Letters to the Editor
Proposed reductions in credits and exemptions will stymie economic growth
The Honorable Bill Ritter, Jr.
The Honorable Terrance Carroll
The Honorable Brandon Shaffer
The Honorable Mike May
The Honorable Josh Penry
Over the past several months, we have engaged in discussions with you regarding the importance of a strong economic rebound in Colorado that projects jobs and enhances our competitiveness. We write you today united in our commitment to that overall strategy. We are gravely concerned that proposed reductions in credits and exemptions offered by Governor Ritter, and poised to be introduced in the House today, will have a direct, real and sizeable impact on Coloradans through job loss and stymied economic growth.
Just today, the Colorado Department of Labor and Employment announced the December unemployment rate climbed to 7.5 percent. With that backdrop, we believe it would be irresponsible to reduce investments in areas that directly lead to both protecting and growing Colorado jobs. It must be said: Business activity creates the very source of income that funds government — tax dollars. At a time when these resources are declining, purposefully impacting the funding source is unwise.
It is important to note that we understand, and support, Governor Ritter’s request that discussions regarding the balancing of our state’s budget be a shared sacrifice. We are committed to that discussion and our role – as all of us should be. That said, employers and employees must not be asked to carry a disproportionate burden. Below, we have outlined relevant facts that must be taken into account.
According to a recent study by the National Conference of State Legislatures (NCSL), 82 percent of the current budget proposal is financed by one-time funding sources, meaning that we are identifying short-term solutions and ensuring these debates will continue for a number of years. This approach requires that we consider how the budget is being balanced over multiple years to get a complete picture of where the money is coming from. For example, looking back to last year’s budget balancing cycle, more than $300 million in cash funds — funded primarily by business — were used to fill the gap.
Additionally, it is critical that the size and scope of the insolvency of the Unemployment Insurance Trust Fund (UI Fund) be taken into account in these discussions. Due to the increase in unemployment, Colorado employers will be tasked with solving an unbudgeted $800 million deficit in the fund this year. Unemployment Insurance is funded by the private sector, small and large business alike, and is a responsibility we take seriously. Solving against that large a deficit will be difficult, but is something we are committed to accomplishing.
We believe the UI Fund liability, the historical sweep of business-financed cash funds, increased costs passed along through regulation and mandates form all levels of government, are — and must be — variables in discussions regarding shared sacrifice in balancing Colorado’s budget. Most importantly, we know that many businesses continue to be dangerously close to the tipping point of what employers can continue to balance while keeping their doors open and their workers employed.
Specific to the 13 credits and exemptions soon to be debated by the General Assembly, we have heard concerns from business of varying size and multiple industries regarding the impact to jobs should the measures pass. That said, three continue to be of tremendous universal concern. They include:
— Suspend Exemption for Industrial and Manufacturing Energy Use
— Temporary Limit Corporate Enterprise Zone Investment Tax Credit to $250,000
— Temporarily Limit Net Operating Loss to $250,000
We truly do not believe that you are interested in asking employees to sacrifice their livelihoods and increase their household costs unnecessarily. However, we believe the reductions and removals of these exemptions will do just that, and we ask you to reconsider this strategy.
The organizations signing below have worked with you in the past — in both good and challenging economic times — and we are committed to doing so going forward. That said, we will not waver in our commitment to the hundreds of thousands of Colorado employees we represent. We fear the path you are suggesting impacts their livelihood. We must continue to create jobs in Colorado if we are going to see a meaningful economic recovery — our communities and families cannot afford another year of job loss. Employers and employees are united in this cause. We look forward to further dialogue about these issues and the importance of shared sacrifice and ensuring we are making the best choices to balance this budget.
Kelly J. Brough