-554. The office shall keep an accounting of all money expended from the fund pursuant to this subsection (7)( d). fot ptttposes of calculating the repayment of the administrative costs requited by section 24-38.5-120 (3) SECTION 4. In Colorado Revised Statutes, 24-38.5-506, amend (2)(b) as follows: 24-38.5-506. Community access to electric bicycles cash fund creation - gifts, grants, or donations - transfer - repeal. (2) (b) For state fiscal years 2023-24 and 2024-25, the office and, subject to annual appropriation, the department of revenue may expend money in the fund for the administration and implementation of the electric bicycle tax credit created in section 39-22-555. The office shall keep an accounting of all money expended from the fund pursuant to this subsection (2)(b ). fur purposes of calculating the repayment of the adnrinistrative costs tequited by section 24-38.5-120 (3) SECTION 5. In Colorado Revised Statutes, 25-7-1405, amend (2)(b) as follows: 25-7-1405. Electrifying school buses grant program cash fund - creation - gifts, grants, and donations - transfer - repeal. (2) (b) For state fiscal years 2023-24 and 2024-25, and subject to annual appropriation, the Colorado energy office, created in section 24-38.5-101, and the department of revenue may expend money from the fund for the administration and implementation of the innovative motor vehicles and innovative trucks tax credits created in sections 39-22-516.7 and 39-22-516.8 and for the specific ownership tax rate reduction for electric medium-duty and heavy-duty trucks that are part of a fleet as set forth in section 42-3-107 (l)(a)(IV). The office shall keep an accounting of all money expended from the fund pursuant to this subsection (2)(b ). for pmposes of calculating the tepayment of the administrative costs tequited by section 24-38.5-120 (3) SECTION 6. In Colorado Revised Statutes, 34-60-122, repeal

(5)(f) as follows:

34-60-122. Expenses - energy and carbon management cash fund created - repeal. (5) (f) (I) On June 30, 2025, the state t1easme1 shall transfer two million five hundred thousand dollars fi:om the energy and carbon management cash fund to the deea1bonization tax credits administration eash fund created in section 24-38.5-120 (2). (11) This subsection (5)(f) is repealed, effective July 1, 2026.

SECTION 7. In Colorado Revised Statutes, 39-29-108, amend (2)(b ); and repeal (2)( e) as follows: 39-29-108. Allocation of severance tax revenues - definitions repeal. (2) (b) Except as set forth in subsections (2)(d) and (2)(e) SUBSECTION (2)(d) of this section, of the total gross receipts realized from the severance taxes imposed on minerals and mineral fuels under the provisions of this article after June 30, 2017, fifty percent shall be credited to the state severance tax trust fund created by section 39-29-109, and fifty percent shall be credited to the local government severance tax fund created by section 39-29-110. ( e) (I) Fm the state fiscal y eats 2023-24 tht ough 2026-27, the state ti easm et shall et edit the dise1 cte ine1 eased amount of severance tax fot oil and gas prnduction that is attributable to the reduction of the credit against tax pmsuant to section 39-29-105 (2)(b)(II) to the decatbonization tax credits administration cash fund created in section 24-38.5-120 (2), except that, fot state fiscal years 2024-25 and 2025-26, money credited to the decat bonization tax ct edits administ1 ation cash fund shall not exceed the net tevenue fi:om the oil and gas severance tax collection. (II) Repealed. (111) As used in this subsection (2)(e), unless the context otherwise 1equues.

(A) Repealed. (B) "Discrete inereased amount of sevetanee tax fut oil and gas prnduetion" means the amount of tax eolleeted that is attributable to a twelve and one-half pet eent t eduetion in the se vet anee tax et edit fut oil and gas prnduetion set furth in seetion 39-29-105 (2)(b)(II) for tax years beginning on or after January 1, 2024, but before January 1, 2026. (C) Repealed. (IV) This subseetion (2)(e) is t epealed, effeeti'1 e Deeembet 31,

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SECTION 8. Effective date. This act takes effect only if House Bill 26-1405 becomes law, in which case this act takes effect on July 1, 2027. SECTION 9. Safety clause. The general assembly finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, or safety or for appropriations for

the support and maintenance of the departments of the state and state institutions.

Julie McCluskie SPEAKER OF THE HOUSE OF REPRESENTATIVES

James Rashad Coleman, Sr. PRESIDENT OF THE SENATE

Vanessa Reilly CHIEF CLERK OF THE HOUSE OF REPRESENTATIVES

Esther van Mourik SECRETARY OF THE SENATE

APPROVED on Thursday May 28th 2026 at 12:00pm (Date and Time)

Jared S. Polis GOVERNOR OF THE STATE OF COLORADO