The House is considering a measure to change tax policy in such a manner that economic development and business advocates argue will have a chilling effect on retaining and attracting new corporate headquarters to Colorado.
House Bill 16-1275 would place a measure on the November 2016 ballot to allow voters to decide whether to require corporations to pay taxes on income from affiliated corporations incorporated in “tax haven jurisdictions”, unless the affiliated business is operating for “legitimate business purposes.”
The proposal was introduced by Democrat Representatives Brittany Pettersen and Mike Foote. They argue the measure is necessary to “close a tax loophole that allows many of the biggest companies doing business in Colorado to pay no state income taxes.” The proposal is projected to generate an estimated $75M in additional revenue, which would be dedicated to K-12 public school funding.
The broad proposal is drawing equally broad opposition from the Colorado business community, including the NCLA. Opponents argue the measure will make Colorado less competitive, less appealing for relocation and expansion, and creates a risk of double taxation for Colorado companies.
HB 1275 would grant the Department of Revenue (DOR) broad authority and discretion to develop a list of “tax haven countries”, or a blacklist of countries. Blacklisting has been abandoned by all but two states in order to maintain strong trade relations with other countries. DOR would have additional discretion to define “legitimate business purpose.” A company would be required to prove to the “satisfaction of DOR” that they are engaged in a legitimate business.
The bill has been considered in the House and awaits its third reading where it is expected to pass on a party-line vote. With the split majority between the House and Senate, the bill is on a path for defeat in the first Senate committee. Despite the known outcome, the business community has been vocal in their opposition to demonstrate the implications of public policy upon economic development decisions.
Attorney General Opinion Amps Up Transportation Funding Debate
Last week, Attorney General Cynthia Coffman entered into the budget fray by opining that a shift in budget policy to allow the existing hospital provider fee to be statutorily converted to a government enterprise is defensible as constitutional. The opinion provided new energy around the debate that has important implications for the transportation funding and finance that the NCLA is leading.
The opinion provides a path by which the legislature could move the fee to a enterprise which, in turn, would provide more flexibility in the state budget. The flexibility would prompt the flow of some short-term funds for transportation, argue proponents, including the Governor and Democrats. Republican opponents of the move are concerned about the legal implications but are also of the opinion that the suggested move runs contrary to the will of the TABOR amendment unless the voters approve such a change.
NCLA is working with leaders in both houses and the Governor’s office to build a compromise which achieves each parties’ mutual objective of funding and financing transportation in Colorado.
Last week, leaders of the Colorado General Assembly set aside partisan differences and rolled out a 10-bill package to tackle lingering unemployment and address lack of available workforce in certain sectors to assure the state’s economic resurgence remains strong.
The package is focused upon getting Colorado’s businesses more involved in the process of producing Coloradans with the skills and training to step into the thousands of good-paying, skilled positions that are available in Colorado but go unfilled, or are filled by out-of-staters.
“A thriving economy is not a Democratic priority or a Republican priority, it’s a Colorado priority,” House Majority Leader Crisanta Duran (D-Denver) said at a press conference announcing the package. Senate Majority Leader Mark Scheffel (R-Douglas County), House Minority Leader Brian DelGrosso (R-Loveland) and Senate Minority Leader Lucia Guzman (D-Denver) joined Duran for the announcement.
“Our businesses can partner with our schools,” Rep. Duran said. “Let’s encourage Colorado’s companies to take a larger role in the development of the next generation of Colorado workers.”
In addition to providing tools to encourage companies to participate in the development of the workforce, other bills in the package would bolster the computer science and digital literacy curriculum in Colorado K-12 schools and reward school districts for producing high school graduates with workplace-ready skills and training.
Below is a list of the bills included in the package. The NCLA board will be considering its positions on the workforce package at their board meeting this week.
Industry infrastructure grant program HB16-1288 (Kraft-Tharp/Tate): Works toward a system in which businesses are engaged in the education system as centers of learning and drivers of career-focused education content. Creates a matching grant program within the Colorado Workforce Development Council to assist industry associations to define industry competencies and collaborate to facilitate training and education in the classroom and the workplace.
Computer science and digital literacy HB 16-1291 (Lontine & Duran/Hill & Johnston): Directs the Department of Education to update content standards to include tech skills and creates a voluntary resource bank for schools and districts that want to start or expand computer science programs for students. Also creates a grant program for public school teachers in Colorado to pursue additional education that will enable them to teach computer science courses. Colorado public schools have standards in 10 content areas, but the current system lacks guidance for technology and computer science.
Incentives for student success HB16-1289 (Esgar & Duran/Crowder & Garcia): Creates a pilot program wherein school districts receive a $1,000 bonus for each high school student who (1) earns an industry certification tied to an in-demand job, (2) finishes a rigorous workplace training program tied to key industry needs, or (3) successfully completes a Computer Science AP course. After Florida adopted a similar incentive program, the number of students earning industry certifications each year rose from 800 to 45,000 in just five years, with some of the biggest gains for underserved groups like rural students, minorities and students living in poverty.
Apprenticeship study HB16-1287 (Rosenthal & Wilson/Cooke & Kefalas): Directs the Colorado Department of Labor and Employment to study ways to increase the use of apprenticeship programs by Colorado businesses and to make a report and recommendations based on the study.
Extension of ReHire Colorado HB16-1290 (Esgar & Kraft-Tharp/Hill & Heath): Extends the ReHire Colorado program, which provides job training to help Coloradans find gainful employment and transition off of government assistance. The program helps the economic recovery reach the Coloradans who need it most, focusing on helping veterans, seniors and non-custodial parents secure long-term employment.
Tax credit for apprenticeships HB 16-1301(Garnett/Scheffel): Provides an income tax credit to qualified Colorado businesses that integrate quality apprenticeships into their workplaces. Companies must offer high-paying, in-demand jobs as identified by the state Workforce Development Council.
Aligning student academic plans with career pathways SB16-079 (Martinez Humenik & Todd/Young): Directs the Department of Education to collaborate with the community college system to more effectively align postsecondary and workforce readiness initiatives, so that students graduate with the tools they need to be successful in their future career and academic goals. This bill has passed the Senate and was introduced in the House this week.
Clarifying license pathways for mental health professionals HB 16-1103 (Kraft-Tharp & Landgraf/ Martinez Humenik & Todd): Clarifies and streamlines the pathway to licensure in the mental health professions. The bill has passed its first House committee and was sent to the Appropriations Committee.
Qualifications for licensed electricians HB16-1073 (Duran & DelGrosso/Scheffel & Guzman): Modifies the license renewal process for electricians by requiring continuing education rather than an assessment. The 24 hours of training will better equip electricians with the skills they need to be successful in their profession.
Colorado voters in November 2016 may be forced to read a ballot pamphlet as long and dense as a political science textbook. While most attention is being payed towards the dramatic 2016 Presidential campaign, 2016 is also shaping up to be a very dramatic and crowded year for statewide ballot questions which tackle a host of issues affecting our economy and political process.
Several factors come into play when a group of citizens decide to pursue a ballot initiative. It could be that in order to affect the change they seek, the constitution requires them to pursue a vote of the people for permission. In the case of 2016, however, citizens who have either been rejected through the legislative process or are opting to bypass the legislative process altogether knowing they will not receive a favorable outcome will also pepper the crowded ballot with ballot questions.
A complete list of 2016 ballot initiatives won’t take shape until later this year, but the short list is already a mile long. It includes proposals to fund and finance transportation (including north I-25), boost Colorado’s minimum wage, effectively prohibit oil drilling, provide a single payer health system, allow unaffiliated voters the option to vote in primaries, and, ironically, make proposing ballot initiatives more difficult.
Below, a brief summary of ballot issues positioning themselves today for debate in November 2016.
Oil and Gas
A series of petitions were filed for statewide ballot measures that would allow communities to ban drilling and fracking within their boundaries, or effectively prohibit new drilling by greatly expanding setbacks between development and homes or other buildings. Frustrated with state-level efforts to regulate the industry, activists are taking to the ballot to find relief and control an industry struggling to prosper with declining oil prices.
On the heels of the defeat of a legislative proposal to allow local governments to raise the minimum wage, proponents filed a statewide ballot initiative to raise the state minimum wage to $12 per hour by 2020 from the current $8.31. The increase would phase in over three years and would include inflationary adjustments after 2020. The business community defeated the legislative measure and will oppose a statewide initiative.
Single Payer Health Care
Already qualified for the 2016 ballot is a measure to convert Colorado’s health care system to a “Single Payer” system. Dubbed ColoradoCare, the measure calls for 10% payroll tax plus 10% non-payroll tax to raise the $25 billion necessary to cover the costs of the proposed single payer system.
Statewide TABOR “DeBruce”
Frustrated by a lack of flexibility in the state constitution TABOR’s amendment for Colorado to keep revenues generated by the growth in the economy, a ballot initiative is anticipated to be filed within the next couple of weeks which proposes a statewide “debrucing” approach which would grant constitutional permission to keep such revenues. We anticipate the retained revenues would be dedicated to transportation as well as the K-12 and higher education systems.
Unaffiliated Voters in Primary
With an increasing number of voters opting to register as unaffiliated, some believe all voters should have a voice in each phase of the electoral process, including the political party primaries. Under a measure submitted in the last few weeks, any unaffiliated voter would be eligible to vote for any candidate on the day of a primary election for president or any other partisan election. The only restriction would be the voter could only vote on within the Republican or Democrat primary, not both.
With transportation funding and finance the major issue in the 2016 legislative session, complimentary efforts are underway to secure new funding to shore up Colorado’s failing transportation system. Under the leadership of the NCLA, the legislature is positioning to introduce a legislatively referred measure to seek voter approval to issue bonds to accelerate 60+ transportation projects throughout the state, including major expansions of North I-25, I-70 West and South I-25.
Additionally, the road building industry is preparing to submit ballot initiative to ask voters to increase the statewide sales tax by ¾% to raise funds necessary to sustain our transportation system over the long term.
In a year where we may see a record number of ballot questions, ironically, we will likely see a measure to counteract the rush to the ballot to make constitutional changes. The same group pushing for the DeBrucing measure is promoting a measure to reform the ballot initiative process. Crafted to dissuade constitutional amendments, the measure proposes to increase amount of the vote required to pass a constitutional amendment to a 55% majority. It goes further to assure signatures collected to secure position on the ballot are collected from throughout the state by requiring at least 2% of signatures come from each State Senate District.
Under the leadership of Speaker Dickie Lee Hullinghorst, equal pay and family leave will receive considerable attention by House Democrats as a legislative priority for 2016. They have introduced a package of bills this year designed to close the gap between how much women and minorities make compared to men and provide leave opportunities for employees.
All of the bills are expected to pass the House because Democrats have a majority there, their face a more difficult challenge in the Senate where Republicans who hold control of the Senate oppose the proposals. Democrats are expected to make equal pay, family leave and reproductive rights issues central to their election-year campaigns.
The NCLA Board of Directors discussed the legislative package at length at their most recent board meeting and opted to oppose the entire package. The NCLA believes employers consider a variety of factors when deciding pay for their employers and government mandates on private sector pay will only serve to undermine growth and economic opportunities for employees and employers alike.
Last year, Colorado’s Equal Pay Commission was not renewed after it was argued that the commission had produced little or no substantive work in its previous eight years. A bill has been introduced to re-establish the commission in 2016.
A report from the U.S. Bureau of Labor Statistics last year indicated Colorado women make 77.9 percent of what men receive in weekly wages, below the 82.1 percent national gender gap average, proponents argue.
The first bill introduced in the 2016 legislative session, House Bill 16-1001, addressed holding state contractors to an equal pay standard. It was co-sponsored by the entire House Democrat caucus. The measure is modeled after a California law that went into affect on January 1. The bill provides some exceptions, such as seniority, merit and how much work one employee does compared to another.
Another measure would allow employees in all private companies to freely discuss their pay with anyone without retribution from employers, while the final bill would bar employers from asking about pay history in hiring workers.
“When women are earning equal pay for equal work, our entire economy will grow and families will become more secure and have greater opportunities,” Rep. Jesse Danielson, D-Wheat Ridge told The Grand Junction Daily Sentinel. “Equal pay for equal work means breaking down barriers to economic opportunity and financial security. That’s how we grow the middle class.”
“House Democrats live in a world devoid of reality,” countered Kelly Maher, executive director of the right-leaning Compass Colorado in discussing the measures with The Sentinel. “Employers consider a variety of factors when they are deciding pay, including education, experience and quality of work. Taking those factors out of the equation will stifle growth and progress in every sector and industry across the state.”