Colorado Capitol Report

In this Capitol Report:

• House Committee Approves Bipartisan Transportation Funding Bill
• House Bill to Publicize Companies Guilty of “Wage Theft” Progresses in Senate
• CACI-Advocated Bill to Protect Taxpayers Moves Forward in the House
• State-Local Tax Study Bill Receives House Committee Approval
• Update: Regulatory Reform Bills
• Chamber Day at the Capitol
• CACI's Legislative Agenda

House Committee Approves Bipartisan Transportation Funding Bill

On Wednesday afternoon and evening, the House Transportation and Energy Committee held a lengthy hearing on HB-1242, the proposal that would move Colorado forward in a major way to address the $9 billion backlog of transportation projects facing the state.

After many hours of testimony by about 70 witnesses, the Committee amended the bill and then sent it to the House Finance Committee at about 9:32 p.m. on a party-line 8-to-5 vote.

Amendments eliminated the controversial late fees for vehicle registrations under the FASTER law and added $75 million more to state-wide projects.

The introduced bill would increase the state sales tax from 2.9 percent to 3.52 percent for 20 years to generate almost $700 million in new tax revenue per year.  The proposal would use the revenue stream from the sales tax increase to allow the issuance of $3.5 billion in bonds to quickly kick-start priority projects.

On Thursday, March 16^th, the CACI Board of Directors voted to support HB-1242 as introduced.

CACI’s Loren Furman, Senior Vice President, State and Federal Relations, testified before the Committee in support of the bill.  Here’s an edited version of Loren’s prepared testimony:

I am testifying today on behalf of CACI in support of HB-1242.

I appreciate the leadership shown by the bill’s sponsors in the House and Senate in carrying this bill.  And I can appreciate how difficult this bill is for you to vote on.

There are two reasons as to why I am here speaking to you today.

First, CACI represents a variety of industries across the State.  Our goal is to protect and encourage a business friendly environment for existing and new businesses.  CACI members are retailers, manufacturers, oil-and-gas companies and mining companies.  You think of them: we represent them.

If a business is delivering a widget or a couch, a company needs to be able to easily transport goods from point A to point B.  Its employees need to be able to easily get to and from their jobs.

All of which is to say that we need a functioning transportation infrastructure in our state.

Second, let me state the obvious: It seems there is widespread agreement that we have a transportation problem that needs a solution;

And, there is agreement that we have a funding problem.  But, the biggest disagreement is how to fund it.

What I can tell you is that CACI believes this bill identifies the most viable long-term funding source to solve this problem.

The other funding options that I have heard about don’t appear to provide the level of long-term funding needed;

What CACI likes about this bill is that it allows the voters to decide whether or not they want to fund our transportation needs.

CACI is simply asking you to stay within the spirit of TABOR, and allow the voters outside of the Capitol and who drive on our roads every day to make that choice.

For news media coverage of the hearing, read:

“Colorado transportation funding bill clears first hurdle in Legislature – with concessions,” by Ed Sealover, The Denver Business Journal, March 23^rd.

“Colorado transportation bill clears first hurdle in the House,” by Brian Eason, The Denver Post, March 22^nd, The Denver Post.

The bill is the product of more than half-a-year of negotiations between Democrat House Speaker Crisanta Duran (Denver) and Republican Senate President Kevin Grantham (Canon City), other legislators and interested parties, including CACI’s Loren Furman, Senior Vice President, State and Federal Relations.

In addition to the two leaders, the co-sponsors of the 40-page HB-1242 include the chair of each chamber’s transportation committee: Representative Diane Mitsch Bush (D-Steamboat Springs) and Senator Randy Baumgardner (R-Hot Sulfur Springs).

The bill will likely continue to be amended as it advances through various committees and the two chambers.

The introduced bill’s fiscal note states that the bill will produce new revenue of $312.9 million in fiscal year 2017-2018, which begins July 1^st, and $629.3 million in the next fiscal year.

Here’s the introduced bill summary:

Section 15 of the bill requires a ballot question to be submitted to the voters of the state at the November 2017 statewide election that seeks approval for the state to temporarily increase the rate of the state sales and use tax for 20 years beginning in 2018. If the voters approve the temporary sales and use tax rate increase, the new revenue generated is allocated solely for transportation infrastructure funding purposes, with specific projects to be funded required to be included in the 2017 ballot information booklet provided to the voters of the state, as follows:

• $300 million annually to the state highway fund for use by the department of transportation (CDOT); and
• Of the remaining new revenue:
• 70% to counties and municipalities in equal total amounts; and
• 30% to a newly created multimodal transportation options fund (fund).
• If the voters approve the temporary state sales and use tax rate increase:
• CDOT may issue up to a specified amount of transportation revenue anticipation notes (TRANs) for the purpose of funding transportation projects that are part of CDOT’s strategic transportation investment program and are on CDOT’s priority list for funding and the transportation commission must covenant that amounts it allocates on an annual basis to pay TRANs shall be paid: First, from $50 million from any legally available money under its control other than the new sales and use tax revenue; next, from the new sales and use tax revenue; and last, if necessary, from any other legally available money under its control any amount needed for payment of the TRANs until the TRANs are fully repaid;
• The revenue allocations to counties and municipalities are further allocated to each county and municipality in accordance with certain existing statutory formulas used to allocate highway users tax fund (HUTF) money to each county and municipality;
• The existing statutory requirement that at least 10% of the sales and use tax net revenue and other general fund revenue that may be transferred or appropriated to the HUTF and subsequently credited to the state highway fund must be expended for transit purposes of transit-related capital improvements is repealed;
• A transportation options account and a pedestrian and active transportation account are created in the fund and the transportation commission is required to designate the percentages of fund revenue to be credited to each account subject to the limitations that for any given fiscal year no more than 75% of the revenue may be credited to the transportation options account and at least 25% of the revenue must be credited to the pedestrian and active transportation account;
• A multimodal transportation options committee of gubernatorial appointees representing transit agencies, transportation planning organizations, local governments, and CDOT is created as a type 1 agency within CDOT for the purpose of allocating the money in the transportation options account of the fund for transportation options projects throughout the state. Under the supervision and guidance of the committee, the transit and rail division of CDOT is required to solicit, receive, and evaluate proposed transportation options projects and propose funding for interregional transportation options projects. Any transportation options project receiving funding from the transportation options account of the fund must also be funded by at least an equal total amount of local government, regional transportation authority, or transit agency funding.
• CDOT is required to allocate the money in the pedestrian and active transportation account of the fund for projects for transportation infrastructure that is designed for users of nonmotorized mobility-enhancing equipment;
• Transfers of 2% of general fund revenue to the HUTF that are scheduled under current law to be made for state fiscal years 2017-18, 2018-19, and 2019-20 are eliminated;
• The state road safety surcharges imposed on motor vehicles weighing 10,000 pounds or less are reduced for the same period during which the rates of the state sales and use taxes are increased. The resulting reduction in state fee revenue is taken entirely from the share of such fee revenue that is kept by the state so that county and municipal allocations of such revenue are not reduced.
• CDOT must annually report to the joint budget committee, legislative audit committee, house transportation and energy committee, and senate transportation committee regarding its use of TRANs proceeds and must post the reports and certain user-friendly project-specific information on its website; and
• The transportation revenue anticipation notes citizen oversight committee is created to provide oversight of the expenditure by the department of the proceeds of additional TRANs. The committee must annually report to the transportation legislation review committee regarding its activities and findings.

For more information about transportation funding and HB-1242, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

House Bill to Publicize Companies Guilty of “Wage Theft” Progresses in Senate

A House bill to clarify when the State of Colorado can disclose that a company has cheated its workers through so-called “wage theft” cleared an important hurdle Monday when a Senate committee unanimously endorsed the measure and sent it to the Senate Floor for Second Reading debate.  CACI has taken a neutral position on the bill.

The Senate Business, Labor and Technology Committee approved the bill on a 7-to-0 vote.

Larry Hudson, CACI contract lobbyist

Larry Hudson, CACI contract lobbyist, testified before the Committee that the bill strikes a good balance between transparency in the outcome of wage-claim violations against employers and the importance of protecting confidential, proprietary and trade secret information from disclosure during and after an investigation by the Colorado Department of Labor and Employment.

The bill, HB-1021, is sponsored by Senator John Cooke (R-Greeley).  The House sponsor is Representative Jessie Danielson (D-Wheat Ridge).

Here’s the legislature’s summary of the bill:

Current law requires employers to release requested information to the division of labor standards and statistics (division) in the department of labor and employment and allows the division to have access to employers’ premises and all books, records, and payrolls of employers. Current law also prohibits the release Last of any of this information obtained by the division if the release of the information might reveal a trade secret. The bill clarifies that information obtained by the division that relates to a finding by the division of a violation of wage laws is not confidential and shall be released to the public or for use in a court proceeding, unless the director of the division makes a determination that the information includes specific information that is a trade secret.

The bill’s fiscal note contains a detailed analysis of the bill.

Last year, the House approved a bill on this matter, HB-1347, but it died in the Senate.  CACI was neutral on the bill.

CACI-Advocated Bill to Protect Taxpayers Moves Forward in the House

In 1985, the legislature passed a bill to deal with the problem that arose when a taxpayer submitted a sales-and-use tax payment by mistake to the wrong local government.  The 1985 law created a process to encourage the two local jurisdictions to solve the problem and get the money to the correct jurisdiction without forcing the taxpayer to also pay the tax to the correct local government.

A court case, however, inserted the statute of limitations into one dispute with the result that the taxpayer was forced to pay the tax to the correct municipality after having mistakenly paid the tax to the wrong municipality.

The goal of SB-112, which has earned bipartisan support in both the Senate and the House, is to explicitly remove the statute of limitations from such disputes.

The House Local Government Committee Wednesday amended the bill and then passed it on a bipartisan, unanimous 13-to-0 vote, which sends the bill to the House Floor for Second Reading.  The House sponsor is Representative Dan Pabon (D-Denver).

CACI’s Loren Furman, Senior Vice President, State and Federal Relations, testified before the Committee in support of the bill, which she said is “very important” to the CACI Tax Council.  The bill “protects the taxpayers and local jurisdictions” from “administrative and costly nightmares,” Loren said.  The bill will ensure that a tax payment ends up with the correct jurisdiction, she said.

Here’s the summary of the SB-112 by the legislature:

The bill seeks to clarify the general assembly’s intent when it enacted a dispute resolution process in 1985 to address a situation when a taxpayer paid a sales and use tax to one local government when it should have instead paid that disputed amount to a different local government. A recent court case applied the statute of limitations to this dispute resolution process, resulting in the taxpayer having to pay the disputed amount twice to 2 different local governments. The bill specifies that any statutes of limitations, either local, state, or in intergovernmental transfer agreements, do not apply to the remedies set forth in law.

The bill’s fiscal note contains a more detailed analysis of the proposal:

Summary of Legislation

Under current law, taxpayers who are determined to have made a disputed local government sales or use tax payment to the wrong jurisdiction are relieved of their obligation for the disputed tax and associated penalties and interest. The bill clarifies that this provision is not subject to any state, local, or intergovernmental statute of limitations.

The bill applies to disputed sales or use tax payments in home rule counties and municipalities, statutory counties and municipalities, and other taxing districts.

Background

Under current law, if the Department of Revenue determines that a disputed sales or use tax payment was made to the wrong jurisdiction, the taxpayer is relieved of the tax due up to the amount paid, as well as associated penalties and interest. In a 2014 court case, QwestCorp. v. City of Northglenn, a state court of appeals applied the state’s three year statute of limitations for use tax payments, ruling that this remedy was not available to a taxpayer who had erroneously paid use taxes to the City of Northglenn rather than the City of Thornton between 2002 and 2005. As a result of the case, the taxpayer was required to pay the disputed amount to the City of Thornton after having already paid the amount to the City of Northglenn.

State-Local Tax Study Bill Receives House Committee Approval

A bill to create a legislative task force to study how to improve Colorado’s complex, state/local sales-and-use tax system received its first committee endorsement Tuesday.

The House Business Affairs and Labor Committee approved HB-1216 by an unanimous 12-to-0 vote, with Representative Matt Gray (D-Broomfield) excused.

House co-sponsors of the bill are the Committee’s chair, Representative Tracy Kraft-Tharp (D-Arvada) and Representative Lang Sias (R-Arvada).

Members of the Coalition to Simplify Colorado’s Sales Tax spoke in support of the bill, describing difficulties and costs that businesses face when trying to comply with state and local taxing jurisdictions (notably home-rule cities and special taxing districts).  Problems include inaccurate address data bases, differing definitions of items subject to state and local sales taxes and the administrative difficulty of maintaining sales-tax licenses from multiple jurisdictions and then filing the taxes with the jurisdictions.

Here’s the legislature’s description of the bill:

The bill creates the sales and use tax simplification task force (task force) made up of legislative members and state and local sales and use tax experts. The bill requires the task force to study sales and use tax simplification between the state and local governments, and in particular between the state and home rule jurisdictions. The task force is:

• Authorized to seek, accept, and expend gifts, grants, or donations from private or public sources in order to meet its goals;
• Subject to sunset review in 3 years; and
• Required to make an annual report to the legislative council that may or may not include recommendations for legislation.

The bill’s fiscal note, which contains a detailed analysis of the proposal, states that the cost to the legislature to support the task force would be $31,735 in the fiscal year beginning July 1^st and $34,093 in the next fiscal year.  The bill specifies that no general fund money would be appropriated to support the task force.  Instead, the cost would have to be covered by “gifts, grants and donations.”

The CACI Tax Council has endorsed the bill.  For more information about HB-1216, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

Update: Regulatory Reform Bills

Each session, the first bills out of the chute for a majority caucus are an indication of the caucus’ top priorities for the session.

This year, for the majority Senate Republicans, the first two bills concerned regulatory reform.  SB-1 was intended to ease the burden on small businesses.  SB-2 is much broader in scope.  CACI supported both bills.

Receiving bipartisan support in the Senate, SB-1 would have provided a modicum of regulatory relief to small companies that inadvertently run afoul of state rules by giving them a chance to first comply without facing a fine.

The bill, however, died March 2^nd in the House Business Affairs and Labor Committee on a party-line, 7-to-6 vote to send the bill to the House Floor for Second Reading.  (For details on SB-1, see below.)  Since then, the Committee chair has introduced her own bill, HB-1270, on the topic.

HB-1270

Committee Chair Representative Tracy Kraft-Tharp (D-Arvada) introduced on March 16^th HB-1270, which also has bipartisan support.  The bill is co-sponsored in the House by Representative Polly Lawrence (R-Roxborough Park).  The Senate co-sponsors are Senator Don Coram (R-Montrose) and Senator Angela Williams (D-Denver).

The bill is scheduled for its first hearing Tuesday, March 28^th, when the House Business Affairs and Labor Committee convenes for a session at 1:30 p.m. in Room A in the Legislative Services Building.  CACI does not yet have a position on the bill.

Here’s the legislature’s summary of the bill:

The bill contains a legislative declaration about the difficulties small businesses encounter when attempting to stay current with changing rules and new rules that affect their businesses. The bill identifies 4 specific actions that the executive branch could take to inform small businesses about proposed and new rules.

The bill creates a system that gives state agencies discretion in imposing fines upon a business for a first-time offense of a minor violation. The agency’s discretion applies to small businesses with 50 or fewer employees (business).

Unless specifically stated otherwise in statute, a state agency has discretion to give the business an opportunity to cure the violation and then waive the fine if the minor violation is cured or to reduce the penalties or fine.

The opportunity to cure a minor violation 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:

• Relates to operational or administrative matters such as record keeping, retention of data, or failing to file reports or forms; and
• Relates to a rule promulgated within the 12 months immediately preceding the alleged violation; and
• Is enforced by a fine, either in total or in the aggregate, of $500 or less.

‘Minor violation’ does not include:

• Any matter that places the safety of employees; other persons; or the public health, safety, or environment at risk; or
• Violations relating to:
• The issuance of or denial of benefits or compensation to employees; or
• Activities required by federal law.

Each state agency shall conduct an analysis of noncompliance with its rules to identify rules with the greatest frequency of noncompliance, rules that generate the greatest amount of fines, how many first-time offenders were given the opportunity to cure a minor violation, and what factors contribute to noncompliance by regulated businesses. The agency shall consider and review what actions should be taken to address the issues identified.

Each principal department containing agencies that issue fines for violations of new rules shall prepare an annual report for the general assembly summarizing the results of its analysis of noncompliance. The principal department shall absorb the costs of preparing the annual reports within existing resources.

SB-1

SB-1, entitled “The Regulatory Relief Act of 2017,” was sponsored by Senator Tim Neville (R-Littleton).  The House sponsor was his son, House Minority Leader Patrick Neville (R-Castle Rock).

SB-1 cleared the Senate on final, Third Reading,  on February 1^st by a bipartisan 24-to-11 vote, with the following five minority Democrats joining the majority Republicans to advance the bill to the House: Angela Williams (Denver), Cheri Jahn (Wheat Ridge), Kerry Donovan (Wolcott), Rhonda Fields (Aurora) and Dominick Moreno (Commerce City).

On January 30^th, the Senate amended the bill on Second Reading with the addition of a provision that defining a “minor violation” excludes “violations relating” to “Rules adopted by the Secretary of State relating to the regulation of lobbyists pursuant to Part 3 of Article 6 of Title 24.”  The bill’s fiscal note states that there will be little impact on State Government if it becomes law.

The Senate Business, Labor and Technology Committee approved the bill on January 26^th by a 6-to-1 vote with Democrats Angela Williams (Denver) and Cheri Jahn (D-Wheat Ridge) joining the four majority Republicans.  The lone vote against the bill was cast by Democrat Senator Andy Kerr (Lakewood).

SB-1 was 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

This bill was approved by the first committee of reference in the Senate and sent to the Senate Appropriations Committee, where it languishes alongside many other bills that would have a substantial financial impact to the State if they become law.  Normally, the legislature’s two appropriations committees do not turn their attention to these bills until after the two chambers have approved the Long Bill, the state’s budget, which will happen at the end of March and beginning of April.

SB-2 is sponsored by Senator Beth Martinez Humenik (R-Thornton).

ON February 14^th, the Senate Business Labor and Technology Committee amended the bill and then passed it unanimously.

The bill would require, according to its fiscal note, the hiring of 10.9 full-time equivalent (FTE) workers and would require the legislature to appropriate $882,752 for the first year of operation, which would be the fiscal year beginning this July 1^st.

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.

For more information about regulatory reform and the bills, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

Chamber Day at the Capitol

CACI Day at the Capitol Feb. 5, 2015. Photo by Evan Semón

March 30^th from 8am to noon CACI will be hosting Chamber Day at the Capitol in the Old Supreme Court Chambers.  This event is open to all CACI members and members of the local chambers of commerce as well as CACI’s EXECs Advocacy Class.  The day will open with local chamber executives from across the state discussing legislation of importance to their communities.  This will be followed by a panel of lobbyists, who will describe what they do at the Capitol.  The group will be able to observe action on the House floor and then back to the Old Supreme Court Chambers for agenda items including Construction Defects, Transportation, Federal Legislation and Health Care.  We invite you to register online for this exciting event.

CACI's Legislative Agenda

Below is a list of bills and their status on which CACI Policy Councils and the Board of Directors have taken positions.  For more information on the bills, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.