CACI to Legislature: Toss these eight bills

(Editor’s note: This is a letter sent by CACI President Chuck Berry to Senate President Brandon Shaffer (D-Longmont), Senate Minority Leader Josh Penry (R-Grand Junction), House Speaker Terrance Carroll (D-Denver) and House Minority Leader Mike May (R-Parker)-urging them to oppose eight bills that CACI deems harmful to the state’s business climate.)

On behalf of the Board of Directors of the Colorado Association of Commerce and Industry (CACI), I am writing you to express CACI’s concerns with eight bills that we view as harmful to Colorado’s business climate.

Two of these bills will increase business taxes while the other six will add more costs to the bottom line for firms with unnecessary mandates in such areas as economic development incentives, workers’ compensation insurance, taxation, health insurance and employment law.

Earlier this session, the legislature increased businesses taxes as Colorado companies are struggling to emerge from the economic recession. In February, the legislature approved, and Gov. Bill Ritter signed into law, nine bills that increase taxes on businesses by $231.3 million for the 28 months beginning March 1, 2010.

Two bills of particular concern are scheduled for a vote tomorrow in the House Finance Committee. If enacted, these bills would severely damage Colorado’s economic development efforts to recruit new companies to our state and to retain the ones that are here now.

The first bill is HB-1396, sponsored by Rep. Joel Judd, Chair of the House Finance Committee. This bill would eliminate Colorado’s enterprise-zone tax credits, thus eliminating the most important tool used by state and local economic development officials.

HB-1396 is opposed not only by CACI but by numerous companies, local chambers of commerce and local economic development organizations. This bill would increase taxes on businesses located in enterprise zones by $37.4 million in fiscal year 2010-2011 and by $77 million in fiscal year 2011-2012 for a total of $114.4 million over the two fiscal years.

It is often stated that Colorado has relatively few tools in its economic-development toolbox when compared to the other states, including those that surround us and are our most important competitors in the competitive struggle for jobs and economic growth. HB-1396 takes aim at one of the most important economic development tools that Colorado possesses.

The second bill is HB-1200, which caps the enterprise-zone investment tax credit at $250,000 per taxpayer for income tax years beginning 2011 through 2013 and requires the taxpayer to defer claiming any amount above $250,000 to tax year 2014. If the taxpayer has to defer credit exceeding $250,000, the bill allows the taxpayer to carry the credit forward for 12 income-tax years after the year that the credit was allowed plus an additional year for the years that the taxpayer could not take the credit above $250,000.

Currently, any depreciable equipment purchased and used within an enterprise zone is eligible for a three percent tax credit. The credit may be used up to $5,000 of the taxpayer’s tax liability plus fifty percent of the taxpayer’s liability above $5,000.

Here are CACI’s major concerns with the HB-1200:

  • Because HB-1200 caps the enterprise zone credit at $250,000, it will hurt companies that invest millions of dollars in equipment to operate their business
  • If this legislation is adopted, the unfortunate, likely result will be that companies will not invest in new equipment until the full credit is available again in three years
  • By capping this credit at $250,000 for three years, companies may either be discouraged from locating in Colorado until the full credit is available or will look to locate and invest in other states that offer a higher enterprise-zone credit.

In addition to these proposals, I also want to call your attention to the following six currently pending bills that CACI believes will be harmful to the state’s business climate:

SB-12 (Violations of the Workers’ Compensation Laws)
SB-76 (Unreasonable Insurance Claims Practices)
HB-1269 (Employment Discrimination)
HB-1012 (Workers’ Compensation Surveillance)
HB-1350 (Economic Development Incentives)
HB-1263 (Limit Deductions on Compensation)

In general, laws that mandate restrictions on businesses in the labor-and-employment and health-care areas, simply drive up the cost of doing business in Colorado for companies and make our state less competitive with other states.

In conclusion, CACI urges you to focus on policies that encourage job retention–sustaining the private-sector jobs we have now–and lay the groundwork for Colorado’s economic recovery where we will be restoring lost jobs and creating new jobs for our workforce.

On behalf of business leaders across the state, we urge you to make sure that the bills that I have listed above do not become law and cause significant damage to our state’s business climate.

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