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Dan Pilcher
Senior Vice President
And Chief Operating Officer
Phone: 303.866.9600
E-Mail:
dpilcher@COchamber.com
Friday, April 9, 2010
Bill to Eliminate Enterprise-Zone Tax Credits--Costing
Businesses $114.4 Million—Awaits Action in Sponsor’s Committee
True to his word, Representative Joel Judd (D-Denver), who
earlier in the session told the CACI Tax Council that he would
introduce a bill to eliminate the enterprise-zone tax credits,
did so Monday. CACI vigorously opposes the bill.
Representative Judd’s “late bill,” HB-1396, required the
approval of Speaker Terrance Carroll (D-Denver) before it could
be introduced. Late bills can only be introduced with the
approval of the presiding (majority-party) officer in each
chamber of the legislature.
The bill was heard Wednesday in the House Finance Committee,
which Representative Judd chairs, and then he laid the bill over
for action. Today, Representative Judd announced that the bill
will be heard on Wednesday, March 14th.
This bill will increase taxes on businesses located in
enterprise zones by $37.4 million in fiscal year 2010-2011 and
by $77 million in fiscal year 2011-2012 for a total of $114.4
million over the two fiscal years.
This bill is of particular concern to CACI and the statewide
business community because it will eliminate Colorado’s
enterprise-zone tax credits, which is one of the most important
tools used by state and local economic development officials.
HB-1396 is opposed not only by CACI but by a large coalition of
companies, local chambers of commerce, local economic
development organizations and other business organizations.
The bill also is opposed by Governor Bill Ritter’s Office of
Economic Development and International Trade (OED/IT). Two
representatives of OED/IT—Alice Kotrlik, Deputy Director, and
Matt Cheroutes, Director of Communications and External
Affairs—testified in opposition to the bill.
It is often stated that Colorado has relatively few tools in its
economic-development toolbox when compared to the other states,
including those that surround Colorado and are the state’s most
important competitors in the competitive struggle for jobs and
economic growth. HB-1396 takes direct aim at one of the most
important economic development tools that Colorado possesses.
Calling it a “very dangerous bill, The Pueblo Chieftain
today editorialized against HB-1396:
http://www.chieftain.com/opinion/editorials/
CACI Vice President of Governmental Affairs Loren Furman
testified Wednesday before the House Finance Committee in
opposition to HB-1396. Here is an edited version of her
prepared remarks:
I am testifying in opposition to HB-1396 because CACI members
have told us how important that the enterprise-zone tax credit
is for the operation and expansion of their businesses. They
told us through two surveys we conducted on all of the tax
exemptions, credits and exclusions.
Representative Cheri Gerou (R-Evergreen) mentioned CACI’s
December survey so I’d like to provide the Committee with some
background. When we learned last summer that the legislature
was interested in pursuing the elimination or suspension of tax
credits, exemptions and exclusions, we wanted to do a thoughtful
and deliberate assessment to determine which of those credits
were critical to our members.
We did a survey in August 2009 when all of the tax credits were
being discussed. Then we did another one in December that
narrowed the survey to the 13 tax exemptions that were part of
the Governor Bill Ritter’s 2010-2011 budget proposal. In fact
the enterprise-zone tax credit ranked in the top four of the
ones that are most critical to employers.
In both CACI surveys, it was very clear that the enterprise-zone
tax credit was critical to businesses operations and that, if it
was eliminated, it would truly impact the ability of companies
to operate, invest and expand.
There are several quotes from our members in these surveys. I’d
like to read you one from a small business in Fort Collins: “As
a small business, it is important for us to keep our enterprise
zone tax credits. Without these, we may have to relocate to
another state or delay future expansions of our operations.”
This company estimates that, if the credit is removed, it will
cost the firm $10,000 to $50,000 annually.
To help you understand how important this credit is, we’ve
developed a list of all of the companies, economic development
organizations and local chambers of commerce that oppose this
bill. I also know of several non-profit organizations that are
fully impacted by this bill and are opposed as well. These are
entities across the state far and wide that have reached out to
us to let us know they are concerned and do not want this bill
to pass.
Here’s the list of companies, business organizations, towns,
counties and other organizations that have joined the
broad-based business coalition to oppose HB-1396:
Companies, Business Organizations and Other Organizations
A. Marvin Strait, CPA
Action 22
American Furniture Warehouse
CaridianBCT
Climax Molybdenum
Club 20
Colorado Concern
Colorado Competitive Council (C3)
Colorado Counties Inc.
Colorado Municipal League
Colorado Motor Carriers Association
EnCana Oil & Gas
Evraz Rocky Mountain Steel
Green Industries
International Association of Shopping Centers
NAIOP
National Federation of Independent Businesses
Printing Industries of Colorado
Progressive 15
Qwest
St. Mary Land & Exploration
St. Mary’s Hospital Foundation
Suncor Energy
Teague Diversified
Union Pacific
Verizon and Verizon Wireless
Xcel Energy
Local Economic Development Organizations
Economic Developers' Council of Colorado
Adams County Economic Developers' Council
Aurora Economic Development Council
Broomfield Economic Development Council
Colorado Springs Economic Development Council
Grand Junction Economic Development Council
Jefferson Economic Development Council
Metro-Denver Economic Development Council
Montrose Economic Development Council
Northern CO Economic Development Council
Pueblo Economic Development Council
Region Nine Economic Development District
Rifle Economic Development Corporation
Westminster Economic Development Council
Chambers of Commerce, Business Organizations, Towns and Counties
Akron Chamber of Commerce & Town of Akron
Arvada Chamber of Commerce
Aurora Chamber of Commerce
Broomfield Chamber of Commerce
Colorado Springs Chamber of Commerce
Colorado Women’s Chamber of Commerce
Douglas County Business Alliance
Fort Collins Chamber of Commerce
Fruita Chamber of Commerce
Fort Collins Chamber of Commerce
Grand Junction Chamber of Commerce
Greater Woodland Chamber of Commerce
Highlands’ Ranch Chamber of Commerce
Denver Metro Chamber of Commerce
Golden Chamber of Commerce
Metro North Chamber of Commerce
Northern Colorado Legislative Alliance
Phillips County
Rifle Chamber of Commerce
Town of Limon
West Chamber Serving Jefferson County
House Finance Committee to Take Action on Bill Suspending
Enterprise-Zone Tax Credits
Although HB-1200 was introduced January 22nd, the
bill only received its first hearing Wednesday. On Monday, the
House Appropriations Committee referred the bill to the House
Finance Committee without amending it.
The House Finance Committee took testimony on the bill
Wednesday, laying it over for action.
Today, Representative Joel Judd (D-Denver), the Committee Chair,
announced that the bill will be heard on Wednesday, March 14th.
The House sponsor is Representative Dickey Lee Hullinghorst
(D-Boulder).
This bill was one of the 13 bills proposed by Governor Bill
Ritter, as part of his 2010-2011 budget proposal, to suspend or
eliminate business tax credits, exclusions and exemptions. The
enterprise-zone tax credit was ranked in the top four of the
ones that are most critical to employers, according to a CACI
survey of businesses in December.
HB-1200 caps the enterprise-zone investment tax credit at
$250,000 per taxpayer for income tax years beginning 2011
through 2013 and requires the taxpayer to defer claiming any
amount above $250,000 to tax year 2014. If the taxpayer has to
defer credit exceeding $250,000, the bill allows the taxpayer to
carry the credit forward for 12 income-tax years after the year
that the credit was allowed plus an additional year for the
years that the taxpayer could not take the credit above
$250,000.
Currently, any depreciable equipment purchased and used within
an enterprise zone is eligible for a three percent tax credit.
The credit may be used up to $5,000 of the taxpayer’s tax
liability plus fifty percent of the taxpayer’s liability above
$5,000. Here are CACI’s major concerns with the bill:
·
Because HB-1200 caps the enterprise zone credit at $250,000, it
will hurt companies that invest millions of dollars in equipment
to operate their business;
·
If this legislation is adopted, the unfortunate, likely result
will be that companies will not invest in new equipment until
the full credit is available again in three years; and
·
By capping this credit at $250,000 for three years, companies
may either be discouraged from locating in Colorado until the
full credit is available or will look to locate and invest in
other states that offer a higher enterprise-zone credit.
For more information on this bill, contact Loren Furman, CACI
Vice President of Governmental Affairs, at 303.866.9642 or via
e-mail at
lfurman@COchamber.com
The Short Life of HB-1397: Bill Mandating Sick-Leave
Requirements on Businesses Dies
Introduced on Monday, HB-1397 died a quick death in committee
Wednesday at the request of its sponsor. A similar bill died in
last year’s session.
On Tuesday, the CACI Governmental Affairs Council agreed to make
the bill a priority for defeat by the business community. CACI
strongly opposed the bill, which would have been an unnecessary,
costly mandate on Colorado companies.
HB-1397, sponsored by Representative Cherilyn Peniston
(D-Westminster), would have
required companies to provide specific amounts of sick leave to
workers based on the size of the business. All employers would
have had to provide each worker at least one hour of paid sick
leave for every 30 hours worked. For companies with more than
ten employees, the maximum would have been 72 hours per year.
For companies with ten or less employees, the maximum is 40 hrs
per year. The bill also would have required an employer to
allow a roll-over of unused paid sick leave to subsequent years.
A bill sponsor usually requests that his or her bill be killed
in committee when it’s apparent that the bill lacks the votes to
be approved by the committee. In the case of HB-1397, it meant
that some majority-party members of the House Business Affairs
and Labor Committee likely would have voted against the bill.
A major advocate of the bill was 9to5 National Association of
Working Women:
http://www.9to5.org/local/colorado
Representative Peniston was quoted by The Denver Business
Journal as saying that she hopes to work on the bill with
various interest groups this summer to rework the bill for the
2011 legislative session.
Virtually all private employers currently provide paid sick
leave for their employees, and they accommodate their workers
with requested time off for being sick or for appointments. Most
employers provide the same number of hours of sick leave
regardless of the size of the business, and they currently must
comply with sick leave mandates set forth in the Federal Medical
Leave Act (FMLA).
This bill would have created a mandate on business, which in
turn would have created high operational costs and discouraged
job creation and retention. This bill would have been exactly
what businesses do not need during an uncertain period of
economic recovery. Economic development officials warned that
states with mandates are unattractive to companies seeking
relocation. This bill would have made their jobs even harder to
recruit new businesses.
Businesses told CACI that they would have been forced to reduce
payroll and healthcare and retirement benefits to workers in
order to fund this new mandated benefit. The bill would have
created a costly burden on businesses that would have had to
change existing leave policies, create new accounting
procedures, re-calculate leave schedules and keep sick-leave
records for five years. This bill would have prevented an
employer from asking a worker to disclose the reasons for the
leave, thereby making it impossible for an employer to determine
whether the worker was entitled to the leave as defined in the
bill.
The bill’s overly broad definition of a "family member" applied
to any person who resided with an employee for more than six
months, which could have include a friend, roommate or any other
non-related individual.
This bill would have allowed an employee to roll-over paid sick
leave that he or she did not use in a current calendar year.
This would have been a costly benefit to employers and is not a
currently practice of many companies. Small businesses would
have avoided the bill’s requirements by keeping the number of
workers below the threshold in the bill to minimize their
costs. The bill mandated that a business pay a worker for sick
leave, but it did not require that the worker prove that the
sick leave was actually used because of illness.
Prospective workers have a responsibility to assess the benefit
package offered by a business to determine if the benefits will
meet their needs before they take a job. Government
interference with company benefits will erode a companies’
ability to offer competitive benefits to attract and retain
workers.
House Committee Kills Pinnacol Bill on Bipartisan Vote
On Tuesday, the House Business Affairs and Labor Committee
killed on a seven-to-four vote one of the Pinnacol Assurance
bills, HB-1356, when two Democrats joined the minority
Republicans to oppose the bill. CACI opposed the bill.
HB-1356, sponsored by Representative Su Ryden (D-Aurora), would
have limited the amount of Pinnacol’s risk-based capital that
keeps in reserve and require it to annually return the excess to
businesses that hold Pinnacol workers’ compensation insurance
policies.
The two Democrats were Committee Chair Joe Rice (Centennial) and
Edward Casso (Commerce City).
The legislature’s interim Pinnacol committee last year
recommended seven bills affecting Pinnacol to this year’s
legislative session.
Last week, the Senate Judiciary Committee heard five of the
Pinnacol bills, approving four on a party-line vote, which sent
the following three to the Senate Floor for Second Reading:
·
HB-1009, “Pinnacol Assurance Board of Directors,” sponsored by
Representative Joe Miklosi (D-Denver) and Senator Mary Hodge
(D-Brighton);
·
SB-12, “Disclosure of Workers’ Compensation Conflicts of
Interest,” sponsored by Senator Morgan Carroll (D-Aurora) and
Representative Miklosi; and
·
SB-12, “Penalties on Worker’s Compensation Benefits,” sponsored
by Senator Lois Tochtrop (D-Thornton) and Representative Sal
Pace (D-Pueblo).
The Committee sent a fourth bill, SB-13, “Workers’ Compensation
Accountability,” sponsored by Senator Hodge and Representative
Su Ryden (D-Aurora), to the Senate Appropriations Committee.
The fifth bill is HB-1012, “Limiting Surveillance of Workers’
Compensation Claims,” sponsored by Senator Carroll. The
Committee, chaired by Senator Carroll, laid over HB-1012 to
allow Senator Carroll to work on amendments. CACI and other
business organizations strongly oppose HB-1012 in its current
form. The bill has not yet been scheduled for action.
For more information on the Pinnacol bills, contact Loren Furman
at 303.866.9642 or via e-mail at
lfurman@COchamber.com
or Dan Anglin, CACI Governmental Affairs Representative, at
303.866.9641 or via e-mail at
danglin@COchamber.com
Upcoming CACI Council Meetings
Council meetings will be held at the CACI Office beginning at 12
Noon. These will be the last Council meetings held during the
2010 session of the Colorado General Assembly, which must
adjourn sine die by Wednesday, May 12th.
·
HealthCare Council,
Thursday, April 15th; guest is Representative Ellen
Roberts (R-Durango); lunch sponsored by Christine Shlagor, Quest
Diagnostics, whose website is
www.questdiagnostics.com
·
Governmental Affairs Council,
Tuesday, April 20th; lunch sponsored by Melissa
Kuipers, Colorado Auto Dealers Association, whose website is
www.coloradodealers.org
·
Labor and Employment Council,
Wednesday, April 28th; lunch sponsored by Mark
Moses, Outback Steakhouse, whose website is
www.outback.com
·
Governmental Affairs Council,
Tuesday, May 4th; lunch sponsored by
Shayne Madsen, Jackson Kelly PLLC, whose website is
http://www.jacksonkelly.com
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