Legislation to incentivize businesses to rehire laid-off workers faces opposition

By Marianne Goodland

A bill to incentivize businesses to re-hire their laid-off workers has hit yet another snag in its efforts to move through the General Assembly.

Senate Bill 133, which would provide an income tax incentive to companies that rehire their own laid-off workers, was heard Wednesday by the House Business Affairs and Labor Committee.

The bill is sponsored by the committee’s chair, Rep. Joe Rice, D-Littleton, but even with that support SB 133 faces opposition from both business groups and the Colorado Fiscal Policy Institute, groups who don’t always see eye-to-eye.

Under SB 133, beginning January 1, 2010, businesses that hire workers they laid off in 2009 would get a two-thirds FICA credit for re-hiring those workers through April 30. On May 1, that credit would drop to one-third of the FICA through August 31. The laid-off employee must have worked for the employer for a full year prior to being laid off, and once re-hired, would have to work for that employer for a full year. In addition, the employer would have to sign an affidavit stating that without the credit the employer would not have re-hired the laid-off worker within the time frame specified in the bill.

The bill has had a troubled history since it started in the Senate in February. On February 16, it passed the Senate Business, Labor and Technology Committee on a party-line vote, with opposition from Republicans such as Sen. Ted Harvey, R-Highlands Ranch and Sen. Shawn Mitchell, R-Broomfield, who said the bill was too narrow in its focus and the bill should provide incentives for companies that didn’t lay off workers or for companies that wanted to hire new workers. Those ideas were viewed favorably by the bill’s Senate sponsor, Sen. Rollie Heath, D-Boulder, but he opposed incorporating them into his bill because of the potential for delay. Heath said at the time he would support late bill status for a new measure that incorporated those ideas, an idea favored by committee chair Sen. Lois Tochtrop, D-Thornton. However, Tochtrop told The Colorado Statesman the Republicans on the committee never asked her to write to the senate president on that request.

No one testified either for or against SB 133 in its senate committee hearing; Heath later told The Statesman that none would be needed in the Senate, but he expected House members would need some convincing for it to succeed in that chamber.

The Senate Appropriations Committee amended SB 133 on March 19, extending the timeline for rehiring a laid-off worker to Sept. 30, 2010.

The bill survived a scare in the Senate; it passed second reading on March 25, but on April 5, it was killed on a 17-17 vote, drawing “no” votes from all Republicans and Sen. Morgan Carroll, D-Aurora; Sen. Mary Hodge, D-Brighton; Sen. Moe Keller, D-Wheat Ridge; and Sen. Gail Schwartz, D-Snowmass Village. (Schwartz shares a senate office with Heath.) Schwartz admitted she had made a mistake and then asked for immediate reconsideration of the vote and changed her vote to a “yes,” allowing it to get out of the Senate on an 18-16 vote.

Rice told the committee Wednesday he believed he had the support of the business groups that had initially been opposed, based on an amendment he intended to offer. That amendment would change the year of the layoff from 2009 only to 2008 and 2009. It also would expand the date for rehiring to October 31, 2010. In addition, the amendment would cap the incentive at $5.3 million, close to the bill’s original fiscal note.

SB 133 would provide an incentive to an employer who is already considering rehiring workers, Rice said, and possibly lighten the load on the state’s unemployment insurance fund.

Republicans opposed the bill in the Senate because they did not like the state offering an incentive right after the General Assembly passed bills taking away business tax exemptions. That argument was re-ignited on Wednesday from Rep. David Balmer, R-Centennial, who said he was concerned that the state would use revenues as a tax incentive when the state has other incentives on the books.

Balmer’s reference to the previous fights over tax exemptions drew objections from Committee Vice-Chair Sara Gagliardi, D-Arvada, who twice asked Balmer to stick to the subject of the bill. That drew an angry response from Rep. Amy Stephens, R-Monument, who defended Balmer’s right to express his objections. “This is free speech…it’s disrespectful to cut him off,” she said.

Rep. Larry Liston, R-Colorado Springs, continued the fight. “We’ve already sent a message to businesses” with the exemptions repealed by the state, he said. Liston also questioned whether the tax incentive in SB 133, a two-thirds FICA credit, would be sufficient for companies to re-hire workers. And will the “hoops” that companies have to jump through to get the incentive be worth it? he asked.

Rice responded that if the incentive isn’t worth it and the bill passes, it wouldn’t cost the state anything. But “I think it will help — we’re primarily a small business state,” he said.

But as it turned out, Rice’s support from the business community isn’t yet a reality.

Virginia Morrison Love of the Colorado Competitive Council said her group had voted to oppose SB 133 and had not yet changed its position, although they were awaiting a look at Rice’s amendment. SB 133 in its current form would not provide any economic benefit to the state, she said, calling the incentive “arbitrary…It’s no better or worse for the state for a company to re-hire someone they’ve laid off. The economic benefit is the same.”

Love noted that a company coming out of recession may want to hire people with different skills, and hence the council would like the bill to be more flexible. She also took exception with language in SB 133 that requires an employer to sign an affidavit stating they would not have re-hired the employee as soon but for the incentive. “No employer can say that,” Love said. “You rehire someone because you have work for them.”

Ali Mickelson of the Colorado Fiscal Policy Institute, a progressive think tank, testified that her group also was opposed to SB 133, but for different reasons. The state already has a $1 billion budget deficit and this will add another $2.7 million (based on the most recent fiscal note) to that deficit for the next two years, Mickelson explained.

Rice decided after that to table SB 133 to work out differences with the opposition and immediately huddled with representatives from the Colorado Competitive Council. Action on the bill, including amendments, will be rescheduled for another date.