In this Capitol Report:
This Capitol Report is brought to you by:
State Policy News
Colorado Business Day Luncheon: Transportation Funding and Construction-Defect Litigation Reform Top Legislative Leaders’ Discussion
Senate President Kevin Grantham (R-Canon City), Ed Sealover,The Denver Business Journal,House Speaker Crisanta Duran (D-Denver) (photo by Evan Semón Photography)
Yesterday, at CACI’s Annual Colorado Business Day Luncheon held at The Brown Palace Hotel, Denver, the two new leaders of the Colorado House and Senate amicably discussed top business issues facing the General Assembly, particularly transportation funding and construction-defect litigation reform.
Veteran statehouse reporter Ed Sealover of The Denver Business Journal moderated the discussion between House Speaker Crisanta Duran (D-Denver) and Senate President Kevin Grantham (R-Canon City). About 330 CACI members, guests and public officials attended the Luncheon.
Speaker Duran said that she and Senator Grantham have been discussing transportation funding for a number of months and examining various options. She is concerned that no community “be left behind” if a solution can be found. Local governments should have “options” on how new money should be spent. The talks are “going very well” and are “productive,” she said. One possible option to increase revenue is the county vehicle ownership tax, she added.
Senator Grantham said that the Senate Republicans are interested in offsetting any increase in taxes with cuts to existing revenue streams or redirecting existing streams to transportation infrastructure. Another option might be to redirect the local business personal property tax to transportation funding, he said. He said he is “optimistic” that he and Speaker Duran can reach a conclusion to increase transportation funding.
The second major issue on which the House Democrats and the Senate Republicans may find common ground is reform of construction-defect litigation laws. The difference in 2017, compared to prior years, on this issue is that “we have the ability to communicate,” Senator Grantham said.
Sealover mentioned SB-45, which is summarized in the following way on the legislature’s Web site:
In a construction defect action in which more than one insurer has a duty to defend a party, the bill requires the court to apportion the costs of defense, including reasonable attorney fees, among all insurers with a duty to defend. An initial order apportioning costs must be made within 90 days after an insurer files its claim for contribution, and the court must make a final apportionment of costs after entry of a final judgment resolving all of the underlying claims against the insured. An insurer seeking contribution may also make a claim against an insured or additional insured who chose not to procure liability insurance for a period of time relevant to the underlying action. A claim for contribution may be assigned and does not affect any insurer’s duty to defend.
The bipartisan bill is sponsored by Senator Grantham and Senator Angela Williams (D-Denver)
Speaker Duran said the bill is a “good starting point” to addressing the issue of high liability insurance premiums for condominium developers. She said she wants to do more to “empower consumers and homeowners” before they become involved in a lawsuit against a builder for alleged defects. She wants to involve the “stakeholders” in the discussion. She also said she is not sure that mandatory arbitration would lower the cost of insurance for builders.
The third issues to be discussed by the two legislative leaders involved regulatory reform. Two bills have been introduced in the Senate by Republican sponsors to reduce the regulatory burden on businesses
SB-1 is described this way on the legislature’s Web site:
The bill enacts the ‘Regulatory Relief Act of 2017’. The bill includes a legislative declaration about the importance of small businesses to the Colorado economy and acknowledges the difficulty these types of businesses have in complying with state rules that are not known or understood by these businesses.
The bill requires a state agency (agency) to give a small business (which is defined in the ‘State Administrative Procedure Act’ as a business with fewer than 500 employees) a period of time to cure a first-time minor violation of a rule instead of enforcing the rule by imposing a fine. When an agency determines that a small business has committed a minor violation of a rule, instead of imposing a fine, the agency is required to notify the small business in writing of the violation, including the steps to cure the violation, and give the small business 30 business days to cure the violation. Upon a showing of good cause, the business owner may request additional time to cure the violation. If the small business owner fails to cure the minor violation within the stated time period, the agency may impose the fine on the small business. This does not apply in cases where an agency is required by statute to assess a fine for noncompliance.
The bill defines ‘minor violation’ as a violation that includes operational or administrative matters, such as record keeping, retention of data, or filing of reports, and that is enforced by a fine; except that ‘minor violation’ does not include any matter that places the safety of the public, employees, or others at risk. The bill provides exceptions from the definition of ‘minor violation’ for certain types of rules or violations.
Under current law, agencies are required to convene stakeholder groups to give input about proposed rules. The bill amends the stakeholder provision to direct agencies to make diligent attempts to notify and solicit input from representatives of small businesses about proposed rule-making, if the agency’s proposed rule-making has a potential negative impact on small businesses.
SB-2 is summarized this way on the Legislature’s Web site:
Current law requires each principal department to review all of its rules, in accordance with a schedule established by the department of regulatory agencies (DORA), to assess, among other things, the continuing need and cost-effectiveness of each rule. The bill repeals the DORA schedule-setting and instead requires a review and supplemental update to be completed every 3 years, commencing in 2017. Thereafter, the bill imposes a triennial schedule for reviews to be conducted.
The bill further specifies that the public and certain state agencies must be accorded no fewer than 14 business days to provide input regarding an agency’s rules during its review, and that any input received must be attached to the report setting forth the results of the rule reviews included in each agency’s departmental regulatory agenda.
Speaker Duran said she believes regulations, in general, are needed to “protect health and the environment,” but that she also is “sympathetic to small businesses” about the burden placed on them by Federal and State regulations. The House Business Affairs and Labor Committee is chaired by Representative Tracy Kraft-Tharp (D-Arvada), the Speaker said, and Representative Kraft-Tharp will want to convene stakeholders together on bills such as SB-1 and SB-2.
Senator Grantham said that the Senate Republicans are interested in promoting small businesses and their workers.
Speaker Duran said she ask, “How do we make the economy work for everyone?”
Senator Grantham said that SB-1 would remove the “burden of immediate fines” on small firms for a “first-time offender” that makes a “simple administrative” mistake.
The fourth topic that the two legislators tackled was repeal of Connect for Health Colorado, the state health insurance exchange which was created by a bill that CACI supported.
SB-3, sponsored by Senator Jim Smallwood (R-Parker), which would repeal the Colorado Health Benefit Exchange. CACI’s position is to monitor the bill. Here’s how the bill is described on the legislature’s Web site:
In 2010, pursuant to the enactment of federal law that allowed each state to establish a health benefit exchange option through state law or opt to participate in a national exchange, the general assembly enacted the ‘Colorado Health Benefit Exchange Act’ (act). The act created the state exchange, a board of directors (board) to implement the exchange, and a legislative health benefits exchange implementation review committee to make recommendations to the board. The bill repeals the act, effective January 1, 2018, and allows the exchange to continue for one year for the purpose of winding up its affairs. The bill also requires the board, on the last day of the wind-up period, to transfer any unencumbered money that remains in the exchange to the state treasurer, who shall transfer the money to the general fund.
Speaker Duran said 158,000 Coloradans receive their health insurance through the exchange, including the workers of 3,000 small companies. If the Federal Affordable Care Act (ACA) is repealed whole or in part, “What’s the best way?” to provide coverage for these individuals, the Speaker asked.
Senator Grantham said that “there are ways” to bridge the gap between repeal of Colorado’s exchange and transitioning the individuals to the Federal exchange, www.HealthCare.gov. Colorado does not know what changes are coming to the ACA, but he wants to “stop the bleeding” by the ACA for taxpayer dollars.
Speaker Duran says she wants to continue coverage for pre-existing conditions and to allow young adults to remain on their parents’ insurance policies. A multi-state exchange may be an option for Colorado is the ACA is repealed in whole or in part, she said. In addition, people rural areas find it difficult to afford health insurance and to “access affordable health care,” she said. Health care costs are a “tremendous issue,” she said. She said Colorado legislators have the “ability to work across the aisle” and make the exchange better.
Sealover asked the Speaker about bills that her caucus sponsors that affect relations between employers and workers. The Speaker replied that it is “astonishing” that women and minorities do not have “equal pay for equal work” in 2017. She said this issue is “incredibly important” to the House Democrat Caucus. She invited CACI’s members to contact her on this issue.
Sealover pointed on that the Senate Republican Caucus over the last two sessions has killed bills that would have affected the employer-worker relationship. Senator Grantham responded that State Government should not tell employers what to do and “what not to do.” Business needs the “freedom to operate in the marketplace.” “The less we are telling them (what to do), the better,” the Senator said.
In concluding the program, Sealover asked the two lawmakers to name their top business issues for the session.
Speake Duran said “investing” in transportation, health care and education are her top priorities. In particular, Colorado is facing a “crisis in education” because of constitutionally mandated rebates this year under the TABOR and Gallagher Amendments may reduce funds for education, she said. She wants to find ways to “invest in kids” to give them “the ability to succeed.”
Senator Grantham said addressing “regulatory overreach” is a top priority for his caucus.
CACI Councils Begin to Take Positions on Early Bills
As the legislature ends its second full week of the session, increasing numbers of bills are being introduced, assigned to committees and initial hearings held.
The January meetings of the CACI policy Councils featured these first bills, with three of the Councils taking positions. The position of a Council may change, however, based on amendments to a bill as it wends its way through committee hearings and floor sessions. Here are the Councils, the bills and the positions:
Energy and Environment Council
SB-14, sponsored by Senator Randy Baumgardner (R-Hot Sulfur Springs), bars inspections by local governments of underground petroleum storage tanks. The bill’s fiscal note states that the tanks are regulated by the Division of Oil and Public Safety in the Colorado Department of Labor and Employment. Apparently, only the Denver Fire Department conducts inspections and charges fees to the tank owners. SUPPORT
SB-89, by Senators Stephen Fenberg (D-Boulder) and Kevin Lundberg (R-Berthoud). OPPOSE The bill is described this way on the legislature’s Web site:
The bill declares that consumers of electricity have a right to install and use electricity storage systems on their property, and this will enhance the reliability and efficiency of the electric grid, save money, and reduce the need for additional electric generation facilities.
The bill directs the Colorado public utilities commission to adopt rules under which:
- Residential and small commercial consumers can install electricity storage systems with a discharge rate of up to 25 kilowatts (kW) alternating current (AC) for later use or to provide backup in case of an outage;
- The utility and interconnection approval process for photovoltaic plus storage systems must be simple and streamlined, subject to electrical code and safety requirements but not more complex than existing approval requirements for photovoltaic installations;
- A utility whose customer installs electricity storage must use only a single revenue meter unless the storage system exceeds a discharge rate of 25 kW AC; and
- Any applicable standby charges, minimum charges, additional meter charges, or other fees or charges are identical as between customers with electricity storage systems and those without.
HealthCare Council
SB-3, sponsored by Senator Jim Smallwood (R-Parker), which would repeal the Colorado Health Benefit Exchange. CACI supported the legislation that created the Exchange. MONITOR
Here’s how the bill is described on the legislature’s Web site:
In 2010, pursuant to the enactment of federal law that allowed each state to establish a health benefit exchange option through state law or opt to participate in a national exchange, the general assembly enacted the ‘Colorado Health Benefit Exchange Act’ (act). The act created the state exchange, a board of directors (board) to implement the exchange, and a legislative health benefits exchange implementation review committee to make recommendations to the board. The bill repeals the act, effective January 1, 2018, and allows the exchange to continue for one year for the purpose of winding up its affairs. The bill also requires the board, on the last day of the wind-up period, to transfer any unencumbered money that remains in the exchange to the state treasurer, who shall transfer the money to the general fund.
SB-57, sponsored by Senator Lucia Guzman (D-Denver), which would convert the Hospital Provider Fee to a state enterprise. SUPPORT
Here’s the description of the bill from the Legislature’s Web site:
The bill creates the Colorado healthcare affordability and sustainability enterprise (enterprise) as a type 2 agency and government-owned business within the department of health care policy and financing (HCPF) for the purpose of participating in the implementation and administration of a state Colorado healthcare affordability and sustainability program (program) on and after July 1, 2017, and creates a board consisting of 13 members appointed by the governor with the advice and consent of the senate to govern the enterprise. The business purpose of the enterprise is, in exchange for the payment of a new healthcare affordability and sustainability fee (fee) by hospitals to the enterprise, to administer the program and thereby support hospitals that provide uncompensated medical services to uninsured patients and participate in publicly funded health insurance programs by:
- Participating in a federal program that provides additional matching money to states;
- Using fee revenue, which must be credited to a newly created healthcare affordability and sustainability fee fund and used solely for purposes of the program, and federal matching money to:
- Reduce the amount of uncompensated care that hospitals provide by increasing the number of individuals covered by publicly funded health insurance; and
- Increase publicly funded insurance reimbursement rates to hospitals; and
- Providing or contracting for or arranging advisory and consulting services to hospitals and coordinating services to hospitals to help them more effectively and efficiently participate in publicly funded insurance programs.
The bill does not take effect if the federal centers for medicare and medicaid services determine that it does not comply with federal law.
The enterprise is designated as an enterprise for purposes of the taxpayer’s bill of rights (TABOR) so long as it meets TABOR requirements. The primary powers and duties of the enterprise are to:
- Charge and collect the fee from hospitals;
- Leverage fee revenue collected to obtain federal matching money;
- Utilize and deploy both fee revenue and federal matching money in furtherance of the business purpose of the enterprise;
- Issue revenue bonds payable from its revenues;
- Enter into agreements with HCPF as necessary to collect and expend fee revenue;
- Engage the services of private persons or entities serving as contractors, consultants, and legal counsel for professional and technical assistance and advice and to supply other services related to the conduct of the affairs of the enterprise, including the provision of additional business services to hospitals; and
- Adopt and amend or repeal policies for the regulation of its affairs and the conduct of its business.
The existing hospital provider fee program is repealed and the existing hospital provider fee oversight and advisory board is abolished, effective July 1, 2017.
The bill specifies that so long as the enterprise qualifies as a TABOR-exempt enterprise, fee revenue does not count against either the TABOR state fiscal year spending limit or the referendum C cap, the higher statutory state fiscal year spending limit established after the voters of the state approved referendum C in 2005. The bill clarifies that the creation of the new enterprise to charge and collect the fee is the creation of a new government-owned business that provides business services to hospitals as an enterprise for purposes of TABOR and related statutes and does not constitute the qualification of an existing government-owned business as a new enterprise that would require or authorize downward adjustment of the TABOR state fiscal year spending limit or the referendum C cap.
Tax Council
SB-89, sponsored by Senator Larry Crowder (R-Salida). SUPPORT Here’s the bill’s description from the legislature’s Web site:
There is an exemption from property tax for business personal property that would otherwise be listed on a single personal property schedule that is equal to $7,300 for the current property tax year cycle. The bill triples the exemption to $21,900 for the next 2 property tax years and adjusts it for inflation for subsequent property tax cycles.
HB-1049, sponsored by Representative Dan Thurlow (R-Grand Junction). OPPOSE The Tax Council’s position may change, however, based on amendments to HB-1049.
Here’s the bill’s description from the legislature’s Web site:
If property taxes are levied erroneously or illegally and a taxpayer has not protested the valuation within the time permitted by law, then the taxpayer has 2 years from the start of the property tax year to file a petition for abatement or refund. The board of county commissioners is required to abate the taxes, and the taxpayer is entitled to a refund for the incorrect amount and, in some circumstances, refund interest equal to 1% per month. The bill eliminates the refund interest related to a property tax abatement.
HB-1063, sponsored by Representative Tim Leonard (R-Evergreen). SUPPORT Here’s the bill’s description
Under current law, if a business has less than $7,300 of personal property that would be listed on a single personal property schedule, then the personal property is exempt from the property tax and the business is not required to submit a schedule to the county assessor. With respect to this exemption, the bill reduces the amount of personal property tax that businesses pay by:
- Increasing the exemption that applies per schedule from $7,300 to $50,000, adjusted for inflation in the future, which increase will allow more businesses to avoid filing personal property tax schedules; and
- Allowing businesses whose personal property value exceeds the total exemption amount to claim the exemption.
- For public utilities that are assessed statewide, the property tax administrator currently considers all of a public utility’s tangible property within the state as a factor in determining the value of the public utility as a unit. The bill modifies the valuation process by:
- Exempting the first $50,000 or an inflation-adjusted amount of personal property from the property tax and excluding it from the administrator’s consideration for valuation purposes; and
- Excluding the exempt personal property from the public utility’s statement of property that it files with the administrator.
HB-1090, sponsored by Representative Tracy Kraft-Tharp (D-Arvada). SUPPORT Here’s the bill’s description from the legislature’s Web site:
A qualified investor who, prior to January 1, 2018, makes an equity investment in a qualified small business from an advanced industry is allowed an income tax credit that is equal to a percentage of the investment, up to a maximum credit of $50,000. The Colorado office of economic development (office) determines the eligibility for the tax credits and issues nontransferable tax credit certificates that are used to claim the credit. The maximum amount of tax credits allowed for a calendar year is $750,000.
The bill extends the credit by allowing qualified investments made on or after January 1, 2018, but prior to January 1, 2023, to qualify for the tax credit. For those years, the total maximum amount of credits for a calendar year is increased to $1.5 million; except that, if the office authorizes less than this amount in a year, then the remaining, unused credits are added to the next year’s total maximum amount. In addition, the definition of ‘qualified small business’ is expanded to include a company that has annual revenues of less than $5 million or that has been actively operating and generating revenue for less than 5 years. Currently, a business must meet both criteria, in addition to other criteria that will continue to apply.
The advanced industry investment tax credit cash fund, which was started with money transferred from another cash fund and has no current revenue source, is repealed.
In 2022, the office is required to submit to legislative committees a report that includes information about the tax credits issued after January 1, 2018, and the economic benefits from the related qualified investments.
Opportunity to Join the Workers’ Compensation Appeals Board
The Colorado Division of Insurance is accepting resumes of qualified applicants who would like to join the Workers’ Compensation Appeals Board. Individuals who meet the qualifications described in the notice are encouraged to apply.
The Workers’ Compensation Appeals Board was created to hear grievances brought by employers against their workers’ compensation insurer concerning the calculation of experience modification factors and classification assignment decisions. The board meets periodically, approximately 2-3 times per year
If you are interested in serving on the Workers’ Compensation Appeals Board, please contact Loren Furman [email protected] or (303) 866-9642. The deadline for submitting resumes is February 22, 2017.