Colorado Capitol Report

Legislature Sends CACI-Initiated Space-Equipment Tax Bill to Governor

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State Policy News

Legislature Sends CACI-Initiated Space-Equipment Tax Bill to Governor

At 1:05 a.m. this morning, the House concurred with the Senate on an amended HB-1178, which sends the bill to Governor John Hickenlooper for his signature.  The bill provides an exemption to the sales-and-use tax for qualified space equipment stored within the state.

On Wednesday, the Senate gave final, Third Reading approval to HB-1178, which sent the bill back to the House for concurrence because the Senate stripped out a House amendment that required the bill to sunset after five years.  The sunset provision would have lessened the long-term benefit of the bill if businesses knew that the State would yank the rug out from under them in five years and re-instate the tax.

The qualified property includes space vehicles and components, equipment to be placed in a space vehicle and fuel for space flight.  The bill’s fiscal note says that the State will lose $74,327 in the current fiscal year ending June 30th and $77,895 in the following fiscal year.

The Senate sponsors of the proposal are Senators Mary Hodge (D-Brighton)and Kevin Grantham (R-Canon City).

The Senate vote was a largely bipartisan 31-to-4 vote.  Four Republicans Senators, however, voted against the bill: David Balmer (Centennial), Randy Baumgardner (Cowdrey), Vicki Marble (Fort Collins) and Kevin Lundberg (Berthoud).  On Tuesday, the Senate passed the bill on Second Reading.

On April 22nd, the Senate Finance Committee approved the bill on a 4-1 vote, with only Republican Senator Owen Hill (Colorado Springs) voting against the bill.

Testifying before the Senate Finance Committee in support of the bill were the following CACI members:

Senator Hill’s vote against the bill broke HB-1178’s remarkable record of three unanimous committee votes:

  • House Finance Committee,
  • House Appropriations Committee, and
  • Senate Appropriations Committee.

The bill’s House prime co-sponsors are Speaker Mark Ferrandino (D-Denver) and Minority Leader Brian DelGrosso (R-Loveland).

When the House passed HB-1178 on recorded, final, Third Reading on April 9th, only six Republican Representatives voted against the bill.  Voting for the bill were 58 Republicans and Democrats.

The six Republican Representatives who voted against the bill were Perry Buck (Windsor), Justin Everett (Littleton), Stephen Humphrey (Windsor), Dan Nordberg (Colorado Springs) Lori Saine (Firestone) and Jared Wright (Fruita).  Representative Frank McNulty (R-Highlands Ranch) was excused.

CACI assembled a coalition of aerospace companies, business organizations and state and local economic development entities to support HB-1178, including the following CACI members:

The Colorado Office of Economic Development and International Trade and the Colorado Economic Development Commission are members of the CACI coalition.

For more details on HB-1178, read the February 14th article in CACI’s The Colorado Capitol Report.

For more information on HB-1178, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

Employee-Funded Paid Family Medical-Leave Bill Dies at Hands of Sponsor

A bill to create a new state-administered, paid family medical-leave program, which would have been voluntarily supported by workers, died yesterday in the Senate Appropriations Committee.

Calling it a “great bill,” the sponsor, Senator Jessie Ulibarri (D-Commerce City), moved that SB-196 be laid over until May 8th.  The legislature must adjourn its session by May 7th.

Senator Ulibarri ascribed the bill’s fate to concerns with the Joint Budget Committee and elsewhere about the bill’s fiscal note.

The bill’s fiscal note said that creating the insurance program within a new CDLE division would cost the State $26.3 million in the first two years of start-up.  By fiscal year 2017-2018, the new division would require about 238 new state workers at which time the program would be self-sufficient with $434 million in premiums from workers but with $493 million being paid out to workers to replace wages.

When he spoke to the Committee, however, Senator Ulibarri did not mention that a very serious political roadblock to his bill had arisen.

Ed Sealover, statehouse reporter for The Denver Business Journal, had written that Senator Cheri Jahn (D- Wheat Ridge) had vowed to kill the bill on the Senate Floor.  Because the Democrats control the Senate by one vote, 18-17, Senator Jahn could have voted with the Republicans to stop the bill.  Read:

“Paid sick leave bill falls victim to opposition, tight legislative budget,” by Ed Sealover, The Denver Business Journal, May 1st.

“A gain and a setback for paid-sick-leave bill,” by Ed Sealover, The Denver Business Journal, May 1st.

On Wednesday, the Senate State, Veterans and Military Affairs Committee approved the bill on a party-line, 3-2 vote.  The Committee is chaired by Senator Jessie Ulibarri.

On Monday, the Committee heard testimony on SB-196.  Loren Furman, CACI Senior Vice President, State and Federal Relations, testified for CACI and other business organizations against the bill before the Committee.  Here’s an edited version of Loren’s prepared testimony:

CACI is opposed to SB-196.  We have several concerns with this legislation.

Unlike under the Federal Family Medical Leave Act that applies to employers with 50 or more workers, all employers would be mandated to comply;

This means all employers would be required to absorb the substantial administrative cost of setting up payroll-deduction plans for ALL workers.

Employers that do not have family medical leave policies would be required to establish one under this bill.

The bill states that a worker’s wage replacement varies based on current wages.

This is yet another administrative burden for employers to determine how each worker’s wage replacement is determined;

And, if workers want to opt-out of the program any time during the year, employers would have to once again adjust their payroll deduction.

To add insult to injury, the bill states that the new “Division of Family Medical Leave Insurance,” to be created in the Colorado Department of Labor and Employment (CDLE), would be responsible for determining the timing for the opt-out.

Every employer’s payroll program is different.  Establishing a “one-size fits all” system would be impossible.

The bill also requires that the employer provide the worker, who had taken leave, with the same or equivalent position after the leave had been taken.  This requirement would certainly create a big problem for any size of employer, especially smaller employers who may have had to make cut backs in personnel or had to hire someone to replace the worker who had taken the leave!

We also believe the fines assessed in this bill are unreasonable and–just like in all of the other employment-related bills we’ve seen this session–this bill allows for more litigation to be brought against employers;

Finally if this bill becomes law, we believe there will be attempts in future sessions to impose an employer match, which would cost employers millions of dollars.

The proponents have mentioned this has been adopted in other states.  Keep in mind that only 4 states have adopted this policy:

  • Washington–it was adopted in 2007 but the State has not yet found a way to pay for the program and it continues to sit unused.
  • California–the law was adopted in 2002 and research has shown that the program is woefully underutilized while the State continues to pay for it.  In fact, California is spending money on outreach/marketing to get more workers to take advantage of the program!

You’ve obviously seen the fiscal note on this bill, which shows huge revenue shortfalls on the state and assumes a large number of participants.

I think we should, therefore, be careful about assuming the number of workers who would participate in a Colorado program, based on what has happened in other states.

As I hope many of you have learned, CACI has proven time and time again that we are willing to sit down and work through bills and try to find common ground.  Several times, we’ve been able to reach an agreement on legislation that has evolved into good public policy on behalf of workers and employers!

I am very disappointed; consequently, that the proponents have decided that introducing a bill during the last 15 days of session is the process they’ve chosen.

We strongly believe that this legislation requires significant engagement by the employer community and the CDLE to determine whether or not this proposal is even good public policy for the State.

That process never occurred and, therefore, we strongly oppose this bill.

Here’s the bill’s summary:

The bill creates the family and medical leave insurance (FAMLI) program in the newly created division of family and medical leave insurance (division) in the department of labor and employment (department) to provide partial wage replacement benefits to eligible individuals who take leave from work to care for a new child or a family member with a serious health condition or who are unable to work due to their own serious health condition.  Each employee in the state that has not opted out of the program will pay a premium based on a percentage of the employee’s yearly wages, and the premiums are deposited into the family and medical leave insurance fund from which family and medical leave benefits are paid to eligible individuals.  The division is established as an enterprise, and premiums paid into the fund are not considered state revenues for purposes of section 20 of article X of the state constitution (TABOR).

For more news media coverage of the complicated 19-page bill, read:

“Sick-leave bill carries heavy cost, Colorado business groups warn, but backers say it is worth it,” by Ed Sealover, The Denver Business Journal, April 29th.

“Business groups opposed to paid family leave bill in Colorado,” by Aldo Svaldi, The Denver Post, April 28th.

“Paid family leave hot forum topic,” by Aldo Svaldi, The Denver Post, April 13th.

For more information on the proposal, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

CACI-Opposed Oil-and-Gas Health Impacts Study Bill Dies

Two Democratic Senators joined their three Republican colleagues on the Senate Appropriations Committee Tuesday to kill HB-1297 on a 5-2 vote.  The Senators were Mary Hodge (Brighton) and Pat Steadman (Denver).

The bill’s prime sponsors were Representative Joann Ginal (D-Fort Collins) and Senator Irene Aguilar (D-Denver).

As introduced, the legislation would have required the Colorado Department of Public Health and Environment (CDPHE) to study and report on the health and quality of life effects of oil and gas operations for selected communities in Adams, Boulder, Larimer and Weld Counties.

The study would have been conducted with input from a politically appointed scientific-oversight committee composed of nine voting members and four non-voting members.

CACI lobbied and testified against the bill due to concerns that:

  • The legislation proposed a public-opinion survey rather than a scientific survey,
  • The proposed analysis had a predetermined outcome and
  • The political appointment of the “Scientific Oversight Committee” injected further bias into the proposal.

Although the bill’s sponsors amended the bill throughout the legislative process in an effort to ensure its passage, amendments could not alleviate the inherent bias that existed in the proposal.

In the Senate, discussion shifted to whether whittling the bill down to just the section calling for a review by CDPHE of peer-reviewed, scientific publications on the effects of oil-and-gas operations on human health would alleviate opposition.

In consideration of that proposal, CACI’s Energy and Environment Council sent a memo to the bill’s sponsors and members of the Senate Appropriations Committee to propose an alternative to running legislation for the literature review.  The CACI memo noted that, in discussions with the CDPHE, it had come to CACI’s attention that the CDPHE could conduct the literature review without legislative direction and that the cost of such a review could be absorbed within its current budget.

Additionally, CDPHE expressed a willingness and interest in conducting such a review.  Based on this information, CACI urged the legislators to defeat the bill.

For more on the bill, read:

“Bill to study impacts of oil and gas dies in Colorado Legislature,” by Ed Sealover and Cathy Proctor, The Denver Business Journal, April 29th.

For more information on the bill, contact Carly West, CACI Governmental Affairs Representative, at 303.866.9622.

Bill Extending Effective Date of Definition of “Retail Sale” Heads to Governor

The Senate yesterday approved a CACI-advocated bill to extend the effective date for the definition of “retail sale,” which was adopted last year with the passage of HB-1295, from July 1, 2014, until after the U.S. Congress enacts the proposed Federal “Marketplace Fairness Act” to authorize the states to require “certain retailers” to pay, collect, or remit state or local sales taxes.

The bill, HB-1348, now goes to Governor John Hickenlooper for his signature.  The measure was sponsored by Speaker Mark Ferrandino (D-Denver) and Senate Majority Leader Rollie Heath (D-Boulder).

CACI Tax Council Chair and Board Member Rhonda Sparlin, Partner, RubinBrown LLP, testified in support of the HB-1348 before the Senate Finance Committee on Tuesday.

The bill’s fiscal note provides the background to HB-1348 and HB-1295:

The definition for retail sale that was adopted in HB 13-1295 requires sales taxes to be calculated based on where the consumer takes possession of the property rather than where the property is purchased. This change in definition would not impact sales tax collections when the consumer takes possession of the property at the store, which is most common. This change in definition would impact the sales taxes on property that was delivered to the consumer at a location other than the physical store.

For example, the sales tax on a purchase of furniture from a store in Larimer County that is delivered to the customer’s home in Logan County would be calculated and distributed differently under the two definitions:

  • Current definition (effective until June 30, 2014 under current law): Taxes would be administered as if the sale occurred in Larimer County, the location of the store.
  • HB 13-1295 definition (effective July 1 under current law): Taxes would be administered as if the sale occurred in Logan County, where the furniture was delivered.

This definition of retail sale was adopted in HB 13-1295 to comply with the definition of retail sale in the Federal Marketplace Fairness Act.

News Media Coverage

Below is recent news-media coverage of business, political, policy and governmental issues of interest to CACI:

“Some Colorado GOP lawmakers willing to compromise on local control of drilling,” by Mark Jaffe and Kurtis Lee,The Denver Post, May 1st.

“Battle over oil and gas regs in Colorado loops in political powers,” by Mark Jaffe and Aldo Svaldi, The Denver Post, May 1st.

“Hickenlooper backs talks on oil & gas local-control bill, but isn’t sure bill will come,” by Ed Sealover, The Denver Business Journal, May 1st.

“Hickenlooper signs $23B Colorado budget that boosts college, job incentive funding,” by Ed Sealover, The Denver Business Journal, April 30th.

“Colorado Legislature passes 5 bills on energy, tax, other business issues,” by Ed Sealover, The Denver Business Journal, April 30th.

“Business-civic coalition forms to oppose Colorado fracking ballot measures,” by Ed Sealover, The Denver Business Journal, April 30th.

“Oil/gas interests and legislators discussing potential bill to give local governments more regulatory control,” by Ed Sealover and Cathy Proctor, The Denver Business Journal, April 29th.

“Colorado telecom reforms pass Senate,” by Greg Avery and Ed Sealover, The Denver Business Journal, April 28th.

“Colorado Senate overwhelmingly backs boost to state’s top economic development incentive,” by Ed Sealover,The Denver Business Journal, April 28th.

“For Gerou, Duran, Colorado’s budget battle also personal,” by Anthony Cotton, The Denver Post, April 27th.

Federal Policy News

CACI Supports Health-Care Exemptions for U.S. Citizens Working Abroad for U. S. Businesses

Over the last week, CACI has urged each of Colorado’s U.S. Representatives to support taking up H.R. 4414, the Expatriate Health Coverage Clarification Act of 2014, for a second vote.

On Tuesday, the House reconsidered and passed H.R. 4414 by a vote of 268 – 150.  This bill, sponsored by Rep. Carney (D-DE) and Rep. Nunes (R-CA) would allow U.S. businesses with employees and operations overseas to be exempt from unintended consequences of the Federal Affordable Care Act (ACA) coverage requirements so long as employees reside overseas at least 180 days per year.

The U.S. Chamber of Commerce found that many businesses were being hit with ACA coverage requirements while foreign countries often require their own risk insurance and health coverage of U.S. workers as well.  In the end, businesses are being hit twice: paying for ACA coverage their employees can’t use, while shouldering extra cost burdens required by foreign countries, both of which keep U.S. businesses from being more competitive in the global market.

The House had previously voted on H.R. 4414 on April 9th under suspension of the rules, which required a two-thirds majority to pass.  Although the bill fell short of passage by 30 votes that day, on Tuesday H.R. 4414 passed with a simple majority, which sends the bill to the U.S. Senate for consideration.”

CACI Supports Reauthorization of Perkins Career and Technical Education Act

CACI joined the National Association of Manufacturers (NAM) in signing a letter this week, urging support for reauthorization of the Perkins Program, with reform efforts focused on aligning manufacturing and business needs with the skills being taught in career and technical schools.  The Perkins Program helps prepare students for the academic and technical skills needed to successfully enter the workforce, with the support of federal education funds.

 Dear Member of Congress,

We the undersigned businesses and organizations urge you to move forward with reauthorization of the Carl D. Perkins Career and Technical Education Act (Perkins). As the American economy recovers from the most significant economic recession in recent memory, employers are still reporting a shortage of skilled workers to fill in-demand positions. Career and technical education (CTE) programs, found throughout the country, are central to overcoming this skills gap and provide greater opportunity for America’s youth and adults.

CTE has proven to be an effective tool for improving student outcomes and helps prepare both secondary and postsecondary students with the necessary academic, technical, and employability skills required for successful entry into the workforce. Indeed, CTE prepares students both for college and careers.

Reauthorizing the Perkins Act is critical for the continued economic prosperity of the United States and ensures the country remain a leader in global competitiveness. As Congress sets out on this task, we urge you and your colleagues to focus on areas where improvements can be made to current law, building upon its past successes and enhancing aspects of the Perkins Act, which will help to better serve both workers and employers. A reauthorized version of Perkins should:

  • Align CTE programs to the needs of the regional, state, and local labor market;
  • Support effective and meaningful collaboration between secondary and postsecondary institutions and employers;
  • Increase student participation in experiential learning opportunities such as industry internships, apprenticeships and mentorships; and promote the use of industry-recognized credentials.

These improvements will more effectively spend federal dollars to help our nation’s students acquire the skills that they need and employers are demanding.  We urge you to move forward with this important work and applaud Congress’ ongoing bipartisan commitment to invest in our nation’s students, workers, and economy.