CACI Tells Pinnacol Committee that It Has Strayed from Its Charge by Looking at the Workers’ Comp System

In its final meeting today, the legislature’s interim Pinnacol Committee head more testimony, including comments from representatives of the business community. CACI’s Loren Furman, Vice President of Governmental Affairs, told the Pinnacol Committee that CACI believes that the Committee has gone far beyond the charge of SB-281, which created the Committee. Loren participated on a panel of lobbyists from other business organizations that addressed the Committee. Here’s an edited version of Loren’s prepared comments to the Committee:

· I’d like to talk about the direction that this Committee has gone since the adoption of SB-281.

· We believe that several of the draft bills that this Committee has proposed are beyond the scope of legislative intent of SB-281.

· I’d like to take you back to the last legislative session when the bill that created this committee was moving through the legislative process.

· When the bill passed out of the Senate and went to the House, the language in the re-engrossed bill (page 6, lines 2-4) stated that the Interim Committee “shall study employer insurance premiums for workers’ comp, worker safety and compensation for injured workers.”

· After the bill passed out of the House as amended and went back to the Senate, a Conference Committee was appointed and met on April 30^th.

· In that Conference Committee, the Committee members consciously voted to remove the language that I have just read and replaced it with language that states “the interim committee shall study, make recommendations and report findings on all matters relating to the operation of Pinnacol.”

· We would contend that, if the Conference Committee had wanted this Interim Committee to study and propose legislation to change the workers’ comp system, then the Conference Committee would not have purposely and specifically removed this language.

· CACI has continuously supported the workers’ comp reform efforts accomplished through SB-218 in 1991, which received bi-partisan support and was signed into law by then-Governor Roy Romer.

· We believe that the 1991 reform has worked for Colorado businesses and workers. The proposed draft bills before the Pinnacol Committee today, which would drastically change Colorado’s workers’ comp system, threaten the balance created by the bipartisan leadership of Governor Romer and the Colorado General Assembly in 1991.

During its afternoon session, the Committee was debating and scheduled to vote on the proposals. It can only send eight bills on to the Legislative Council, which will then consider the proposals and decide which will be introduced during the 2010 session. The Committee’s action will be reported in next week’s issue of the Capitol Report. For more on the Pinnacol Committee, click on the legislature’s Web page:

Legislature’s Fiscal Stability Commission Told that Billions Are Needed to Meet the Needs of Coloradans

Legislative staffers yesterday told the interim Long-Term Fiscal Stability Commission that an additional $8.5 billion is needed to provide the services that the heads of different state departments and agencies say is needed to meet the demands of the state’s citizens.

The major categories of need--as defined by the state official--include higher education, prisons, human services, building construction and health care.

For The Denver Post’s coverage of yesterday’s meeting of the Commission, click on:

The last two meetings of the Commission are scheduled to begin at 9 a.m. on November 4^th and November 5^th in House Committee Room 112 in the State Capitol.

For more on the Fiscal Stability Commission, click on the legislature’s Web page:

Eleven Days Away: CACI’s 44th Annual Meeting Luncheon on October 27^th to Feature Colorado Governor Bill Ritter as Guest Speaker

The 2010 session of the Colorado General Assembly is about two and one-half months away. and the statewide business community, which is represented by CACI, is certain to face many challenges in such areas as taxation, workers’ compensation insurance, mandates on employers, health-care benefits, environmental regulation, and so forth.

The Platinum sponsor of the Annual Meeting Luncheon, to be held at the Denver Westin Tabor Center Hotel, is EnCana, the oil and natural gas company:

Silver sponsors are The Ball Corporation, Boeing, Centura Health, CH2MHill, HealthONE, Lockheed Martin, Pinnacol Assurance, Verizon Wireless, Wells Fargo and Xcel Energy.

CACI members interested in attending the Luncheon should contact Denise Reeves, CACI Vice President of Events and Programs, at 303.866.9622 or via e-mail at dreeves@COchamber.com

CACI’s Berry Participates in Panel on Colorado’s Economy and Fiscal Future

On October 7^th, CACI President Chuck Berry participated in a panel discussion on the economic outlook for Colorado and the fiscal situation facing Colorado State Government. The event was sponsored by the Colorado Social Legislation Committee:

The panelists included well-known economist Tucker Hart Adams, The Adams Group; Colorado State Representative Jack Pommer (D-Boulder), who is a member of the legislature’s Joint Budget Committee; and Natalie Mullis, the legislature’s Chief Economist.

I’m here to advocate that we all work for a healthy business climate in Colorado.

A healthy business climate in Colorado is not only good for business and workers, it’s also good for state and local government and the services they provide to Colorado citizens. So it’s to everyone’s advantage that Colorado businesses do well.

The people on this panel know better than I do that. when the economy is performing well, the two principal revenue streams on which the state relies--the income tax and the sales-and-use tax--produce significantly more revenue than they are producing now.

Compare the revenue reports in 2005, 2006 and 2007 with what we’re seeing now: when the unemployment rate is high, the state sees less in the way of income tax revenue, and when consumer confidence is weak and people aren’t buying retail goods, sales-and- use tax revenues are lower.

In other words, state revenues do well when the Colorado business community does well.

So what we all want to work for is an economy that is prosperous, where people can hold on to their jobs and sometimes find better jobs as the economy grows.

Things are much better for everyone when Colorado’s private-sector businesses are doing well: employers, workers, families, as well as state and local governments and all the citizens who rely on their services.

We at CACI have always had a strong belief that our economy must support successful small businesses as well as large companies, some of which often do business is multiple states and more and more internationally.

We strongly believe there is a synergy here: most small businesses cannot prosper without larger businesses in the same community. And the larger companies cannot prosper without many, many small businesses that are their suppliers and also provide a wide variety of goods and services to their workers.

The larger companies with the higher paying jobs that do business in multiple states are very interested in funding higher education.

Every business--small, medium and large--wants a good transportation system. Workers travel to and from home to their work-place, either in a car or on light rail or other public transit. We also need good roads and bridges for products to get from business to business to manufacture goods, agricultural products, etc.

The University of Denver published the first report of the Colorado Economic Futures Panel, which emphasized the need for Colorado to see itself in a global economy and to strive for the success of our businesses in this growing global economy.

We consequently need laws and regulations, tax systems and governmental systems that empower our businesses to be competitive in the global economy.

Let me note that I hear a lot these days that businesses can’t get the lending credit they need to sustain their operations, much less create new jobs. And the bankers are saying they want to do the commercial lending that will help our economy but that the regulators are making it very difficult. The U.S. Congress needs to sort this issue out. But from what I’m hearing, it’s clearly having an impact on Colorado businesses. As long as credit markets are constricted, we’re going to struggle. We need the credit markets to open up for businesses--particularly our tens of thousands of smaller businesses—if they are to do well.

I would like to share with you some of the business rankings done by national organizations looking at all fifty states. In a number of cases, Colorado ranks well. I know for a fact that the people who make business investment decisions for companies operating in multiple states really do look at these factors. In all of these that I’m going to mention, #1 is best and #50 is worst.

The Forbes Table, “The Best States for Business,” gives Colorado an overall rank of #6 in 2008, whereas we were #8 in 2007. Our workforce ranking is # 1, which measurers educational attainment, net migration and projected population growth.

But we don’t rank as well in other areas. In the Forbes survey, Colorado doesn’t rank particularly well on business costs: 35^th nationally. That index is based on cost of labor, energy costs and taxes (both state and local).

Governor Bill Ritter likes to tout the CNBC rankings for “America’s Top States for Business 2009” where Colorado ranks 3rd nationally. In this ranking, we do better on the comparison for cost-of-doing business (22nd) while we don’t do as well on workforce (12^th). About the same on quality-of-life

The magazine, “Chief Executives,” ran an annual “Best & Worst States Survey,” and Colorado ranked 13th in the most recent survey.

The Milken Institute publishes a cost-of-doing business index. Colorado ranked 27th in that survey, which compared the average cost-of-doing business around the country. The survey ranks such items as electrical costs and industrial rent for larger facilities as well as health-care costs and taxes. And according to that survey, Colorado’s costs rank about in the middle among the 50 states.

The Beacon Hill Institute runs a state competitiveness index. The most recent index ranked Colorado third. Colorado ranked particularly well on technology, venture capital and business incubation, security, workforce and environmental policy. Colorado ranked in the top ten states on all of those criteria.

The Public Policy Institute of New York issues an annual state business-tax-climate index. And in this year’s ranking, Colorado is 13th. Compared to the other 49 states, Colorado’s corporate income tax ranks 15^th; individual income tax, 14^th; sales tax, 12^th; unemployment insurance tax, 19^th; and property tax, 6th.

The Washington, D.C.-based Tax Foundation produces a similar annual ranking, which also ranks Colorado 13th, although it ranks Colorado a little different in the various categories than the other survey.

The U.S. Chamber of Commerce’s “Best to Worst State Legal Systems” survey ranked Colorado 13th in its most recent survey. Colorado has ranked higher in previous years and seems to be slipping.

This slippage is noticed by business decision-makers and site locators with national site-location companies that advise corporate executives on where to locate their facilities.. They look at these comparisons.

Based on these rankings, I think most Colorado business leaders would say: “First, do no harm.”

We should encourage legislators and other public policymakers to focus on job retention--sustaining the private-sector jobs we have now--and then focus on laying the groundwork for Colorado’s economic recovery where we will be restoring lost jobs and creating new jobs for our workforce.

I hear often from CACI members that we should be telling public officials: “Don’t change Colorado’s labor union organizing laws.” They are particularly upset with the card-check proposal in Congress. Here in Colorado, they want the legislature to leave the workers’ comp system and Pinnacol Assurance alone.

I’ve listened via the Internet to many of the meetings in recent months of the Interim Long-Term Fiscal Stability Commission, and there’s not much consensus in the group. But something they all seem to agree on is that Colorado State Government should have a “rainy day fund” that would set aside revenues when economic times are good so state budgeting won’t be so hard when the economy sours and we’re in a recession.

CACI supported Referendum C in 2005 and Referendum D, which provided a bonding program for transportation and it’s a shame that Referendum D failed.

A year or so after that 2005 election, I had the opportunity to see a detailed analysis by Walt Klein, one of the principle architects of the campaign. It was clear that it took a strong bipartisan effort: Mayor John Hickenlooper and Speaker Andrew Romanoff on the Democratic side, Governor Bill Owens and University of Colorado President Hank Brown on the Republican side. Without the strong advocacy of each of these leaders, Klein’s survey showed that Referendum C would have lost at the ballot box.

CACI’s Furman Addresses Northern Colorado Legislative Alliance on Challenges to Face the Business Community during the 2010 Session of the Colorado General Assembly

Yesterday, Loren Furman, CACI’s Vice President of Governmental Affairs, addressed a meeting of the Board of Directors of the Northern Colorado Legislative Alliance (NCLA). The NCLA is comprised of the Fort Collins, Greeley and Loveland Chambers of Commerce, all of which are CACI members. At the State Capitol, the NCSL is represented by Capitol Solutions, also a CACI member. Here’s an edited version of Loren’s prepared remarks:

I have been asked to discuss the bills that we anticipate for the upcoming legislative Session that will affect business and to discuss CACI’s legislative agenda.

Before I talk about the 2010 Session, I want to mention a few things about last session. Last year, we heard great presentations from legislative leadership and the Governor that jobs and the economy were their priority. We also knew that the State had a significant budget deficit and that any legislation that cost money would have little success. We were very optimistic and expected a plethora of bills that would help business get through this difficult economic time.

Instead, what we saw were very few bills that actually created new jobs or maintained current ones and CACI ended up fighting a lot of bills that were unfriendly to business. Examples of these bad-for-business proposals included unemployment insurance for locked out union workers; mandated sick leave; mandated parental leave; prevailing wages for public works projects; a raid on Pinnacol funds; and increased med-mal caps. We all know that these kinds of mandates cost businesses money, which translates into lost jobs, lower wages and benefits and businesses closing.

For the upcoming 2010 legislative session, the State faces a worse budget situation, and elected policymakers want businesses to help solve the budget problem. But the business community has already been hit hard this year: $300 million raided from employer-paid funds; the retail vendor-fee allowance eliminated for two years; and two tax exemptions eliminated.

One of the ways that they want businesses to contribute to their effort to eliminate the budget deficit is by eliminating some of the current 100 business tax incentives. We surveyed our members a few months ago when we first learned that legislators might want to eliminate these exemptions. Our members pointed to several exemptions that are critical to businesses and, if removed, they told us that there would job losses, wage cutbacks and even possible relocation of their business to other, more tax-friendly states. Our survey indicated that the most important incentives include the net-operating-loss exemption, machinery exemption, manufacturing exemption and enterprise zone exemptions.

One of the top items on CACI’s agenda is to fight the elimination of these critical tax exemptions.

The interim Pinnacol Assurance Committee has been on CACI’s watch list. This Committee has met several times over the summer in response to the Pinnacol bills that were debated last Session. During the last meeting, 19 proposals were made by the Committee, but only eight can be proposed as actual bills. Based on those proposals, here are some that will affect Pinnacol: empowering the state Senate to approve Pinnacol’s CEO; putting an injured worker on Pinnacol’s Board; and increased fines for fraudulent claims.

CACI, however, is more concerned about the proposals that would significantly change the workers’ comp system: changing the way that rates are determined for paying workers’ comp claims and changing surveillance procedures on injured workers. These proposals will be important to follow since they will affect businesses that are also workers’ comp policyholders.

We’ve also been monitoring the Business Personal Property Tax (BPPTax) Task Force, which has been meeting over the summer. This Task Force was created by the legislature in response to Senator Mark Scheffel’s bill, whose introduced version would have phased out the tax. On Tuesday, the Task Force decided to discuss legislative proposals during its October 28^th meeting and then vote on the proposal during the October 29^th meeting, which will be the last meeting of the Task Force. BPPTax relief is a priority for CACI, which has advocated for years to try to find ways to reduce the tax or eliminate it completely.

A coalition of CACI’s members, concerned about the BPPTax, has met for several months to come up with some options for this Task Force. It is our hope that the Task Force can agree on a bill and move it forward during the 2010 session.

Here are two other proposals that CACI will be following:

· Prevent businesses from doing a credit check on job applicants for a job; and

· Mandate sick leave (CACI fought this bill last session, and it was defeated in the first committee of reference).

The Colorado Department of Revenue (DOR) is seeking to adopt two regulations, which could create significant changes in tax policy and cost businesses significantly:

· Regulation 7 only applies sales tax on a software product that is packaged. Recently we’ve learned that the Ritter Administration may want to change that regulation to apply sales tax to installation of software or to downloaded software. CACI opposes any change to this regulation.

· Nexus Regulation—currently, a company that doesn’t have significant nexus in Colorado does not have to pay corporate income tax. The regulation that the DOR wants to adopt would say that if a company has $50,000 in property, $50,000 in payroll or $500,000 in sales, then they would have nexus in Colorado and should be taxed. CACI opposes this regulation.

In closing, CACI and other business organizations, such as the NCLA, will be doing quite a bit of defensive work on behalf of businesses in the upcoming session. We anticipate that there will be plenty of other bills to come that will affect businesses. CACI appreciates the work that NCLA has done to protect the interests of businesses in Northern Colorado and to help legislators understand the impact of legislation on those businesses. We welcome the opportunity to work together on any of these issues.