Steadman and Ferrandino: Bring back tax amnesty

The Colorado Statesman

Two Colorado lawmakers Wednesday said bringing back a 2003 tax amnesty idea, while not original, is creative and could bring in $15 million for K-12 education.

Senate Bill 11-184 was introduced earlier in the day, sponsored by Joint Budget Committee members Sen. Pat Steadman, D-Denver, and Rep. Mark Ferrandino, D-Denver.

The proposal under SB 184 would create a 60-day tax amnesty program, beginning August 1 and ending September 30. Anyone who owed delinquent taxes through Dec. 31, 2010 could pay what they owe and any penalties would be waived. Any interest on those taxes would have to be paid, but the interest would be reduced by half.

Taxpayers also could set up installment agreements to pay off the taxes. According to Steadman, a conservative estimate provided by the Legislative Council said the bill could generate $15 million.

The bill also contains an accountability piece — a report that directs state agencies to show how taxes are spent, to be available on the Department of Revenue’s website.

Once collected, the money would be used for several purposes: to pay for the cost of marketing the amnesty program to the public, to cover the costs of the report, which could be around $300,000; and the rest would go to the State Education Fund to backfill cuts to K-12 education, beginning January 1, 2012. Steadman said at least some of those funds should be available in time for the Joint Budget Committee to appropriate them through the supplemental bill process.

Taxes are not always the most popular topic these days, Steadman told reporters in a Wednesday press conference. But he said he hopes SB 184 will find bipartisan support at the Capitol.

Steadman explained that the 2003 General Assembly had a similar bill, sponsored by JBC members Sen. Ron Teck, R-Grand Junction, and Rep. Tom Plant, D-Nederland. Initial estimates said the amnesty program would bring in $3 million to $4 million; instead, the state got $20 million.

“It’s not hard to imagine that there are probably quite a few taxpayers in this economy who have fallen behind” in meeting their tax obligations, Steadman said. “Maybe this isn’t the best time to catch up, but the state needs the revenue.” It’s an innovative bill, he said, and packaged in a way so that there’s “a lot to like.”

Ferrandino spoke about the transparency piece, a subject that he’s already dealt with once this session. Last week, the House Finance Committee killed a similar bill, House Bill 11-1104, sponsored by Ferrandino and Steadman. The bill’s demise was based on Republican concerns about its cost and how it would be implemented. SB 184 covers its own costs through the taxes collected in the amnesty program, Ferrandino pointed out.

Steadman, who chairs the Senate Appropriations Committee, said the bill also addresses a request made two weeks ago by Senate President Brandon Shaffer to Senate committee chairs, asking them to find additional savings in the departments they oversee. Shaffer’s intent was to use those additional savings to mitigate the cuts to K-12 education, and the deadline for reports from the committee chairs is Monday, March 7.

The bill lists a number of Democratic co-sponsors in the House and Senate, but no Republicans. While the 2003 effort was drafted by a Republican and Democrat and was a JBC-sponsored bill, Steadman said the current JBC is “busy balancing the budget and introducing bills,” and that he wanted to get this bill out now instead of waiting. SB 184 should be able to clear the Senate; it already has 13 Democratic co-sponsors. The Republican-controlled House is another matter, and Steadman said he did not know if the Republicans on the JBC had taken a position on the issue.

Fellow JBC members Reps. Jon Becker, R-Fort Morgan, and Cheri Gerou, R-Evergreen, both found things in the bill to like and things that may need rethinking.

Gerou told The Colorado Statesman Wednesday that she “loved the first idea” and would have an open mind regarding the tax reporting part. “I’m really pleased to see people thinking this way,” she said. As to putting the revenue into the State Education Fund, “that may not be a deal-breaker for me. The situation we’re in right now with the State Education Fund is not great” and she pointed out the SEF faces a $700 million shortfall in 2012-13. “It makes you wonder just how many good ideas we’re missing,” she said.

Becker was less thrilled with the reporting part and is not a fan of directing the appropriation, either. “I think if it gives people a chance to pay their back taxes with reduced or no penalties, it’s a good idea,” he told The Statesman Wednesday. However, “if we get that money, it should logically head into the General Fund and [we would] decide the most appropriate place to put it rather than designating it right away in the bill. Even though our tough decisions on K-12 definitely put them at a disadvantage for their financial needs, we should have those discussions and not put it through on a bill, which is what the JBC is all about.”