Colorado Capitol Report

In this Capitol Report:

• Progress on Transportation Funding Bill Dims
• Governor Signs CACI-Initiated Bill to Protect Taxpayers
• CACI Fed Council Talks Tax Reform & All Things Congress
• CACI's Legislative Agenda

Progress on Transportation Funding Bill Dims

If politics is the art of compromise, then the Colorado General Assembly is waiting for its Van Gogh to calm tempers, overcome ideology and foster bipartisanship, especially when it comes to the session’s major transportation funding proposal.

A committee hearing Tuesday will likely spell the end of the line for HB-1242, which was intended to create a stable, 20-year plan for transportation funding by increasing the state sales tax by 0.5 percent to 3.4 percent and then issuing $3.5 billion in bonds to fund transportation projects.

The bill is the most important bill this session for CACI and the statewide business community that it represents.  On March 16^th, the CACI Board of Directors voted to support HB-1242 as introduced.

Meanwhile, a complicated measure, SB-267, the ‘Rural Sustainability’ bill, is still waiting to be heard in the Senate Appropriations committee.  The bill would save rural hospitals from funding cuts while boosting funds for rural development.  CACI supports SB-267.

Despite a session that has, until now, featured a refreshing atmosphere of professed bipartisanship, ideological speed bumps now threaten to send the two bills into the ditch.

All eyes are on the Senate Finance Committee

The hearing for HB-1242 is scheduled before the five-member Senate Finance Committee, which will convene at 2 p.m. in Senate Committee Room 354.

To pass this five-member Committee, the bill would need the vote of at least one Republican lawmaker.  The Committee members are:

• Chair–Senator Tim Neville (R-Littleton),
• Vice-Chair—Senator Owen Hill (R-Colorado Springs),
• Senator Jack Tate (R-Centennial),
• Senator Lois Court (D-Denver), and
• Senator Andy Kerr (D-Lakewood).

According to news media reports, Senate President Kevin Grantham yesterday informed reporters that he could not get the support of any of the three Republicans on the Committee to support the bill.

Until Wednesday night, Senator Tate’s undeclared position had been the focus of proponents and opponents of the bill.  With the Senator’s decision to oppose the bill, the fate of HB-1242 appears to have been sealed.

Senator Grantham told reporters yesterday, according to The Denver Business Journal, “We have five days including the weekend to try to figure out something that than can appear to Republicans and Democrats. . . I’m not sure what that looks like at this point.”

In general, many Republican lawmakers have opposed increasing the state sales tax for long-term transportation funding without cuts to state spending that would direct funds to transportation.  Repeated efforts to institute such cuts during debate on the Long Bill, the state’s budget measure, were repulsed.

The current version of the HB-1242

The newest fiscal note, which was issued yesterday and is 13 pages long, contains an analysis of the current version of the bill.  The latest version of the bill on the legislature’s Web site, however, does not include the amendments of the Senate Transportation Committee.

On Tuesday, April 11^th, the Senate Transportation Committee amended and approved HB-1242.

The most significant of the 13 amendments proposed by Senator Grantham and approved by the Senate Transportation Committee include the following:

• Reducing the proposed increase in the state sales tax from 3.62 percent to 3.4 percent (the current tax is 2.9 percent).
• Committing General Fund support of $100 million annually for two decades for future bond payments to pay for about $3.5 billion in projects to expand highways.
• Ensuring that the Colorado Department of Transportation (CDOT) receives a set percentage of the above funding stream instead of a fixed $375 million annually that was in the bill that came to the Transportation Committee.
• Creating a new, multi-modal transportation grant fund.
• Reforming the contracting practices of the Colorado Department of Transportation (CDOT) to open up the bidding process and make it more transparent.

The vote to approve the bill by the Committee was 3-to-2.  Senator Baumgardner joined the two minority Democrats, Senator Nancy Todd (Aurora) and Senator Rachel Zenzinger (Arvada), to advance the bill.  The Committee’s other two Republicans, Senator John Cooke (Greeley) and Senator Ray Scott (Grand Junction), opposed the bill.

Leadership bipartisanship, although not total, has been a hallmark of HB-1242

The bill’s prime Republican movers in the Senate are two of its leaders, although the bill did not have the support of all Senate Republican leaders.

The Senate co-sponsors of the bill are Senator Randy Baumgardner (R-Hot Sulfur Springs), who chairs the Senate Transportation Committee and Senate President Kevin Grantham (R-Canon City).

The bill’s House prime sponsors are Democrat House Speaker Crisanta Duran (Denver) and Representative Diane Mitsch Bush (D-Steamboat Springs), who chairs the House Transportation and Energy Committee.

The introduced bill was the product of more than half-a-year of negotiations between and Senator President Kevin Grantham and Speaker Duran and interested organizations.

For more information about HB-1242, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

For news media coverage and additional information, read:

“Colorado lawmakers grand bargain on transportation appears doomed,” by John Frank, The Denver Post, April 21^st.

“Bills to increase road funding likely headed for a crash,” by Ed Sealover, The Denver Business Journal, April 20^th.

“A dead end for Colorado transportation measure?” editorial, The Denver Post, April 20^th.

“Transportation Funding Bill Awaits Critical, Second Senate Committee Hearing,” CACI Colorado Capitol Report, April 13^th.

“Senate Committee Endorses ‘Rural Sustainability’ bill,” CACI Colorado Capitol Report, April 13^th.

Governor Signs CACI-Initiated Bill to Protect Taxpayers

On Tuesday, Governor John Hickenlooper signed into law a bill, SB-112, that will address a problem that bedevils some taxpayers.

Specifically, the bill closed an odd loophole in statute that could force a taxpayer, who mistakenly pays a sales-and-use tax to the wrong jurisdiction, to be forced to also pay the tax to the correct jurisdiction.  In other words, the taxpayer could end up paying the same tax twice to two different jurisdictions and not get a refund from the jurisdiction that received the tax by mistake in the first place.

In 1985, the legislature passed a bill to deal with the problem that arose when a taxpayer submitted a sales-and-use tax payment by mistake to the wrong local government.  The 1985 law created a process to encourage the two local jurisdictions to solve the problem and get the money to the correct jurisdiction without forcing the taxpayer to also pay the tax to the correct local government.

A court case, however, inserted the Colorado statute of limitations into one dispute with the result that the taxpayer was forced to pay the tax to the correct municipality after having mistakenly paid the tax to the wrong municipality.

The goal of SB-112, which earned bipartisan support in both the Senate and the House, is to explicitly remove the statute of limitations from such disputes.

The House sponsor was Representative Dan Pabon (D-Denver).  The Senate sponsor was Senator Tim Neville (R-Littleton).

Here’s the summary of the introduced SB-112 by the legislature:

The bill seeks to clarify the general assembly’s intent when it enacted a dispute resolution process in 1985 to address a situation when a taxpayer paid a sales and use tax to one local government when it should have instead paid that disputed amount to a different local government. A recent court case applied the statute of limitations to this dispute resolution process, resulting in the taxpayer having to pay the disputed amount twice to 2 different local governments. The bill specifies that any statutes of limitations, either local, state, or in intergovernmental transfer agreements, do not apply to the remedies set forth in law.

The bill’s fiscal note contains a more detailed analysis of the proposal:

Summary of Legislation

Under current law, taxpayers who are determined to have made a disputed local government sales or use tax payment to the wrong jurisdiction are relieved of their obligation for the disputed tax and associated penalties and interest. The bill clarifies that this provision is not subject to any state, local, or intergovernmental statute of limitations.

The bill applies to disputed sales or use tax payments in home rule counties and municipalities, statutory counties and municipalities, and other taxing districts.

Background

Under current law, if the Department of Revenue determines that a disputed sales or use tax payment was made to the wrong jurisdiction, the taxpayer is relieved of the tax due up to the amount paid, as well as associated penalties and interest. In a 2014 court case, Qwest Corp. v. City of Northglenn, a state court of appeals applied the state’s three year statute of limitations for use tax payments, ruling that this remedy was not available to a taxpayer who had erroneously paid use taxes to the City of Northglenn rather than the City of Thornton between 2002 and 2005. As a result of the case, the taxpayer was required to pay the disputed amount to the City of Thornton after having already paid the amount to the City of Northglenn.

For more information about SB-112, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

CACI Fed Council Talks Tax Reform & All Things Congress

Last week, CACI welcomed Darin James, a corporate and federal tax policy expert at RubinBrown to talk about the realities of tax reform for businesses, what businesses can expect from tax reform, plus the politics of proposals coming out of the U.S. House of Representatives —  in contrast to plans floated by the Trump White House.  Darin did a fantastic job of making tax reform an engaging issue and bringing tax reform to an every-person level through his knowledge base and political insights.

CACI’s Leah Curtsinger followed with a look at the challenges, constraints and politics of what Congress and the Trump Administration are attempting to accomplish.

Key Council Takeaways:

• Congress faces a perfect storm: When our delegation returns to D.C. next week, they have only four days to reach an agreement on how to fund the U.S. government, with the added constraint of needing to address our national debt ceiling (a.k.a. the U.S. limit on how much debt the U.S. may issue for spending).  In an environment where Democrats have enough leverage to force Republicans to allow a government shutdown, there are likely to be some tough votes and major compromises.
  • There is talk Senate Majority Leader Mitch McConnell (R–KY) has been working with Senate Minority Leader Chuck Schumer (D-NY) for a one-week “CR” to fund the U.S. government, in order to give Congress time to negotiate a longer-term spending deal.
  • Additionally, funding for a Trump border wall has been removed as a “poison pill” from the one-week extension to encourage compromise.
• Budget Process – President Trump vs. Congress: There was a time in history when the President of the United States and Executive Branch (not Congress) were most aware of where funds were spent once appropriated.  However, the Congress has modernized since the 1970’s and today both proposed and approved budgets are public information.
  • In fact, the U.S. President is Constitutionally required to create a proposed budget for the Congress to consider and Congress has not followed a Presidential budget in its entirety. Ever.
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• It’s not time to panic, just get involved:  If there are programs that support you as a business or programs that you support personally, the next week or two are the time to contact your members of Congress.  Don’t know your House Representative or Senators?  Contact Leah Curtsinger to help connect you and tailor your message to be most effective.
• Trump EOs rollback or temporarily block disliked Obama-era environmental and labor rules:
  • The Waters of the U.S. (WoTUS) has been rolled back by Executive Order (EO), underscoring a court-issued and nationwide injunction on the rule from late 2015.
  • Overtime and Wage Reporting Rules temporarily delayed:  An EO issued early in the Trump Presidency ensured all rules being processed, in line for, or ready for print in the Federal Register, a.k.a. being “noticed,” are delayed for 60 days to give the administration time to review all rules.  This delay is typical of all modern presidencies to ensure rules still being implemented from previous administrations are not contrary to goals of the current administration.  There is talk that an EO may be issued to block one or both labor rules.
  • Fiduciary Rule delayed by 60 days:  Trump issued an EO specifically delaying this rule, and there is talk an EO blocking this rule is also likely in coming weeks.
• Up Next:
  • Healthcare Reform, resurrected:  In the past two weeks, Vice President Pence began talks with Speaker of the House Paul Ryan (R-WI) to resume ‘more inclusive’ talks about how to pass comprehensive healthcare reform.  In previous weeks, President Trump has said he would take a step back from any healthcare reform process post-failed vote, however last week Trump announced his wish for Congress to complete healthcare reform before turning to tax reform or an infrastructure package.
  • Tax Reform:  The big questions right now are ‘will Congress be able to pass comprehensive corporate tax reform’ and when might this actually happen?
    • Congress has managed to address tax extension packages for expiring tax credits and small tweaks to tax credits in years past, however comprehensive tax reform hasn’t happened since 1986 – more than 30 years ago.
  • $1 Trillion Infrastructure Investment Package:  CACI helps our members know how to plan and navigate the current administration, particularly with deciphering the President’s political and policy statements.
  • • For example: Trump has touted a soon-to-be $1 trillion infrastructure investment package, sans public details.  However, in 2016, now Secretary of Commerce Wilbur Ross wrote a white paper on how $137 billion in business tax credits could be leveraged through public-private partnerships (P3s) to create $1 trillion in infrastructure investment over 10 years.

Given the current federal budgetary environment, we can expect to see these numbers surface again in three to six months – and you will now have better insight into what an infrastructure package could really mean in terms of actual federal dollars to be spent, time needed to see full benefits and where businesses can choose to be involved (or not).

• Timing:
  • Healthcare: Because tax reform proposals are reliant on the successful passage of a healthcare reform to reduce costs and free up revenue, the House may turn to healthcare reform upon return from Easter recess, in addition to addressing passage of a CR.  (This will likely take 1-2weeks in addition to a 1-week recess, bringing the House schedule to May 16^th before the House can turn anything else)

• • Tax Reform:  Both House and Senate are working on tax reform behind the scenes, but between healthcare, needing to pass a budget, CR and appropriations bills – tax reform will likely not gain momentum until fall 2017.

• • Proposals as complicated as healthcare and tax reform have traditionally taken three to ten years to complete in the past, but President Trump wants to accelerate the “typical” timeline to address healthcare, tax reform and infrastructure investments by fall 2017 for healthcare and tax reform, plus early 2018 for infrastructure.
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CACI's Legislative Agenda

Below is a list of bills and their status on which CACI Policy Councils and the Board of Directors have taken positions.  For more information on the bills, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.