Gov. Ritter offers state version of stimulus package
By Chris Bragg
Gov. Bill Ritter on Thursday offered his fixes to economic problems that were spawned on Wall Street but are now hitting home in Colorado, including the credit crunch and rising unemployment.
“We will be better than many other states,” Ritter said, “but we will not avoid the effects of the economic downturn.”
To buffer against job losses, Ritter proposed a tax credit for businesses that create at least 20 jobs. And, to increase access to capital for small businesses, Ritter proposed revitalizing the dormant Colorado Credit Reserve Program.
At a Capitol press conference, Ritter laid out a four-point economic agenda for the upcoming legislative session. Some Republicans, however, termed Ritter’s plan “token gestures” that would take scarce money from other areas with greater needs.
Sen.-elect Mark Scheffel, R-Parker, said the $5 million that Ritter wants to spend on expanding credit for businesses, for instance, would be better used on Scheffel’s proposal to cut taxes on business.
“What we are proposing simply is better bang for a very limited amount of bucks,” Scheffel said.
Ritter’s proposal to expand credit for small businesses would restore funding for the Colorado Credit Reserve, a program put on hold in 2006 due to a lack of funding. Under Ritter’s plan, during each of the next two years the state would put $2.5 million into the government reserve.
The government would then pump money from the fund into a reserve held at private banks, with the government’s financial backing lessening the default risk for the banks. Banks would then make small business loans of up to $500,000 backed by the reserves.
“That credit-accessing tool can really be the difference between the borrower’s ability to access capital or not,” said Jaime Gomez, director of commercial lending for the Colorado Housing and Finance Authority, which had overseen the program.
The initial $2.5 million in state money, according to Ritter, could be leveraged into $50 million in loans to businesses.
“I’ve been listening to small businesses owners,” Ritter said. “And this is something they desperately need.”
Meanwhile, the Colorado Office of Economic Development would administer the tax credit to businesses creating 20 or more new jobs. In order for a business to be eligible, the jobs it creates would have to exist for at least one year and it would have to pay at least 110 percent of the average wage in its home county.
In return, the business would receive a tax credit of up to 50 percent on federal insurance taxes for new employees.
Ritter said the proposal would not ultimately increase state spending because the increased tax revenue created by the new jobs would more than pay for the tax credit.
Don Elliman, director of the Governor’s Office of Economic Development, said Colorado was in fierce financial competition with other states, and that, while the state is strong in some ways — having an educated work force, for example — the “inventive money would be the last piece of the puzzle.”
“I greatly look forward to the day when I have that tool in my toolbox,” Elliman said.
During the press conference, Ritter also laid out proposals for new investments in the Colorado Clean Energy Fund — which promotes “green” companies — and the expansion of work force training programs at community colleges.
Sen. Greg Brophy, R-Wray, however, said increased funding for the renewable energy programs unwisely promotes Ritter’s pet projects.
“How is the governor going to pay for these energy programs when he’s been talking about a 2 percent cut across the board in state spending, including in higher education, and when his oil and gas rules have been sending energy companies running for Colorado’s borders?” Brophy said.
As for the political viability of the proposals, Ritter said “people that come from both sides of the aisle” supported them.
That statement would seem to ring true, judging by the diverse coalition of business groups — including the Economic Development Council of Colorado, the Colorado Association of Commerce and Industry, Colorado Concern, the South Metro Denver Chamber of Commerce and the Colorado Springs Economic Development Council — that have already signed onto Ritter’s plan. And so has one Republican — Rep. Don Marostica, R-Loveland — who has agreed to co-sponsor Ritter’s bill and sits on the powerful Joint Budget Committee.