|
Dan Pilcher
CACI Senior Vice President
& Chief Operating Officer
Phone: 303.866.9600
E-Mail:
dpilcher@cochamber.com
Friday, February 5, 2010
Business Tax Bills March on in the Senate
This afternoon, the Senate took up the business tax bills on
Second Reading, ending a long, politically contentious week
under the Gold Dome. Early this morning, the Senate Finance
Committee completed 20 hours of work over three days on the
business tax bill package and sent them to the Senate
Appropriations Committee, which then approved them this morning.
CACI will continue to oppose the tax bills that it considers
harmful for businesses because they increase taxes as the bills
move on to the Senate. CACI members with questions about the
bills should contact Loren Furman, CACI Vice President of
Governmental Affairs at 303.866.8642 or via e-mail at
lfurman@COchamber.com
HB-1190, Removing Exclusion for State Sales Tax on Energy Used
by Industry and Manufacturers
On Wednesday, the House passed HB-1190 on Third Reading by a
35-to-30 vote, sending it on to the Senate, where it was
introduced yesterday to the Senate Finance Committee, which
approved it late last night on a party-line four-to-three vote.
Senator Keith King (R-Colorado Springs) offered an amendment to
ask the Colorado Supreme Court for its opinion on the
constitutionality of HB-1190 because many see the bill as a
TABOR violation. The Committee Chair, Senator Paula Sandoval
(D-Denver) ruled that the amendment was out of order.
The bill places the 2.9 percent sales tax on energy used by
manufacturers and industry for the first time ever, and it is
expected to raise $6.3 million this fiscal year ending June 30th,
$33.3 million in fiscal year 2010-2011 and $35.3 million in
fiscal year 2011-2012.
In other words, businesses will pay $74.9 million in increased
business taxes over the next 28 months under HB-1190. Purchase
of energy for use--a wholesale transaction--by industry and
manufacturers was excluded when Colorado adopted its
sales-tax system in 1935 to tax the retail sale of tangible
products.
Two Democratic Representatives—Joe Rice of Littleton and Wes
McKinley of Walsh—joined the minority Republicans to vote
against the bill as did Representative Kathleen Curry of
Gunnison, the former Democrat who is now an Independent.
Representative Sal Pace (D-Pueblo) said after the final vote on
the bill that he was confused and meant to vote against the bill
but instead voted for the bill, according to The Pueblo
Chieftain:
http://www.chieftain.com/articles/2010/02/04/news/local/doc4b6a6b0b38184554520833.txt
Late Wednesday afternoon, CACI President Chuck Berry and CACI
Legal Counsel Alan Poe, a Partner with Holland and Hart and who
chaired the CACI Tax Council for many years, met with the
editorial board of The Denver Post to discuss the various
business tax bills. In addition, representatives of two CACI
member companies—Ben Lutze, Director of Business Services, Ervaz
Rocky Mountain Steel Company, Pueblo, and Ray Budisaljevic, Site
Manager, Harsco Metals, Pueblo--participated by telephone
conference call:
Today, the Post ran a long editorial and stated its
position on the various bills. Here’s what the Post had
to say about HB-1190:
House Bill 1190
would suspend, until mid-2012, the tax exemption for energy
consumed by industries. It would raise a projected $56.7 million
this budget year, and $60.8 million in the next.
We disclose, up front, that this tax seems as though it would
apply to The Denver Post's printing operations. Regardless, we
think critics of this bill make strong arguments about
double-taxation and the impropriety of using a retail sales tax
to raise revenue from a wholesale purchase.
Representatives of the Colorado Association of Commerce &
Industry contend it's improper to tax a manufacturing input,
which is used to create a retail product that is taxed again.
They call it double taxation, and we find that argument
persuasive.
They also say that, as originally formulated, the lack of taxes
on industrial energy consumption was an exclusion, not an
exemption. If that is the case, it would seem lawmakers could
wade into legal trouble with this bill.
We would hope the legislature would look closely at this
proposal, and perhaps explore the revocation of other tax
exemptions to replace it should it be deemed untenable.
This afternoon,
Lutze
sent the following e-mail about HB-1190 to all members of the
State Senate:
My name is Ben Lutze, Business Director at Evraz Rocky Mountain
Steel in Pueblo. I stayed at the capitol well into this morning
in order to testify in front of the Senate Finance Committee
against HB 1190. During the testimony, it became very obvious
that all readers including senators, labor leaders, business
leaders, and even the authors of the bill do not fully
understand it. The expected annual revenue generation has
varied from $50 million to $33 million and is still changing.
There was extended confusion as to whether or not fuels used to
generate electricity fell under the “…all industrial uses…”
definition thereby double taxing energy. Finally and most
importantly, the Attorney General’s office was unable to confirm
that this is a constitutionally legal tax increase. The later
is of special concern to me as I continually read articles about
the great sums of taxpayer dollars that are spent defending
potentially illegal tax codes that are rushed through the
system. Sometimes well in excess of the expected revenue
generation!
I was shocked that this bill could be approved without a clear
understanding of the above and am extremely disappointed that
the legislative process that can allow this to happen when
Colorado’s jobs, schools, and families livelihoods hang in the
balance. I implore you to please vote no on this misunderstood
bill or at the very least delay it until the facts can be
gathered and verified so you can render a knowledgeable
decision. Please don’t rush this bill through without ensuring
that we won’t be wasting taxpayer dollars defending it, or
potentially refunding all collections and penalties.
Thank you for your consideration and to the members Finance
Committee who heard me last night.
The Other Business Tax Bills . . .
The following bills passed the Senate Finance Committee, chaired
by Senator Paula Sandoval (D-Denver) on a four-to-three
party-line vote:
HB-1189 Eliminates the sales-and-use tax exemption for
direct-mail advertising materials
HB-1191 Eliminates the sales-tax exemption on sales of candy
and soft drinks—the bill was amended to sunset in three years,
and Committee Chair Sandoval was the only Democrat to vote for
the amendment
HB-1192 Expands sales-and-use tax for standardized software—the
bill was amended with provisions suggested by CACI
HB-1193 Collects sales-and-use tax from out-of-state retailers
with “affiliates” in Colorado
HB-1194 Eliminates the sales-and-use tax exemption on
nonessential materials--the bill was amended to sunset in three
years, and Committee Chair Sandoval was the only Democrat to
vote for the amendment;
another amendment was added that allows amnesty for taxpayers
until June 1, 2010, if they miscalculate the tax owed.
HB-1195 Suspends exemption from state sales-and-use tax for
certain items used in agricultural production
HB-1196 Disqualifies the purchase of alternative-fuel vehicles
for a tax credit
HB-1199 Establishes a three-year limit for the state income-tax
deduction on net-operating-loss carry-forward to $250,000—bill
passed with an amendment suggested by CACI concerning the
effective date
On Monday, February 8th, the Second Reading debate
over the business tax bills will continue when the Senate
convenes at 10 a.m., and the Senate will continue with its work
that afternoon and evening, if need be.
CACI Member Submits Letter to State Senators
The following letter was sent Tuesday to members of the Senate
Finance Committee by
Kim Moravec, Secretary and Treasurer, ABC Die Cutting and
Embossing, Denver:
I am writing to encourage you to avoid driving businesses out of
the state of Colorado. Colorado needs small business to create
jobs, which will drive up sales tax and income tax revenues.
By hitting small businesses with these additional taxes, many
will close their doors or leave the state costing the states
many dollars in the long run. We have all been hit very hard
already by the recession and we cannot afford any more increases
in our taxes. Our costs for fuel and energy have increased
dramatically in the last several years already making it
difficult to keep our doors open. Those of us that have
survived to this point have cut costs to the bare minimum
already. Give the recovery a chance. By increasing our costs
right now, you will hurt the recovery by driving our customers
out of state or out of business. Small business has paid a
great price already. Please don't put us out of business now
just when we are starting to see a light at the end of the
tunnel! Please listen to the people you serve. Don't hurt
the recovery, the job market, and the people of the state of
Colorado when we are counting on you to make the smart choices.
Newspapers Weigh in on Business Tax Bills
Today, The Pueblo Chieftain ran an editorial about the
business tax bills entitled, “Statehouse Democrats to Colorado
Business: Drop Dead”
http://www.chieftain.com/articles/2010/02/05/editorial/doc4b6ba55bdcc80316061436.txt
As mentioned, The Denver Post today announced its
positions on the various business tax bills:
http://www.denverpost.com/editorials/ci_14336547#ixzz0egR1V2ha
For more coverage by The Denver Post of the bills and the
politics surrounding the debate, click on:
http://www.denverpost.com/legislature/ci_14314051
http://blogs.denverpost.com/thespot/2010/02/02/the-silly-class-warfare-of-speaker-carroll/
http://blogs.denverpost.com/thespot/2010/02/02/business-could-get-chance-to-cut-back-on-state-budget/
http://www.denverpost.com/opinionheadlines/ci_14289793
House Finance Committee Chair Says He Will Propose Legislation
to Give Remaining 87 Business Tax Provisions a Ten-Percent
“Haircut” and Terminate Enterprise Zone Program
Representative Joel Judd (D-Denver) and Senator
Paula Sandoval (D-Denver) address the CACI Tax Council
Today, Representative Joel Judd (D-Denver) and Senator Paula
Sandoval (D-Denver) spoke to the CACI Tax Council and discussed
the state’s budget problems and the 13 business tax bills now
being considered by the legislature. Representative Judd said
that he will propose legislation to give a ten-percent
“haircut”—a reduction, in other words--to the remaining 87
business tax provisions (credits, exemptions and exclusions) in
state law, which he estimates will raise $150 million to $170
million. Representative Judd also said he would propose
abolishing the Colorado’s enterprise zone program.
Senate Republicans Unveil Plan for Across-the-Board Cuts for
State Government
Yesterday, the Senate Republicans announced a plan calling for
across-the-board cuts to State Government to balance the current
budget and the fiscal year 2010-2011 budget to counter the
majority Democrats effort to suspend or eliminate various
business tax exemptions. The plan includes the following:
·
A 2.4 percent cut in compensation costs in the current fiscal
year ending June 30th
·
A 4.39 percent cut in general fund spending by the state
departments
·
Cuts should be targeted of employees making more than $100,000
annually.
For coverage of this story by The Denver Post, click on:
http://www.denverpost.com/politics/ci_14337903
Compromise Reached on HB-1001, Increasing Renewable Energy
Portfolio for Energy Producers
Yesterday, the House Transportation and Energy Committee began a
hearing, which continued today, on HB-1001, which would increase
the renewable-energy portfolio of Xcel Energy and Black Hills
Corporation—both of whom are CACI members—from 20 percent by
2020 to 30 percent by that year. The compromise reflected the
involvement of the Governor’s Office, environmental
organizations, labor unions and the two companies. For more on
this bill, click on:
http://www.denverpost.com/legislature/ci_14338892
CACI Board Member’s Column Runs in The Colorado Statesman
The Colorado Statesman,
a weekly newspaper that covers politics and government at the
State Capitol, recently ran a column by CACI Board Member Rob
LeVine, General Manager of the Antlers at Vail, who is CACI
Board Chair-Elect:
http://www.coloradostatesman.com/content/991539-want-create-more-jobs-no-new-taxes
Upcoming CACI Council Meetings
Council meetings will be held at the CACI Office beginning at 12
Noon. Council members who would like to sponsor lunches for
Council meetings should contact Misty Fox, CACI Office Manager,
at 303.866-9652 or via e-mail at
mfox@COchamber.com
·
Governmental Affairs Council,
Tuesday, February 9th; lunch sponsored by Chris Howes,
The Howes Group, whose Web site is:
www.chrishowes.com
·
Energy and Environment Council,
Thursday, February 11th; lunch sponsored by John
Jacus, Davis Graham & Stubbs LLP, whose Web site is:
www.dgslaw.com
·
HealthCare Council,
Thursday, February 18th; lunch sponsored by David
Rivera, Copper Molybdenum, whose Web site is:
www.fmi.com
·
Governmental Affairs Council,
Tuesday, February 23rd; lunch sponsored by Marie
Patterson, AngloGold Ashanti N.A., whose website is:
www.anglogold.com
·
Labor and Employment Council,
Wednesday, February 24th; lunch sponsored by Mark
Moses, Outback Steakhouse, whose website is:
www.outback.com
For the complete meeting schedule of CACI Councils during the
legislative session, please visit the CACI Web site:
http://www.cochamber.com/newsandevents_calendar.asp
|
