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SB 193

Local Ordinances & State Employees

2026 Regular Session

The state is not an employer for local minimum wage or local occupation/business taxes and must request a supplemental budget for 2026-27 state employee compensation.

Governor Signed
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Bill Summary · SB 193

Summary of SB 26-193 (Session 2026A, Colorado)

Purpose and objective

SB 26-193 clarifies the state’s role in relation to local minimum wage laws and local business taxes, and strengthens the state's budgeting process around state employee compensation. The bill states the state is not an “employer” for local minimum wage purposes, removes the state from local occupational and business privilege taxes, and requires a supplemental budget request regarding state employee compensation for FY 2026-27.

Key provisions

  • Definition of “employer” for local minimum wage laws (8-6-101(4))

    • Expands the category of entities considered employers to include corporations, sole proprietorships, partnerships, joint ventures, LLCs, trusts, associations, political subdivisions, individuals, or any other entity that employs an employee.
    • Important exception: the state of Colorado is explicitly not an “employer” under these local minimum wage analyses.

  • Definition of “local government” and “political subdivision” (8-6-101(4))

    • Clarifies which entities are treated as local governments (cities, home-rule jurisdictions, towns, charter cities, city and county, counties, home-rule counties, etc.).
    • States that a public corporation does not count as a political subdivision for these purposes, with the state expressly excluded from being a political subdivision.

  • State and municipal licensing tax provisions (31-15-501)

    • Municipal authority to license, regulate, and tax occupations and businesses remains, but the state is not subject to local occupation or business taxes, consistent with the broader “state not an employer” clarification.

  • Office of State Planning and Budgeting (OSPB) reporting (24-37-302)

    • OSPB must, by January 4, 2027, submit a supplemental budget request to the Joint Budget Committee concerning state employee compensation for the 2026-27 fiscal year.
    • The new subsection is repealed effective July 1, 2027.

Financial and fiscal implications

  • State expenditures and local government revenue

    • State: Estimated net savings of about $900,000 per year starting FY 2026-27 (roughly $500,000 from General Fund and $400,000 from other cash/federal funds) due to removing the state from local occupational/business taxes.
    • Local governments: Estimated statewide reduction in revenue of about $900,000 in local taxes paid by the state, with distribution impacts varying by locality.

  • Potential impact on state employee compensation

    • If exempting the state from local minimum wage obligations prompts state employee wage/benefit adjustments, expenditures could rise. The bill requires a supplemental budget request process to address any such changes.

Effective date

  • The act takes effect upon the Governor’s signature or if the bill becomes law without a signature.

Practical impact

  • Local governments lose a portion of revenue tied to occupancy/oil-and-gas-related taxes if those taxes are treated as local occupation taxes (the bill clarifies certain exemptions).
  • The state is insulated from local minimum wage requirements as an employer, and the state will not bear local occupation/business taxes as an employer.
  • The budgeting process for state employee compensation is explicitly tied to a required supplemental budget request by early January 2027, signaling possible mid-fiscal-year adjustments if compensation needs change.

Compiled from official sources — confirm details with the bill’s official record.

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