STATE-ASSEMBLY-01132021-KS-484

DENVER, CO - JANUARY 13: Representatives gather on the floor of the House during the first legislative day of the 73rd General Assembly at the Colorado State Capitol on January 13, 2021 in Denver, Colorado. (Photo By Kathryn Scott)

For the second straight day, Republicans in the state House of Representatives slammed the brakes on the chamber’s agenda, drawing out debate through the first weekend workday of the legislative session and well into the evening.

The delaying tactic, an effort to get Democrats to the negotiating table over the agenda for the session's final weeks, may be bearing fruit. A brief recess Saturday night took legislative leaders off the floor for about 30 minutes to begin those discussions, a source told Colorado Politics.

Once the recess was over, lawmakers were back to debating the second of two major tax policy bills. But after wrapping up debate on House Bill 1311, the pace noticeably quickened.

In a day when the House debated or voted on 10 bills, it took lawmakers nine hours to work through the first five pieces of legislation on their agenda. After the recess, the chamber moved through the last five – House Bills 1307, 1209, 1303, 1288 and 1297– in just under two hours with several Republicans saying they had been asked by their leadership to keep their comments brief. 

Saturday’s legislative calendar featured more than two dozen bills scheduled for either a final vote or debate. After kicking off around 10:30 a.m., the chamber’s Democratic majority was able to conduct a final vote on one bill – House Bill 1269, a relatively uncontroversial measure directing the Public Utilities Commission to conduct a study on the wholesale, opt-out model of community choice energy – before seeing their Republican colleagues resume stall tactics.

In a sign of what was to come, Rep. Ron Hanks asked for another relatively uncontroversial bill seeking to create a public-facing search engine for accessing state agency rules and rulemaking to be read at length. The move from the Cañon City Republican is rarely employed on a bill’s third reading, particularly when factoring in that House Bill 1230 boasts bipartisan sponsorship.

A bulk of Saturday’s slowdown came over Republican objections to a pair of tax-reform measures that Democrats hope will close loopholes and generate $400 million in revenues.

First came the resumption of the fight over House Bill 1312 sponsored by Reps. Emily Sirota, D-Denver and Mike Weissman, D-Aurora, which continued into its final vote on Saturday after debate on the measure stretched through the late evening hours on Friday.

The major provision of that bill is to increase to $50,000 the business personal property tax exemption for small businesses. That's property taxes businesses pay on items such as desks, computers, phones and other movable equipment that they use to run their operations. Under the bill the first $50,000 in property would be exempted from those taxes, up from $7,900. And while those taxes are paid to counties, the state would backfill those taxes under the bill. The measure also provides incentives for employee-owned businesses.

The bill's cost, about $19 million, according to the fiscal analysis, is paid for by changes in tax policy for insurance companies, oil and gas and coal companies, which could not only eventually generate about $150 million per year but would also result in a TABOR refund in 2022-23 that would be paid the following year.

Insurance companies with home or regional offices in Colorado would pay for the biggest tax changes under the bill. Under current law, those companies have been getting tax breaks, worth as much as $200 million per year, according to Sen. Chris Hansen, D-Denver, as a jobs incentive.

Another set of changes is in line for the oil and gas and coal industries, applied to tax deductions they currently take. Hansen said that coal companies have been getting breaks on severance taxes that have been on the state books since 1977. It hasn’t produced the benefit for taxpayers, which is to encourage investment and employment, Hansen told Colorado Politics recently.

After objecting to the bill for nearly nine hours on Friday, Republicans on Saturday rolled out another round of filibustering. That included reading the bill at length after it grew from 18 pages to 21 after Friday's second reading debate. The bill passed on a 37-24 party-line vote after a 90-minute debate and now heads to the Senate.

Debate on the second bill of that pair, HB 1311, went even longer.

The second bill from Weissman and Sirota seeks to modernize the state’s tax code, closes special interest tax loopholes for large corporations and wealthy individuals and will benefit small businesses, according to comments from Sirota during the House Finance Committee hearing on May 14.

The bill doubles the state Earned Income Tax Credit and for the first time funds the Child Tax Credit. It also limits capital gains deductions for the sale of real property to $100,000 per year, and caps how much families can contribute to a 529 account, which Coloradans use to set aside money for their children’s college education. Under HB 1311, that limit is $10,000 for a single filer and $15,000 for joint filers.

The change to the Earned Income Tax Credit, which is for low-wage earners, is in two forms: lowering the age of those who can apply for it from 25 to 19; and increasing the credit from 15% to 20%. Under current law, Colorado’s Earned Income Tax Credit is available for those who claim the federal EITC; the Colorado credit is equal to 15% of the federal credit.

The Child Tax Credit would provide up to $600 in tax credits per child for up to 200,000 families. That credit is intended to help pay for child care and other pre-elementary school expenses.

The changes are paid for by capping certain itemized deductions for taxpayers with adjusted gross incomes at $400,000 or more; eliminate the capital gains deduction; and eliminate what’s known as a “pass through” deduction of 20% of business income; created under the federal Tax Cuts and Jobs Act in 2017.

Among the lengthiest part of Saturday’s debate:

Rep. Adrienne Benavidez, D-Adams County, offered an amendment to limit deductions for all tax filers to $10,000 per year, claiming the cap in the bill would still benefit wealthy earners. “I’m not here to help the high earners,” Benavidez said, who she said are those with incomes at $500,000 or more. Her amendment lost.

The bill sponsors also had more than a half-dozen amendments of their own, all which passed. Those included changes to how the Earned Income Tax Credit is claimed, and changes to the section on capital gains. 

An amendment from Rep. Dan Woog, R-Erie, would have denied the Child Tax Credit to undocumented residents. It also failed.

Republicans also seized on the cap on deductions for earners at $400,000 or above, claiming it would would hurt nonprofit organizations that have struggled during the pandemic.

Sandwiched in between debate on the two tax bills was 2½ hours of consideration on a bill from Reps. Chris Kennedy, D-Lakewood, and Leslie Herod, D-Denver, attempting to combat opioid and other substance abuse.

Hanks opted to personally read the text of House Bill 1276 from the well of the House, a move his Republican colleague Rep. Richard Holtorf of Akron duplicated with the bill’s fiscal note.

Holtorf also pledged to read the entirety of the text of the fiscal note for each bill considered by the House for the remainder of the legislative session.

After the recess and debate on the second tax measure wrapped up, the House returned to a legislative pace more akin to normal. Lawmakers advanced five more bills through second reading and on to a final vote in just under two hours before calling a halt to proceedings to "raucous cheering," according to Rep. Kerry Tipper, a Lakewood Democrat who was chairing the Committee of the Whole at the end of the evening.

The House will reconvene on Monday at 10 a.m.

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