Gov. Jared Polis, in his state of the state address on Jan. 9, continued to voice support for the concept of an income tax rate reduction, but it isn’t going over well with Democrats in the state legislature.

And they showed that on Wednesday, when Democrats on the Senate State, Veterans and Military Affairs Committee put to an end Senate Bill 20, voting it down on a 3-2 party-line vote.

The measure is the second attempt in the past two years from Sen. Jerry Sonnenberg, R-Sterling. 

Sonnenberg’s bill would reduce the state’s individual and corporate income tax rate from 4.63% to 4.49%. The bill’s fiscal analysis said it would cost the state $143.8 million in lost tax revenue in 2019-20 and $294.6 million the following year.

And because of the Taxpayer’s Bill of Rights (TABOR), that reduction would be permanent unless voters decided to allow the state to increase income tax rates through a ballot measure.

Sonnenberg told the committee that the state continues to have revenue surpluses that must by law be refunded to taxpayers. Instead of those TABOR refunds, he said, it makes sense to allow the taxpayer and businesses to keep that money up front.

In 2019-20, the state will refund $304 million; next year, the refund will be $360 million and more than $400 million will be refunded in 2021-22 based on current projections. Refunds are issued a year after they are accrued.

The only witness to speak in support of SB 20 was Shari Shiffer-Krieger, representing right-leaning Americans for Prosperity. “This legislation will continue to drive our economy forward by allowing hard-working citizens keep more of their money.”

Speaking on behalf of the Colorado Fiscal Institute and against the bill, economist Chris Stiffler said the bill would reduce revenue for roads, schools and colleges when there’s no TABOR rebates, as well as exacerbate the state’s “already upside-down tax code.” And it would provide only about $10 more per year for low-income workers but about $1,200 per year for millionaires, he said.

“I understand your logic when we’re in a TABOR refund period,” State Affairs Chair Sen. Mike Foote, D-Lafayette, said to Sonnenberg.

But this is a permanent tax cut, he said, and “the last time we were in a recession, we found ourselves with not enough revenue to cover reasonable funding for schools.” That led to the negative factor, which resulted in a $1 billion cut to K-12 schools that has yet to be fully repaid. 

In his State of the State address, Polis said he was “enthusiastic about working to deliver permanent income tax relief, and we should continue down the path of eliminating tax breaks for special interests so that we can lower rates for everyone without reducing state revenue.

“A broader base taxed at a lower rate will boost economic growth with the ancillary benefit of preventing the corrosive influence of crony capitalism.”

He pointed out that Democratic presidents have worked to reduce tax burdens, adding that he’s heard from his “Republican friends” on this issue as well. 

Polis told a luncheon put on by the Colorado Business Roundtable and Civic in Denver Tuesday that he wants to make tax cuts permanent. Doing so, however, means cutting loopholes and shelters used by the wealthy and corporations.

“The common thread in our work is very easy to understand,” Polis told the business and civic leaders. “In my administration across all areas … (we believe) we should save Coloradans money, and that applies to saving Coloradans money on taxes, too.”

He said he was enthusiastic about delivering permanent tax relief in Colorado. “I look forward to eliminating tax breaks for special interests, so we can lower rates for everyone without reducing state revenue,” Polis said.

He did not mention a specific bill or sponsor in his plan, but pointed to his announcement during the State of the State that he would create a bipartisan study group to make recommendations on the tax code “by broadening the base and lowering the rate.”

Sonnenberg told Colorado Politics he spoke to Polis a year ago about his 2019 bill, but when the time came for the bill the governor never backed his proposal. Sonnenberg didn’t make a second try at the governor’s support for the 2020 measure, he said recently.