Colorado Capitol Report

Post-Mortem: Data-Center Tax Bill Rose Up Like the Phoenix . . . but then Crashed


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State Policy News

Post-Mortem: Data-Center Tax Bill Rose Up Like the Phoenix . . . but then Crashed

A bipartisan bill, HB-1158, which called for a legislative assessment of  the economic development benefits of data centers for the state and local governments died on the Senate Floor on the final day of the 2015 session.

CACI has worked with a coalition of its members over the last two years to develop legislation that would allow Colorado to compete with the 23 other states that currently provide data center incentives.  CACI truly appreciates the time and energy invested by the many companies involved in this effort and  will continue to work for the passage of the bill during the 2016 session.

Background

The bill initially died on Wednesday, May 8th, on a final, Third Reading vote of 22-13 with 10 Republicans and 12 Democrats voting against the bill.

Senator Chris Holbert

Senator Chris Holbert

Voting “yes” for the bill were the following eight Senate Republicans: John Cooke (Greeley), Kevin Grantham (Canon City), Owen Hill (Colorado Springs), Chris Holbert (Parker), Ellen Roberts (Durango), Mark Scheffel (Parker), Ray Scott (Grand Junction) and Bill Cadman (Colorado Springs).  Additionally, five Democrats supported the bill which included:  Rollie Heath (Boulder), Mary Hodge (Brighton), Cheri Jahn (Wheat Ridge), Linda Newell (Littleton) and Nancy Todd (Aurora).

Based on a request by CACI and other coalition members supporting the bill who had been lobbying senate members all day, Senator Sonnenberg made a motion to reconsider the vote, which the Senate approved.  Only a legislator who votes on the prevailing side of a Third Reading vote can make a motion to reconsider.

Senator Tim Neville (R-Littleton), spoke against the bill as the Chair of the Joint Technology Committee.  Based on the amended version of the bill, that committee would have been directed to assess the benefits of state and local benefits of data centers.  He said the Committee has “lots to do” during the legislative interim this year and that it should focus on its primary purpose – the State information-technology system.  Senator Linda Newell (D-Littleton), also a member of the Committee, and who had originally voted in favor of the bill twice, argued against the bill and stated that the Committee lacked the “bandwidth” to take on the project.

The bill then died once again on a bipartisan 15-20 vote.  Unfortunately, five legislators who had originally voted in favor of the bill on Third Reading flipped their vote to oppose to the bill.

The introduced bill

In its introduced form, HB-1158 would have provided limited tax refunds for IT equipment used in refurbished or new data centers.  The Achilles tendon of the introduced bill had been the fiscal note.  Even with a cap of up to $3 million per refund per firm, the total loss of tax revenue to the state, according to the first fiscal note, was estimated at $10.4 million in fiscal year 2016-2017 and, five years later, $18.5 million in fiscal year 2021-2022.  The bill was also met with resistance from certain legislators who believed that the bill would provide “corporate handouts” to companies who would already be moving to Colorado or expanding their current business in Colorado.

The journey of HB-1158

The House Business Affairs and Labor Committee amended and approved the bill on February 26th, sending the bill to the House Finance Committee, which amended and approved the measure on March 19th.  On April 22nd, the House Appropriations Committee amended the bill, making it into a study and sent it to the House Floor.   It was debated on Second Reading on April 23rd and then passed.  On April 27th, the House approved the bill on final, Third Reading, which sent it to the Senate.

The Senate Finance Committee passed the bill on April 30th and sent it to the Senate Appropriations Committee, which passed it on May 1st.  The Senate approved the bill on Second Reading on Tuesday, May 5th.

The final version

The final version of the bill would have directed the legislature’s Joint Technology Committee to study the issue during this year’s legislative interim and report to the House Business Affairs and Labor Committee and the Senate Business, Labor and Technology Committee by January 31, 2016.  Here’s how the bill’s final fiscal note summarized the measure:

Summary of Legislation

This reengrossed bill requires the Joint Technology Committee, which is a standing committee of the General Assembly, to study data centers during the 2015 interim. On or before January 31, 2016, the committee is required to make recommendations on:

  • the economic benefits of data centers;
  • if data centers can create a long-term investment in a community;
  • if data centers can provide new revenue;
  • whether Colorado would benefit from state-implemented tax incentives;
  • if Colorado data centers have lost business because of a lack of tax incentives; and
  • whether providing state tax incentives to data centers will encourage new data center investment in Colorado.

For more information on this bill, read:

Bill to Provide Tax Incentives for Data Centers Survives, Only to Be Studied,” CACI Colorado Capitol Report, April 24th.


CACI Presents Local Chamber Awards

Pictured at the conference of the Colorado Chamber of Commerce Executives (CCCE), left to right, are: Heidi Petersen, CCCE Executive Director; Donna Evans, President and CEO, Colorado Women’s Chamber of Commerce; Bonnie Finley, CACI Manager, Membership Involvement; Dennis Houston, President and CEO, Parker Area Chamber of Commerce; Chris Romer, President and CEO, Vail Valley Partners; Sue Griswold, Membership Director, Greater Woodland Park Chamber of Commerce; Jack Llewellyn, Executive Director, Durango Chamber of Commerce; and Kim Medina, Membership Director, Fort Collins Area Chamber of Commerce.

Pictured at the conference of the Colorado Chamber of Commerce Executives (CCCE), left to right, are: Heidi Petersen, CCCE Executive Director; Donna Evans, President and CEO, Colorado Women’s Chamber of Commerce; Bonnie Finley, CACI Manager, Membership Involvement; Dennis Houston, President and CEO, Parker Area Chamber of Commerce; Chris Romer, President and CEO, Vail Valley Partners; Sue Griswold, Membership Director, Greater Woodland Park Chamber of Commerce; Jack Llewellyn, Executive Director, Durango Chamber of Commerce; and Kim Medina, Membership Director, Fort Collins Area Chamber of Commerce.

CACI announced the winners of the Chamber of Commerce Performance and Special Achievement Awards in Palisade May 8th at the Colorado Chamber of Commerce Executives’ conference.

The Government Affairs Award went to the Chambers that demonstrated leadership and effectiveness toward the goal of building business issue advocacy.  Both the Colorado Women’s Chamber of Commerce and the Parker Area Chamber of Commerce took home this award.

The next award went to the Vail Valley Partnership for Special Achievement for the development and implementation of a new economic development plan. The Eagle County Economic Development Plan focuses on retaining and expanding current businesses and bringing in new business to the area.

The Communications Award went to Woodland Park Chamber of Commerce for its e-newsletter and the Parker Area Chamber of Commerce for its rebranding and repackaging communications efforts.

The Durango Chamber of Commerce won the New Fundraiser Award for its first “Tech-Knowledge Conference.”  The Conference began a year ago as a result of membership surveys, and Fort Lewis College Marketing Department students conducting studies for the Chamber.  The 800-plus members indicated they were in need of technology based information.  The event was a big success.

The next trophies were awarded for the Largest Increases in Dues Revenue.  First place went to the Parker Area Chamber of Commerce, second place went to the Colorado Women’s Chamber of Commerce and third place went to the Durango Chamber of Commerce.

It was followed by the award for the Largest Increase in Membership, which went to the Parker Area Chamber of Commerce which saw over 9 percent growth in 2014.

The Colorado Chamber of Commerce Chief Executive of the Year Award went to David May of the Fort Collins Area Chamber of Commerce.  David has been in chamber work for 35 years, the last 12 at the Fort Collins Chamber.  He has earned both the Certified Chamber Executive designation from the American Chamber of Commerce Executives and the Certified Association Executive designation from the American Society of Association Executives.

His Board Chair says this about him, “David May is one of the smartest people I know. His ability to assess a situation and then begin to process what it means and what could be next steps is beyond anyone else . . . His efforts to encourage our City leadership to develop an economic development office, creation of the Fort Collins WORKS website to provide education to our community about the importance of jobs, economic development, and primary employers, and his new adventure, Save North I-25 are invaluable to the success not only of Fort Collins, but of our region.”

CACI congratulates all the winners!

For more information about CCCE, contact Bonnie Finley, CACI Manager, Membership Involvement, at 303.866.9643.


CACI EXECs High Rollin’ at the Ameristar in Black Hawk!

CACI EXECs spent the afternoon on Wednesday, May 13th, at CACI-member Ameristar learning about Colorado’s gaming industry and the challenges and issues that confront it.  The members of the 2015 EXECs class also learned how to play craps, played in a slots tournament and won winning some awesome prizes.

Ameristar General Manager Sean Demeule and other staff members discussed with the EXECs class issues impacting Colorado’s gaming industry! Click here for pictures.


News Media Coverage

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

Gov. John Hickenlooper announces legislative, legal appointments,” by Lynn Bartels, The Denver Post, May 20th.

Business, agriculture groups call for immigration solutions from the GOP,” by Ernest Luning, The Colorado Statesman, May 15th.

Williams, Cooke: a partnership for success,” by Marianne Goodland, The Colorado Statesman, May 15th.

Neguse named to head DORA,” The Colorado Statesman, May 15th.

Governor signs bill to ‘jump start’ rural areas,” by Vic Vela, The Colorado Statesman, May 15th.

Education activists say testing changes not good enough,” Vic Vela, The Colorado Statesman, May 15th.

Holland & Hart attorney names Colorado’s chief business regulator,” by Mark Harden, The Denver Business Journal, May 11th.


Manufacturing Initiative

Governor Signs IBM-Inspired “P-TECH” Schools Bill into Law

Pictured from left to right: Scott Laband, President of Colorado Succeeds (back left); Representative Mike Foote (D) – HD 12; Senator Nancy Todd (D) – SD 28; Senator Andy Kerr (D) – SD 22; Ray Johnson, Manager of Corporate Citizenship and Corporate Affairs at IBM and CACI Board Member; unknown; House Majority Leader Representative Crisanta Duran (D) – HD 5; Representative Jovan Melton (D) – HD 5. Photo courtesy of Jamie Trafficanda, Colorado Succeeds.

Pictured from left to right: Scott Laband, President of Colorado Succeeds (back left); Representative Mike Foote (D) – HD 12; Senator Nancy Todd (D) – SD 28; Senator Andy Kerr (D) – SD 22; Ray Johnson, Manager of Corporate Citizenship and Corporate Affairs at IBM and CACI Board Member; unknown; House Majority Leader Representative Crisanta Duran (D) – HD 5; Representative Jovan Melton (D) – HD 5. Photo courtesy of Jamie Trafficanda, Colorado Succeeds.

 

On Monday, Governor John Hickenlooper signed HB 15-1270 into law.  The bill will allow the development of a limited number of P-TECH schools in Colorado. P-TECH is an acronym for Pathways in Technology Early College High Schools.  This model was developed by IBM in New York and has expanded to four other states including Colorado.

P-TECH schools are based on collaboration between industry and education.  Educators tailor curriculum and the classroom to respond to the needs of industry. Industry supports the schools through some combination of financial and in-kind contributions, providing mentors for each student, offering internships, and the promise of job interviews for graduates of P-TECH schools.

Students enter P-TECH programs in the 9th grade and continue until the completion of the 14th grade.  Upon graduation, students receive both a high school diploma and an Associates of Applied Science degree.  They also receive real-world job experience through the mentoring and internships provided by industry.  Additionally, students do not pay for grades 13 and 14 directly like they would if they attended community college.  These final two years will be covered by the state through expansion of the ASCENT program which currently funds concurrent enrollment courses.

These schools also provide a less tangible benefit to students – connecting their often theoretical classroom instruction with hands-on experience.  One of the reasons students fail to complete their secondary education is that they fail to understand how what they learn in school will benefit them later.  This model will help alleviate some of that dissonance.

HB 15-1270 had bipartisan support in both chambers of the legislature.  CACI was proud to work with legislators, school districts, and other advocacy organizations to promote the bill’s passage.  The bill was part of a larger “Ready to Work” package focused on workforce development for key industries in Colorado.

To learn more about P-TECH and how your company can participate in this innovative model, please contact Patrick Pratt, Program Manager of the Colorado Manufacturing Initiative at CACI. You can reach him by email at [email protected] or by phone at 303-866-9657.


Federal Policy News

CACI’s Federal Relations Council Welcomes SBA, Discusses Joint-Employer Issues and U.S. Ex-Im Bank

On Tuesday, CACI’s Federal Relations Council covered a wide swath of Federal issues, from Small Business Administration capital procurement to labor issues and the proposed Trade Promotion Authority (TPA) currently before Congress (see below).

  • S. Ex-Im Bank Reauthorization:  The Export-Import Bank is up for re-authorization right now, but its authority to lend expires June 30th, 2015.  Ex-Im is responsible for lending to foreign companies and foreign governments so that those entities have the capital to purchase American products.  At a meeting with Ex-Im Bank President two weeks ago, when asked what Plan B for the bank is, Hochberg said, “The Ex-Im IS Plan B.  Plan A is for the private market to serve all exporters and importers, but where there’s too much risk or substantial capital involved, the Ex-Im can step in.”  He added, “’Plan C’ should be considered failure because Plan C is China.”

There are currently two bills being considered by the U.S. House of Representatives and one bill being discussed in the U.S. Senate.  Each bill looks at varying degrees of increased transparency, but:

  • Ex-Im currently reports all actions to Congress every 90 days.
  • Has a loan default rate of less than .05 % (standard bank lenders are typically around 3-4 % default rate).
  • Represents more than 164,000 jobs and $27.5 billion to the U.S. economy.
  • Supplies $675 million in surplus dollars to taxpayers each year (Ex-Im isn’t allowed to keep revenue generated).
  • And nearly 90% of authorizations made by Ex-Im are to small businesses.
  • TPA: Trade Promotion Authority and amendments are currently being debated on the U.S. Senate floor.
    • Senate leadership hopes to pass the House shell bill ahead of Memorial Day weekend and would give the President “fast-track” authority to approve initial trade agreements and Congress would have authority to make an “up-or-down” vote on future trade deals, but not specific provisions.
    • Amendments on currency manipulation and catfish have snagged momentum.
    • Approving TPA gives our Congressional delegation a say in encouraging strong trade partnerships for our exporters, reducing trade imbalances, while helping remove embargoes and tariffs.
  • Trans-Pacific Partnership (TPP): This agreement is up for consideration once TPA is approved.  TPP represents 12 nations and 40 % of the world’s global economic output.
  • Iran vote: Legislation would require Congressional approval of any nuclear deals (specifically with Iran) be approved by Congress.  It passed the Senate (98-1) and the House last Thursday (400 – 25).  It is awaiting President Obama’s signature but seeks a balance of powers between Congress and the Presidential Office.
  • National Defense Auth Act (NDAA):  Passed the House last week in a closer-than-expected vote (269-151).  This legislation ensures military and their families remain protected; contractors and manufacturers supplying our military continue to receive orders, timely payment and ability to plan ahead.
    • Had the President vetoed the Act, it is unlikely the House and Senate could have overcome the veto.  à If all 435 House members vote, would need 290 in House and 67 of 100 in Senate to overcome Presidential veto.

Why Businesses Should Care About the NLRB’s Joint-Employer Rule

Where this is coming from:  Since 1955, union memberships have seen a downward trend.  Given that trend, unions have been both creative and aggressive in their approach to recruiting, gathering and unionizing more workers and workplaces across the U.S. through micro unions, ambush elections and now the proposed joint-employer rule.  However, the one place unions have not gotten a good foothold is within the franchisor/franchisee model.

This is the backdrop of today’s discussion because the National Labor Relations Board (NLRB) has become increasingly more irrational and radical in their judgments for labor and against businesses of all sizes.  As one CACI labor employment expert put it, “The NLRB has gone rogue.”

What is the “Joint-Employer” Rule?   This is the new labor standard being pushed by the NLRB which says large employers, franchisors, contractors and joint ventures would be potentially responsible for the actions of sub-contractors, franchisees, and 3rd party groups –to hold employers accountable and to facilitate greater potential numbers for unions to organize.

Until now, labor law has had well-documented definitions treating franchisees as individual, small businesses.  Traditionally, franchises license intellectual property (recipes, business models, etc.) from the parent company but are free to decide who and how to hire, wages, and day-to-day management decisions.  However, the NLRB, through cases currently being litigated, would essentially treat franchisees and franchisors as one entity, removing flexibility and changing the previous standard for separation.  In this case, the new standard would look at whether the parent company has influence over the franchisee when determining whether to lump them together in lawsuits as “joint-employers”.

It is worth noting, the NLRB has been very clear that their intent for this rule is to facilitate increased unionizing activities and drive an increase in labor union members.  From experience, the business community can show the proposed rule removes incentives to invest in workers AND franchise businesses, and in the end, the employees will be the ones hurt most.

Why CACI Actively Opposes The Joint-Employer Rule:   The proposed rule upends more than 30 years of labor standards and definitions, while taking away the freedom of employers to make decisions best for employees and their company.  This NLRB rule disregards regional economic differences, innovative and better business models, and even differing state laws for small businesses.  With the joint employer rule, franchises would no longer be treated as independent businesses but rather as a joint employer (i.e. In the most simplistic of terms, what one does, all must do or not do).  Taking the NLRB’s standard one step further, this would also remove any incentive to start new businesses which contract for work, particularly because risk brought by the new company is transferred to the hiring business.

Additionally, this rule could have widespread impact on treatment of pensions, workforces unionizing to change base pay rates, as well as healthcare coverage decisions (i.e. businesses previously considered “small” and not required to provide healthcare coverage may now be considered a “large employer”, with corresponding coverage and new tax requirements).  This rule even sets up a scenario where should one location unionize, employee actions would potentially apply to all employees and employers if they are considered one joint-employer.

This issue was made prominent by the NLRB’s on-going case against McDonald’sThe NLRB sued corporate McDonalds, but also included several franchises in the suit for alleged discrimination.  It is likely this corporate/franchisee joint case will be used to set a precedent for treating corporate and franchise employers as one entity.  We are also following the Browning-Ferris case for the same reason, while the NLRB has disregarded the Massage Envy case which ruled the franchise was not responsible for setting the wages of franchisee employees.

Congressional Action: Several members of Congress are watching this issue closely as well.  After lead counsel for the NLRB stated late last year that he and the NLRB did not have legal authority to proceed with the joint-employer issue, but still issued joint-employer lawsuits anyway —  it raised red flags.  Because of the NLRB’s decision to disregard existing case law and legal authority, Rep. Kline (R-MN), Sen. Alexander (R-TN) and Sen. Ron Johnson (R-WI) have demanded justification and legal grounds be produced by the NLRB for the joint-employer issue and resulting lawsuits.  Should that documentation not be produced, those members have subpoena authority through the Senate Health, Labor, Education & Pensions (HELP) Committee and House Education and Workforce Committee.

Ongoing CACI Action: The NLRB’s proposed rule will affect franchises most immediately and directly, but has the potential to change how the entire contractor and sub-contractor environment looks for the future.  This is particularly true if contractors are liable for the work product, working conditions and/or terms of employment of subcontractors or franchisees, so CACI began engaging the NLRB last summer and will continue to educate both our Congressional delegation and the NLRB about the concerns of the Colorado business community.

Excerpt from CACI President Chuck Berry’s letter to the NLRB last July:

“CACI has several serious concerns you need to consider, should the NLRB move forward with this definition:

  • Companies could easily and inadvertently find themselves liable for third party actions they have no control over and could be forced to bargain with local unions representing third party employees they do not employ;
  • In the case of franchises and other large companies, this change would force employers to repeatedly bargain over issues affecting the entire corporation (i.e. pensions, healthcare, neutrality agreements and use of card check). Each of these examples could lead to inconsistent terms across contracts and increased litigation for all parties involved;
  • And for businesses involved in joint ventures, engaging staffing agencies, hiring subcontractors, leasing space to concessionaires or licensing a company name to franchisees, they could unexpectedly be dragged to the bargaining table, to the detriment of the company and future jobs.”