Harsh words, bitter battles surround tax exemption bills
By Marianne Goodland
The package of tax exemption and income tax repeals that have been the cause of so much acrimony in the General Assembly is on its way to Gov. Bill Ritter for signing. But the last day for eight of the nine bills, dealing with concurrence on Senate amendments in the House, was a repeat of the harsh words and bitter battles that have characterized the bills in the past three weeks.
Nine of the 12 original bills in the package have now gotten full legislative approval. Eight of the bills were amended in the Senate last week and required House approval; all eight got that approval and were re-passed Tuesday. The nine now head to Gov. Bill Ritter for signing.
The bills on their way to Ritter are:
• HB 1189, on eliminating exemptions for state sales and use tax on cooperative direct mail;
• HB 1190, suspending the exemption on industrial fuels sales and use taxes;
• HB 1191, eliminating the candy and soda sales tax exemption;
• HB 1192, including standardized software in the definition of tangible personal property and applying the state sales and use taxes to those purchases;
• HB 1193, requiring out-of-state retailers to collect and remit state sales and use taxes;
• HB 1194, eliminating the state sales and use tax exemption for non-food items used by restaurants;
• HB 1195, suspending the state sales and use tax exemptions for certain agricultural products;
• HB 1196, eliminating the income tax exemption for purchase of vehicles that use alternative fuels; and
• HB 1199, placing a temporary limit on income tax credits for net operating losses.
Also in the package but not yet done: HB 1197, which passed the House, 37-27, on Feb. 12 and is awaiting action from the Senate. HB 1200, on enterprise zone credits, has not yet begun its trip through the House and is awaiting first action from the House Appropriations Committee. Its senate sponsor, Sen. Rollie Heath, D-Boulder, told The Statesman this week that a companion bill, SB 162, is scheduled for first hearing in the Senate Finance Committee on Feb. 18 and he wanted to see that bill move through the process before the House took action on HB 1200.
Most of the bills passed with little or no discussion, and got the same or nearly the same votes as they had when the bills went through the House during the first week of February. Republicans voted exactly the same on all of the bills — against — as they had previously.
But the fireworks that characterized the House’s earlier debates on the bills came back on Tuesday. It started with HB 1190, when Republicans read off a laundry list of businesses that would be affected by the bill. The list included Intel of Colorado Springs, which closed its computer chip manufacturing facility in 2007. Rep. Kent Lambert, R-Colorado Springs, later explained that a similar bill passed by the General Assembly had affected that business.
But Rep. Jack Pommer, D-Boulder, who sponsored most of the bills, said he was well familiar with Intel’s situation. Pommer said the city of Colorado Springs had used a state law to say that Intel would never have to pay property taxes. As a result, “every school district in the state paid Intel’s taxes,” Pommer said, angrily. In addition, he said Intel broke an agreement that said it would hire a certain number of workers and only hired half of those agreed to, and still got $1 million per year in tax breaks. “We wasted millions of dollars luring Intel here,” Pommer said.
“That’s the danger when we get into subsidizing businesses. Businesses don’t care about Colorado. They care about their own profits, they’ll get as much money as they possibly can out of us and leave when it suits them. Let’s ask Intel to pay the money they took under false premises. They ripped off the school children of Colorado.”
Pommer’s outburst drew similarly angry comments from Republicans. Rep. Cory Gardner, R-Yuma, pointed out his grandfather had started a farm implement business and “I guarantee you he cares about Colorado.” Rep. Cheri Gerou, R-Evergreen, said she had been at the House Finance Committee hearings crowded by business owners who cared about Colorado. “I can’t apologize for Rep. Pommer but I do apologize to those companies,” she said.
Democrats came forward after the outburst to defend the bill. Only 15 states give this type of exemption, said Rep. Dickey Lee Hullinghorst, D-Niwot, and cited a study that said that tax incentives and policies designed to promote economic development don’t work. “They just cost the taxpayers money,” she said, reading from the study. The study Hullinghorst cited is from Financing State and Local Economic Development, which was published in 1983.
Democrats also cited the need for the bills to minimize the impact of more budget cuts to schools and the state’s growing inability to provide a safety net for the neediest citizens.
Tempers flared over again when the House debated Senate amendments to HB 1193, the bill requiring out-of-state retailers to collect and remit state sales and use tax. Rep. Amy Stephens, R-Monument, first asked that the House reject the Senate amendments and send the bill to a conference committee, and stated the bill was hostile to Colorado businesses. That prompted Pommer to remind Stephens that the House had spent many long hours debating every aspect of the bill and that the bill corrects a huge disadvantage for Colorado businesses. “This is a huge advantage to out of state retailers” who don’t have to collect state sales taxes and that puts Colorado businesses out of business as well as their employees, Pommer explained.
When Stephens asked Pommer again to explain why the bill should not go to conference committee, Pommer said she should not have any trouble understanding the amendments, adding “I don’t have time for remedial bill reading. I have to get this bill passed.” Stephens exploded, stating Pommer’s comments were “absolutely rude and uncalled for.” Speaker Terrance Carroll warned both Stephens and Pommer to behave, stating he was ready to send them both to time-out.
The rest of the bills passed with little fanfare and even a joke or two.
Seven of the nine bills that deal with repealing tax exemptions have implementation dates of March 1; the income tax bills apply to tax filings beginning with the 2010 calendar year but go into effect upon signature of the governor.
The battles continued Wednesday, when the House took up bills covering supplemental appropriations for state agencies for 2009-10. The bills reduce state agency appropriations totaling about $474.5 million in general funds for the 2009-10 budget. Normally, the bills pass with little discussion, but House members on both sides of the aisle spent much of Wednesday trying to find ways to further cut the budget or find money to mitigate other cuts.