In this Capitol Report:
Business Tax Bills Pass Senate in Final Vote
The comprehensive tax bills HB 1311 and HB 1312 passed on the Senate Floor yesterday with several amendments requested by businesses. Together, the bills eliminate a series of tax exemptions while raising the exemption cap for business personal property taxes to $50,000.
Beginning last summer, the Colorado Chamber spent many months negotiating with the bill sponsors to improve the bill from last session (HB 20-1420). Based on feedback from our members and the chamber’s Tax Policy Council, we fought for several changes and improvements which have been adopted to the bills throughout the process. These changes include:
- The reinstatement of the 3 of 6 combined reporting rule
- Slowing the restrictions on the regional home office exemptions
- Eliminating the “highest and best use” language for commercial or residential property assessments
- Providing more clarity and defining terms in the bill, including “mainframe computer access,” “photocopying,” and “packing and crating”
- Allowing agriculturally zoned land to continue to be eligible for Colorado capital gains tax breaks
- Increasing the cap on 529 educational tax deductions in the bill
- Adjusting certain provisions of the bill for inflation
The bill still includes problematic language on the software industry, allowing streaming services like Netflix or Spotify to be considered taxable property. The chamber has argued that this will discourage tech companies from coming to Colorado. The bill also still removes several tax exemptions on the coal industry.
HB 1311 and 1312 will now head to the House for concurrence before going to the Governor’s desk for signature.
SB 176 Laid Over in House Judiciary Early this Morning
In a hearing that concluded after 2:00 a.m. this morning, the House Judiciary Committee laid over SB 176 pending additional changes to the bill. The committee heard several hours of testimony, and it’s unclear when the bill will be considered for a vote.
The Colorado Chamber and a broad coalition of over 50 private and public entities have pushed for major changes to the bill, specifically relating to the problematic definition of harassment, the inclusion of independent contractors and caregivers, and the excessive fines in the legislation. Over the last several days, businesses have sent more than 700 emails to the House Judiciary Committee in opposition to the bill using the Colorado Chamber’s grassroots tools.
Senior Vice President of Governmental Affairs Loren Furman testified on behalf of the coalition to suggest changes to the bill, specifically regarding the definition of harassment.
“We do agree that the definition needs to be updated in the current statute, because what may have been acceptable at one time may no longer be acceptable in these modern times,” Furman said. “But those levels and those elements that are listed on whether harassment exists are very broad, and we believe that a refined approach is very necessary for courts and for legal counsel to get the accurate facts on the case and to litigate those cases.”
Furman suggested that the sponsors adopt the standard they set for themselves in 2018. That standard maintains the “severe and pervasive” language in current statute, but adds expansive provisions to offer more protections to employees. If that standard isn’t acceptable to the bill sponsors, Furman alternatively suggested that groups come together over the next several months to develop a new legal standard that is more balanced. Creating a new legal standard for these cases is complex with many nuanced situations, and it should be thoroughly thought through by stakeholders and attorneys.
The business community has come to the table to work with the sponsors in good faith throughout this process to prevent this type of behavior. Based on laws in other states, the business coalition suggested creating a standard in the bill to require employers to provide harassment training to employees, and that standard was adopted in the Senate. Furman did raise concerns in her testimony about the punitive fines connected to this provision in the bill, noting that if a business of any size fails to comply with the harassment training provisions, even if acting in good faith, they will be hit with huge penalties. The Colorado Chamber believes these fines should be removed or reduced.
Sarah Mercer, representing the Denver Metro Chamber of Commerce, also testified against the bill. She discussed the legal aspects of the bill allowing plaintiffs’ attorneys to fish for misconduct by employers and expose businesses to frivolous lawsuits. Specifically, Mercer pointed out that the affirmative defenses laid out in the bill are very difficult for employers to achieve, and the breach of contract provisions go far beyond the Colorado Discrimination Act, creating uncertainty for employers. The ability for plaintiffs to sue over just one incident is also problematic. Mercer said that upending existing case law for an entirely new legal standard seemed more to benefit plaintiff’s attorneys than women.
“We’ve spent a lot of time with the bill sponsors in the Senate as well as the proponents trying to find middle ground on this bill, but unfortunately the bill is still far from center,” Mercer said.
Giving a perspective of public employers, Megan Dollar with the Colorado Municipal League raised the issue of new costs on taxpayers. While we don’t know ultimately what the final price tag will be, the changes to the legal standard for harassment will inevitably lead to increased costs for public entities, which will be reflected in higher taxes.
“Ultimately we’re concerned that this is an untested legal standard,” Dollar said. “In the Senate, the fiscal analyst estimated that the state’s litigation costs for these claims would increase 25%, and that it excludes costs associated with additional settlements.”
Rep. Adrienne Benavidez expressed concerns over several aspects of the bill during the hearing. She questioned the provision elevating caregivers as a protected class in the bill, pointing out that unlike other protected classes, “caregiver” is a profession. She also worried that putting constraints on the freedom of parties to enter into contracts and come up with agreements that may include nondisclosure provisions could harm the settlements in these cases.
Family Business Preserving Western Heritage
The Colorado Chamber recently caught up with Rocky Mountain Natural Meats, makers of Great Range Premium Bison, and a Colorado Chamber member since 2009. More than a century after the American bison (a.k.a. buffalo) teetered on the brink of extinction, ranchers and agriculturalists like Bob Dineen, founder of the Henderson, CO-based company, have brought the species back, and the North American bison population is thriving. With a passion for preserving this facet of our American heritage through sustainable ranching and processing, and for sharing this high-quality meat product with the world, Bob established Colorado Rocky Mountain Natural Meats in 1986. Today, bison is prized as a high-protein, low-fat red meat that is available to consumers nationwide as well as a few international markets.
While the company has continued to grow and innovate over the years, Bob’s original vision of preserving history while providing the nation with superior-quality, sustainably-produced bison products has remained a central focus for the organization. Sharon Martin, Rocky Mountain’s CFO tells the Chamber that most consumers might be surprised by the lack of waste in the process: Not only does the company produce high-quality meats for consumption, but virtually every part of the bison can be processed and sold for different purposes. The hides, for instance, are used for leather goods. The bison industry is small, and Great Range prides itself on partnering with family ranchers to bring what they see as the “prefect protein” to families across the nation. You can read more about the company’s history, people, and the ranchers they partner with on the Great Range Premium Bison website.