Business leaders are focused on “three fundamental pillars” this legislative session. As outlined in a recent policy briefing hosted by the Denver Metro Chamber of Commerce for legislative leaders and the Governor, the main issues include health care, education and transportation.
Also of interest to the business community is the issue of privatization of Pinnacol Assurance, a quasi-governmental workers’ compensation provider that enjoys certain tax breaks; reforming the state’s enterprise-zone program; and defending against legislation aimed at additional regulations on the business sector.
Bob Moody, vice president of public affairs and communications for the Denver Metro Chamber, said his organization would once again monitor committee and final third-reading votes to determine how lawmakers align with their interests.
“The Chamber will support efforts that ultimately lead to job creation, critical capital infrastructure investment, promote efforts that support our ability to compete globally and those that protect or enhance the business climate,” said Moody. “We will oppose measures that slow, derail or otherwise impede our economic recovery.”
Education is key
Kelly Brough, president and chief executive of the Denver Metro Chamber, said they are focused on education as a means to stabilize Colorado’s economy. Of immediate concern is a proposal by Rep. Tom Massey, R-Poncha Springs, which would address early literacy in the state. Brough and Massey note that 28 percent of third-graders in Colorado cannot read with any level of proficiency.
“The cost of not graduating kids is much higher than the cost of getting these kids reading and moving through,” Brough said at the legislative briefing.
Massey’s idea is similar to a program that has proven successful in Florida where third-graders there are required to meet state literacy standards before being allowed to enter the fourth grade. If a child is required to repeat the third grade, then they spend as much as 70 percent of their time that next year on literacy.
Massey said his proposal would not focus solely on third-graders, but instead would begin addressing early literacy concerns as early as preschool. The legislation would essentially be a rewrite of the Colorado Basic Literacy Act, requiring intervention and a focus on literacy if a student appears to be struggling. Students could be held back, but Massey said that would only happen as a last resort. He agreed that the issue is part of Colorado’s long-term economic stability.
“We know for a fact that an educated workforce is the strongest economic tool we can put in place, and we have been passing too many kids who are functionally illiterate through the system by way of social promotions,” Massey said.
Business leaders are also carefully watching the implementation of last year’s Senate Bill 191, which created some of the toughest teacher accountability standards in the nation. The Committee on Legal Services on Monday unanimously voted to extend all rules proposed by the Board of Education in November concerning the new legislation.
Tamra Ward, president and chief executive of Colorado Concern, an organization of top executives who have been working closely on business and economic development issues, said the adoption of rules proposed by the Board of Education is a positive step in the right direction.
“It’s good news that the committee took that step,” said Ward. “We will continue to work on the education reform side of the equation, monitoring the 191 process, as well as looking at other legislative proposals for our kids.”
Ward said Colorado Concern is also monitoring the fallout from a recent Denver District Court decision that found that the state’s school finance system violates constitutional funding guarantees and is being underfunded by estimates of more than $4 billion per year. She noted that the case is being appealed by the state, suggesting that lawmakers wait to see how the appeal plays out before rushing to action. But Ward pointed out the dire situation the decision could have on Colorado’s economic future.
“It doesn’t simply impact kids in classrooms, but the entire state because of the sizable amount of resources that would be reallocated under the current budget structure,” she said.
Loren Furman, senior vice president of state and federal relations for the Colorado Association of Commerce & Industry (CACI), agreed that lawmakers should wait to see how the appeals process unfolds, but acknowledged the overwhelming impact the decision could have for the state. She said Colorado might want to examine how other states, such as Florida, handled similar lawsuits.
“Colorado’s budget simply cannot support the funding that the plaintiffs are seeking,” Furman suggested.
Transportation is paramount
Just as business leaders believe prudent investments in education are paramount to Colorado’s economic development efforts, so are investments in transportation. The focal point for the Denver Metro Chamber is on the crippled FasTracks bus and light rail expansion project, which is estimated to be underfunded by $2 billion.
Transportation officials from the Colorado Department of Transportation and the Regional Transportation District are currently examining whether to ask voters to approve new taxes this year in order to complete the FasTracks project. A proposal from CDOT would also use the tax increase to improve crumbling Denver-area roads.
Brough said the Denver Metro Chamber, along with the Colorado Competitive Council (C3), a product of the Chamber that analyzes policy issues affecting the business community, is working closely with lawmakers and transportation officials to figure out a way to complete the project sooner. At the current rate, it wouldn’t be completed until 2042, despite voters being promised in 2004 that the project would be completed by 2017.
The light rail expansion project is critical for Colorado’s economic stability. Brough points out that since the completion of the Transportation Expansion Project (T-REX) in 2006 along Interstates 25 and 225, $6 billion has been invested along the corridor. An additional investment into FasTracks is something the Chamber and C3 are seriously considering, Brough added.
“We’re working hard to analyze what should happen there and what best can we do to bring that system online faster …” she said. “We know this investment has to occur.”
Implementation of the Health Insurance Exchanges
Another “pillar” that business leaders will carefully watch concerns the implementation of the health insurance exchange in Colorado.
The Colorado Health Benefits Exchange Board is currently working to organize the exchange, required by last year’s passage of Senate Bill 200. The exchange would be established similar to how airlines sell tickets online, allowing consumers to compare prices and services in order to find the best, most affordable health insurance.
The last action taken was on Dec. 15 when a legislative committee established to oversee the board approved the application for an $18 million federal grant to plan the build-out of its online system.
“We want to make sure that the business community plays a vital role in that process,” said Jason Dunn, an attorney with the local law firm of Brownstein Hyatt Farber Schreck, P.C. and chairman of C3. “Obviously employers pay considerably for health insurance for their employees at a significant cost and a significant impact to their bottom line. We want to make sure that it’s done effectively and in a way that allows businesses to play an important role in that process.”
Ward said business leaders are pleased so far that they have been brought into the process.
“Trying to ensure that we have a system that meets our own unique needs and that [focuses] on costs,” is essential, Ward said.
Regulatory issues top their agenda
While legislative leaders, for the most part, remain optimistic that partisanship won’t get in the way, members of the business community are anticipating a bitter political climate during this election year. That could be good for regulatory affairs as business leaders will be making sure that lawmakers don’t propose regulatory bills that could derail industry.
In fact, Furman said CACI believes the polarized political climate could mean fewer regulations on businesses.
“It’s going to be a completely defensive year. I think everything that we are going to do this year is either going to be fighting legislation that we think is harmful to business, or it’s going to be about folks trying to hold people accountable to their vote,” said Furman.
John Brackney, president of the South Metro Denver Chamber of Commerce, anticipates that his organization will also have to take a similar approach this year.
“In this polarized political situation we have, with the presidential election especially, it’s going to be hard to have people get the other team to look good,” Brackney said. “Everyone’s natural inclination is going to be to put something on their resume, or sock it to the other guy… this would be a year not to anticipate much action out of the Legislature — that’s generally a good thing — the question is how bloody of a fight is that going to be, and does that add up to more uncertainty?”
Dunn said C3 agrees that election year politics is often a positive thing for the business community.
“We still need to make sure that the Legislature does no harm, but to the extent that politics gums-up the process, sometimes that’s not a bad thing,” he said.
The governor on Monday released a 94-page report outlining “regulatory inefficiencies.” It was based on a six-month “Pits and Peeves” statewide meeting tour.
Hickenlooper said the report would be used to address ineffective regulations, all in an effort to brand Colorado as a pro-business state.
“Good government — leaner, more efficient government with less red tape and being collaborative — is something that we should continue to try to define Colorado by,” Hickenlooper told business leaders.
Sara Cassidy, director of C3, said they are hopeful that the report will lead to fewer rules and regulations for the business community. At the very least, business leaders hope to streamline ineffective policies.
“We’re encouraged that the administration and the Legislature is focusing on making sure that the regulatory environment is a friendly one,” Cassidy said following the governor’s remarks. “We’re just thrilled.”
House Republicans on Jan. 5 unveiled their jobs agenda for the year, much of which also focuses on reducing regulatory burdens faced by businesses. House Speaker Frank McNulty, R-Highlands Ranch, told the Denver Metro Chamber audience that after speaking with business owners across the state, the community should expect Republicans to focus on easing regulations to help businesses create jobs.
“Our direction was absolutely clear… get government out of the way,” said McNulty.
Speaking on behalf of Senate majority Democrats, Sen. Betty Boyd, D-Lakewood, touted an agenda that includes at least a dozen bills, with the centerpiece being Senate Bill 1, which would direct state agencies to give preference to Colorado companies bidding on state government contracts.
“The Legislature can’t create jobs… However, what that Legislature does, among other things, is hopefully create an environment where jobs will be created; where people have the confidence to move forward and invest, and to hire new employees and grow their businesses,” said Boyd.
House Democrats on Monday also unveiled three pieces of legislation aimed at assisting small businesses and developing new technologies in Colorado.
House Minority Leader Mark Ferrandino, D-Denver, stressed that their priority is on job creation through assisting businesses.
“Whether it’s a small mom-and-pop just getting started who could benefit from small business counseling, or a brand new biotechnology or aerospace innovation hatched at one of our exceptional universities ready for market, we are providing assistance to our Colorado companies to create Colorado jobs,” Ferrandino said in a prepared statement.
Cassidy says C3 is in the process of analyzing all of the proposals, and will be working closely with lawmakers in the weeks ahead to determine if the policies make sense for Colorado and its business community.
“We’re going to review all of the bills we’re seeing drafted now, and we appreciate that early drafts have been shared with us,” Cassidy said. “As things get introduced formally, we’ll weigh in. I think we have similar goals, we just may have different ideas on how to get there and how to achieve them.”
Privatizing Pinnacol Assurance
One of the core issues that the business community will be focusing on this year is the attempted privatization of Pinnacol Assurance. Lawmakers have for the past two years been looking at its restructuring, a conversation that surfaced again in 2009 when the Legislature considered raiding $500 million from Pinnacol’s reserves to cover a budget shortfall at the time.
Hickenlooper convened a task force in November to begin review of a proposal, supported by Pinnacol, that would turn the agency into a privately held mutual company owned by its policyholders. The state would be granted a 40 percent stake, worth about $340 million. Hickenlooper supports the proposal because it would pay Colorado an estimated $13.6 million in dividends each year — money that would be used for education and economic development. Pinnacol would have the right to make its stock public in the future, and to sell its mutual insurance in other states.
But business leaders are wary that any restructuring of Pinnacol could result in increased costs to them across the state. The community is carefully awaiting results from the Pinnacol task force in order to make an informed decision.
“Pinnacol has been operating very effectively and very efficiently on behalf of good employers,” said Furman. “We are really learning about what it means to privatize the company, and if there are any additional costs to employers.”
South Metro Denver Chamber of Commerce president Brackney is also raising concerns about additional costs to business owners as a result of privatizing Pinnacol.
“Colorado has had the lowest workers’ compensation rates in the nation, anything that would add to the rising cost of workers’ compensation rates we have great concerns about,” he said.
Tony Gagliardi, state director of the National Federation of Independent Busines, said his organization is concerned about the impact privatization could have on small business owners. He says lawmakers should not rush to restructure the insurance provider before first receiving feedback from the task force.
“We do not want to see changes to reforms already in place coming into play,” he said.
Reforming enterprise-zone program
Business leaders also appear cautious about reforming the state’s $60 million’s enterprise zone program, which provides tax credits to businesses within designated distressed enterprise zones.
Rep. Dickey Lee Hullinghorst, D-Boulder, along with Ferrandino have proposed reforming the program after reports surfaced that businesses claiming credits within the zones were still cutting jobs. Lawmakers may call for a review of the zones every five years to ensure that they are still covering areas in need.
Another proposal could permanently cap the enterprise-zone tax credits at $250,000. Hullinghorst attempted to cap the credits in 2010, but pushed the upper limit to $500,000 in order to get her legislation passed.
Ferrandino believes it is still important to provide incentives in distressed areas of the state, but simply wants to ensure that the incentives are being distributed appropriately.
“We want to use these incentives to create jobs and to spur the economy, so we need to figure out how to get the best return on our investment,” he said. “Right now, I don’t think the enterprise zones are necessarily giving out the highest return on our investment.”
But CACI’s Furman cautioned against any drastic change, noting that businesses and the economy benefit from the program. She is especially concerned about setting the cap at $250,000.
“Clearly there could be some conversations about the program,” said Furman. “But trying to create some kind of cap is going to create a lot of problems for some folks.”