An interim panel charged with reviewing the state’s tax policy voted to advance a package of five bills, opting in the process to axe a proposal from a Denver Democrat  that sought a statewide increase on taxes on short-term rentals.

Heading into the Wednesday meeting, the Legislative Oversight Committee Concerning Tax Policy appeared poised to have a good deal of work to get through in its final meeting of the year. The panel in September agreed to draft bills on 10 different subjects but could only advance five pieces of legislation on to Legislative Council, the panel that vets the legal implications and other factors before bills can be introduced.

In the lead-up to the meeting though, one of the ten proposals was pulled. At the meeting itself, Centennial Democratic Sen. Chris Kolker opted to withdraw two of his proposals: one  that sought to bring down the tax rate on premiums for surplus lines insurance from 3% to 2.25% and another relating to a sales tax exemption for building materials for nonprofits. Sen. Chris Hansen, D-Denver, also withdrew a draft of a measure that would exclude C corporations from the state sales tax exemption for farm equipment and parts.

That meant only one bill was on the chopping block, and it was another measure from Hansen that drew the most debate.

The proposal sought to create a hybrid property classification for short-term rentals, which for tax purposes would be classified in part as residential property and in part as a lodging property.

“We’re simply saying that if you have (a short-term rental) and you rent it out, that you need to incorporate the same level of taxes as the bed and breakfast or the hotel that you might be right next door to,” said Hansen, noting a hotel in Steamboat Springs had been converted to short term rentals to reduce the property’s tax burden.

Aspects of the bill received fierce pushback from four of the community members who testified before the committee, including realtors and owners of short-term rental properties. Some of the harshest criticism came from Keith Erffmeyer, Denver County’s assessor who spoke on behalf of the Colorado Assessors Association and said his organization was “unequivocally opposed” to the provision splitting property classifications.

“The administrative efforts for assessors to do any of that is absolutely overwhelming,” he said, after noting other hurdles to pulling off the provisions required in the bill draft. “This would be impossible for us to accomplish with current staffing levels in Denver, I’d probably have to hire five, maybe 10 more people just to be able to do that.”

Hansen acknowledged he was aware of the issues Erffmeyer raised, noting he had met CAA and heard the organization’s concerns weeks ago. Due to the rigid structure of the interim committee process – which requires the concepts for bills to be locked at a set date – Hansen said those concerns and others weren’t included in the draft that was presented to the committee.

“We heard from many stakeholders about implementation issues, et cetera, but I would ask for your support to move this conversation forward today with the commitment that me, personally, and us, collectively, will continue to work on the different information we get from stakeholders,” he said.

None of the panel’s three other Democrats or two Republican members were willing to take Hansen up on that, with Sen. Larry Liston, R-Colorado Springs, and committee Chair Adrienne Benavidez, D-Denver, advising him to bring stand-alone legislation on the issue during the session.

With Hansen’s bill out of the way, the committee proceeded to move the remaining five bills on to Legislative Council. Those included:

• A different bill from Hansen that would replace the current corporate income tax deduction for providing alternative means of transportation for employees, such as mass transit or ride-sharing, with a refundable credit of 50% of a company’s expenditures on such transportation. The Denver Democrat said such an effort has been in place in other states and had seen good uptake
• A proposal from Benevidez seeking to eliminate a handful infrequently used of tax expenditures. Each of the expenditures on the chopping block were evaluated by the Office of the State Auditor, which found “the tax expenditures were rarely claimed by a small number of taxpayers, and in some instances, not claimed at all”
• A measure from Rep. Shannon Bird, D-Westminster, seeking to exempt home rule municipalities from sales and use tax when buying building materials for schools
• A proposal from Kolker to expand the excise tax exemption on alcohol brought to the state by airline passengers
• A second proposal from Benevidez to exclude vehicles that must be registered with the state from the farm close-out sales tax exemption, which applies when farms or ranches shut down operations and sell the property used in those operations

Legislative Council is scheduled to meet Nov. 15 to review legislation coming out of interim committees.