2012 Legislative Wrap-up
Legislators get down to business with a package of bills
The Colorado Statesman
Of the dozens of bills sent to the governor by the Legislature this year, at least eight specifically addressed burdens faced by businesses in the state, including taxes, rules, fines and fees, while also simplifying business filings and reducing insurance costs.
On June 6, Hickenlooper signed one of the centerpieces of business legislation, a measure that seeks to limit state agency fines. House Bill 1119, sponsored by Rep. Don Coram, R-Montrose, and Sens. Angela Giron, D-Pueblo, and Steve King, R-Grand Junction, creates a temporary moratorium on fines imposed by the Colorado Department of Public Health and Environment on construction contractors in instances of minor violations associated with storm water discharges.
The Stopping Unnecessary Costs and Creating Economic Sustainability for Small Business (SUCCESS) Act states that the fine can only be imposed if a contractor fails to cure the minor infraction within a “reasonable time as determined by the division.” The temporary prohibition prevents the CDPHE from issuing a fine for small inspection-related violations and paperwork violations.
“It becomes increasingly expensive when business owners must pay fines for inspection related or paperwork violations that do not harm or threaten public safety,” Coram said following the bill signing. “This law helps eliminate adversarial behavior by government regulators towards Colorado’s job creators and works to accelerate Colorado’s economic recovery.”
Republicans had touted the bill as being part of their business-friendly agenda for the year, developing the legislation after a statewide tour last year in which lawmakers spoke with business owners about issues they are facing.
Another issue of concern to business owners is having input on proposed rules and fees. The legislature passed House Bill 1008, which requires state departments to work with all stakeholders when crafting new rules and fees.
The governor signed the bill on May 17.
HB 1008, sponsored by Rep. Cindy Acree, R-Aurora, and Sen. Cheri Jahn, D-Wheat Ridge, requires state agencies to notify interested parties of new fee or penalty increases, as well as publish regulatory agendas for the year and report to legislative oversight committees.
“This law will help prevent damaging rules by affording business owners and working individuals more participation in the rulemaking process,” Acree said. “By bringing stakeholders into the regulatory process, we ensure against poor policy decisions that could cost our state jobs and derail our economic recovery.”
Relief from fees and taxes
Sen. Mark Scheffel, R-Parker, believes removing onerous fees and taxes will help drive the economy out of the downturn, so he set out to phase out the business personal property tax this year.
Hickenlooper signed Scheffel’s House Bill 1029 on March 24. The bill is sponsored along with Rep. Chris Holbert, also a Republican from Parker. It takes effect on Aug. 8.
The measure reduces the business personal property tax by offering an exemption to relocating or expanding businesses.
The tax is assessed on every piece of equipment used by a business, and is considered by the business community to be one of the most burdensome in the state.
“It offers a significant relief to businesses who are looking to grow their businesses, new businesses, and invest in a community,” said Scheffel. “It’s another tool for local jurisdictions and counties to use in trying to attract business.”
Scheffel, who for years has been working to completely phase out the tax, says he believes HB 1029 offers the momentum to eliminate it.
“My hope is that when people see the benefit of this incremental step, that it will serve as a spring board for additional steps to phase out the tax completely,” he said.
The bill, sponsored by Reps. Larry Liston, R-Colorado Springs, and Dan Pabon, D-Denver, and Sen. Cheri Jahn, D-Wheat Ridge, allows employers to receive credit within their individual accounts for repayment of principal-related unemployment insurance bonding requirements.
The measure was saved as House Bill 1002 in the special session, signed by the governor on June 8, and takes effect on Aug. 8.
Lawmakers were forced to resurrect the measure after House Republican leadership allowed 30 bills to die on the calendar in an effort to kill same-sex civil unions legislation in the last hours of the regular session.
The legislation aims to return the Colorado Unemployment Insurance Trust Fund to solvency by ending a cycle in which the state borrows from the federal government to keep the fund solvent. It is anticipated that the measure will save employers about $40-$50 per employee by crediting their bond repayments to their experience rating, thereby lowering their taxes.
“We can save our state’s job creators tens of millions of dollars within a couple of years,” said Liston, who had the support of the business community, including the Colorado Competitive Council, the legislative arm of the Denver Metro Chamber of Commerce.
“Rep. Liston’s bill ensures the UI trust fund will remain sound and solvent in the most efficient way possible for Colorado’s employers,” said Travis Berry, a lobbyist for the Colorado Competitive Council.
A bipartisan group of lawmakers also tackled unemployment insurance from the workers side of the issue, promoting job skills training for the unemployed.
House Bill 1272, sponsored by Reps. Crisanta Duran, D-Denver, and Robert Ramirez, R-Westminster, and Sen. Linda Newell, D-Littleton, will extend the state’s enhanced unemployment benefits program into 2014. Through the program, claimants can receive up to 50 percent more on their weekly payment for up to 20 weeks if they are enrolled in an approved training program.
“This law will create new employment opportunities for Coloradans across the state,” said Ramirez. “It puts people back on their feet while they advance their career through apprenticeships or unpaid internships.”
Streamlining filings for businesses
Lawmakers also believe that helping businesses spend less time on paperwork and business filings stimulates the economy and creates jobs. To that effect, the legislature sent to Hickenlooper a bill that streamlines the secretary of state’s online business filing system.
Senate Bill 123, signed by the governor on May 11, uses existing revenues to make upgrades to the system. Sen. Scott Renfroe, R-Greeley, and Rep. J. Paul Brown, R-Ignacio, sponsored it.
Secretary of State Scott Gessler’s office believes the bill will save businesses $1 million per year once all the upgrades are complete.
“It makes sense for the state to cut down on the amount of time businesses have to spend filing paperwork so they can focus on growing their businesses and creating jobs,” Renfroe said after the bill signing. “Secretary Gessler’s plan to improve service to the business community without increasing fees is an example of how government should operate.”
The new system will allow businesses to pay for all of their filings at the same time and file multiple records at the same time.
The bill has already taken effect, but the secretary of state’s office must still make the enhancements.
“The business efficiency suite will keep Colorado at the cutting edge of business administration,” said Gessler. “It will allow us to continue putting services online, creating efficiency for our customers and our office, all while maintaining some of the lowest fees in the country.”
On June 4, Hickenlooper signed a bill that aims to add certainty to the business filing application process.
House Bill 1002, sponsored by Rep. Jerry Sonnenberg, R-Sterling, and Jahn, requires that rules governing an application filed with a state agency stay in place for the duration of the application’s review.
Sponsors introduced the bill after receiving complaints that rules can change after an application is filed, forcing applicants to withdraw their original filing and submit a new one.
The bill takes effect on Aug. 8.
Called the Creating Level Expectations for Application Review (CLEAR) Act, Sonnenberg pointed out that the bill was part of a broader package of bills set forth under the House Republicans’ agenda to cut bureaucracy for Colorado citizens and businesses.
“This new law is a direct result of House Republicans’ efforts to listen to the concerns of Colorado’s jobs creators and address their needs,” he said. “The more stable regulatory environment this law creates will help ensure government is working with — not against — employers.”
Business leaders also praised the bill. Loren Furman, senior vice president of state and federal relations for the Colorado Association of Commerce and Industry, said the bill helps businesses comply with usually complicated rules and regulations.
“This new law helps keep government honest and consistent,” she said. “It removes the burdens businesses must bear when application rules change midstream.”
One last piece of legislation aimed at streamlining online filings is House Bill 1274, sponsored by Rep. Keith Swerdfeger, R-Pueblo West, and Jahn. The bill allows notaries public to register online.
The measure was signed on May 24 and takes effect on Aug. 8.
Focusing on specific industries
Lawmakers also took a look at specific industries, passing laws to assist the service industry, fleet operators, farmers, tow carriers and businesses utilizing beetle-kill.
A bill that gives cottage bakers and other home industry food producers a greater ability to sell their goods to consumers received much of the attention.
Senate Bill 48, sponsored by Sen. Gail Schwartz, D-Snowmass Village, and Coram, allows cottage bakers to sell to consumers non-hazardous foods, which are low in moisture and may be maintained at room temperature with minimal risk of spoiling. Producers must be certified in safe food handling and sell their food directly to consumers, such as through a farmers market, a roadside stand or from home.
“The passage of this legislation is so important to the economic success of our small farmers and producers…” Schwartz said just before the bill was signed on March 15.
“This law affords Colorado families and rural areas of the state a real opportunity for job creation,” Coram said after the bill signing. “Now, families with a passion for cooking can do what they love and legitimately sell their creations to food enthusiasts across the state.”
The hotel industry also received some help after Hickenlooper signed Senate Bill 118 on May 24, sponsored by Sen. Jean White, R-Hayden, and Acree, which repeals the requirement that an establishment with a hotel and restaurant alcohol license must make at least 25 percent of its gross income from the sale of meals.
The bill takes effect on Aug. 8.
Senate Bill 1, sponsored by Senate Minority Leader Bill Cadman, R-Colorado Springs, and Reps. Kevin Priola, R-Henderson, and Laura Bradford, R-Colbran, changes the registration procedures for special mobile machinery fleets to allow owners of 10 or more pieces of rental mobile equipment to register their entire fleet at the same time once per year.
The bill was another measure to come out of the special session. It was signed on June 8.
House Bill 1037, sponsored by Rep. Jon Becker, R-Fort Morgan, and Sen. Lois Tochtrop, D-Thornton, takes aim at the agricultural industry, cutting taxes for producers by reclassifying the sale of certain products as wholesale instead of retail, thereby making them no longer subject to sales tax.
The bill was signed on June 4. It takes effect on July 1.
“This law keeps money in the pockets of our state’s ag-producers,” said Becker. “Taxing key components of agricultural production is wrong and works against helping these job creators grow their business.”
He explained that most retail sales tax applies to finished goods sold directly to consumers, but that agricultural businesses often produce goods like livestock feed, pesticide and semen to produce final goods like a crop of wheat or calves.
“Colorado has to free our state’s employers from over-taxation if we want to see a real and sustainable economic recovery,” continued Becker. “This is one more mile marker House Republicans have made in creating a stable environment for job creation and economic opportunity.”
House Bill 1327, sponsored by Coram and King, and Sen. Ellen Roberts, R-Durango, removed the surety bond requirement for tow carriers in Colorado. The measure aims to save small operators from expensive bonding requirements that forced some to shut down.
The bill was signed on May 24. Many of the changes take effect in 2013.
“This new law will save hundreds of jobs and ensure that services like accident clearing and traffic assistance aren’t lost in rural areas of the state,” said Coram. “These jobs provide critical services to anyone traveling through Colorado.”
The new law replaces the bond requirement with lower annual fees and authorizes the Public Utilities Commission to conduct safety inspections on towing operators.
The measure comes after 50 tow carriers were forced to close last year because they could not pay for the $50,000 bond requirement.
“This law is a perfect example of how government must work to understand the policies that hamper business…” added Coram.
House Bill 1045, sponsored by Bradford and King, extends a tax exemption on the sale of beetle-kill wood products. The current tax exemption is set to expire on July 1, 2013, but HB 1045 extends it to July 1, 2020. The measure also expands the exemption to include spruce beetle-kill wood products.
The bill was signed on May 21.
“Removing beetle-kill trees is absolutely crucial to the health of our forests,” said Bradford. “This law encourages market-based solutions to help protect rural communities from the danger of forest fire and prevent our water supply from further deteriorating.”
Planning business investments for the future
Lawmakers this year weren’t just dealing with current business issues, they were also planning for the future, crafting laws that position Colorado to attract both the film and commercial space flight industries.
House Bill 1286, sponsored by Rep. Tom Massey, R-Poncha Springs, and House Minority Leader Mark Ferrandino, D-Denver, and Newell and White, creates a loan guarantee program for film production activities and increases the existing film incentive from a 10 percent rebate on production costs to 20 percent.
Hickenlooper signed the bill on May 18 at High Noon Entertainment in Denver, one of the nation’s largest television entertainment companies. It takes effect on July 1.
“They said this couldn’t be done, but here we are,” said Newell. “This legislation brought us together as Republicans and Democrats, urban, suburban and rural to show our solidarity and belief in our dream to recognize and recapture film jobs in Colorado.”
Colorado is considered a desirable state for film production with its vast landscapes and diverse scenes, but for years the state’s film incentives have been unable to compete with neighboring states.
Under the new law, expenditures for in-state companies must be at least $100,000 and out-of-state companies must spend at least $1 million to qualify for the incentive program. Also, Colorado residents must fill 50 percent of jobs created, an increase over the existing 25 percent requirement.
State film officials praised the bill’s success. “This bill is so important for Colorado’s content creation industry,” said Donald Zuckerman, director of the Colorado Office of Film, Television and Media. “Content creation is one of America’s fastest growing industries and one of its greatest exports.”
Senate Bill 35, sponsored by Sen. Mary Hodge, D-Brighton, and Rep. Bob Gardner, R-Colorado Springs, paves the way for the growing commercial spaceflight industry.
The measure creates the required limited liability statute that will shield commercial flight companies from lawsuits not based on negligence or intentional wrongdoing. The measure aims to further establish Colorado as a leader in the aerospace industry and make the state more competitive in the development of commercial space flight.
The bill was signed on April 19. It takes effect on Aug. 8.
Colorado is already home to 400 space-related companies that provide high-paying jobs. The industry is estimated to generate $3 billion in annual payroll for Colorado workers.
In December, Hickenlooper announced that Colorado was seeking an official “spaceport” designation from the Federal Aviation Administration. SB 35 will ready Colorado for the designation.
“The aerospace industry has been an economic driver and job creator for Colorado and the future of this industry looks bright,” said Hodge. “This bill allows us to take the first crucial steps towards removing current barriers and making our state a spaceport state, and I’m pleased to see this bill signed into law today.”
“The space industry is a significant contributor to the Colorado economy,” added Gardner. “Companies and individuals that create space-related employment should be granted some degree of protection given the inherent dangers of spaceflight activities.”
The first to benefit from the so-called Colorado Aerospace Jobs Act may be the Front Range Airport in Adams County, which is located six miles from Denver International Airport. Front Range Airport is working on developing a space-plane program in which suborbital planes fly on the edge of space, and can transport cargo and passengers across the globe in as little as two hours.
“The concept of Front Range Airport as a spaceport was introduced to us less than six months ago, and we have been highly motivated by the possibilities,” said Dennis Heap, Front Range Airport aviation director. “Colorado needs good jobs and sustaining economic growth. Spaceport designation is very important, but it is just a catalyst to enrich the already robust aerospace industry of Colorado.”
Enterprise zone reform
Hickenlooper also signed a bill on June 6 that Democrats had been touting as part of their jobs package for the year, a measure that brings reform to the state’s enterprise zone program.
House Bill 1241, sponsored by Ferrandino and Sen. Rollie Heath, D-Boulder, creates a task force to recommend changes to the $60 million enterprise zone program, which provides tax credits to businesses within designated distressed enterprise zones.
After reports surfaced that businesses were cutting jobs, yet still claiming the credit, Ferrandino decided to start the process of reforming the program.
“All the evidence shows that when the program was started and what the program is doing now is not aligned, and we need to review how it’s being used in the state, making sure that taxpayers are getting the best bang for their buck,” said Ferrandino.
He believes the bill can be considered a job creation measure because after the review, the hope is to provide incentives in truly distressed areas of the state, while ensuring that jobs are being created, not lost.
“All we want to do is find ways to help and improve our economy and create jobs, and if we can reform this program in a way that gives it a better bang for its buck, we’ll be able to improve the economy in a way that also helps save taxpayers dollars and ensure that we’re getting the return on investment.”