Colin Larson HB1312 052120

Rep. Colin Larson read a legal opinion in HB 1312 for three hours, often very slowly.

Friday's long day saw Republicans playing the delay-of-game tactic, asking for bills to be read at length and other maneuvers to grind the House to a halt in the closing weeks of the 2021 session.

Among the bills caught in that on Friday: House Bill 1312, one of two tax-reform measures that Democrats hope will close loopholes and generate $400 million in revenues.

The bill was approved on a party-lines vote by the House Finance Committee a week ago and was on the agenda for second-reading debate on Friday.

But HB 1312 became part of House Republicans’ efforts to slow down the Democratic agenda — and slow down it did, in a debate lasting just shy of nine hours that wrapped up at 10:30 p.m.

A final last day of session hasn’t been announced. Some had hoped that Friday, May 28, would be the last day, but it’s far more likely that lawmakers will work through the following week. The 120th day of the session, the day the General Assembly must adjourn under state law, is June 12.

The major provision in House Bill 1312 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.

The proposal includes a five-year phase-in, Hansen said. “It’s appropriate not to subsidize coal production,” especially at a 50% tax break.

Travis Holland, representing the oil and gas industry and Colorado Petroleum Council, said he does not believe HB 1312 will generate the revenue it claims will result from the proposed changes in tax policy.

The Women’s Foundation of Colorado, through written testimony, said tax credits in HB 1311 help boost income for families, help kids do better in schools and lead healthier lives. The Foundation learned from families that COVID-19 exacerbated longstanding race and gender inequities, and the bill’s changes in tax policy will put money back into pockets of those who need it most.

Austin Vincent from Colorado Farm Bureau said they want to see the bill amended. In a low-margin industry such as ag, cash flow on small farms is too small to pay for capital gains taxes, one of the provisions in HB 1311. Losing this tax benefit would subject life savings to more taxation, and cause further consolidation or closure of small farms, Vincent said. The higher the capital gains taxes are, the harder it is to sell to a young farmer, he said, also pointing out that the average age of Colorado farmers is 57.

On the House floor, Rep. Shane Sandridge, R-Colorado Springs, said HB 1312 has been interpreted as a ‘de facto tax increase.” He sought an amendment to remove the bill’s safety clause to give the public a say, including those who would benefit from it, he said.

Weissman said the minute the bill becomes law, small businesses will immediately no longer have to file, and noted that the Colorado chapter of the National Federation of Independent Businesses backs the bill. Debate on that amendment: 20 minutes.

Next: amendments offered by the bill sponsors related to the business personal property tax. The first dealt with how appraisals would be done and that the property taxes — which are collected by counties — would be reimbursed by the state on demand. The amendment was requested by Colorado Counties Inc., according to Weissman.

Rep. Janice Rich, R-Grand Junction, asked whether the sponsors had ever talked to the county treasurers.

“They hate this bill,” she said.

A second amendment dealt with insurance premium taxes; companies pay taxes on premiums, not income tax. Debate on those amendments: another 20 minutes.

The debate on the complex issues in HB 1312 between Republicans and Weissman moved along for the next hour until Rep. Ron Hanks, R-Canon City, came to the microphone. While the House has a computer that can read a bill at length relatively quickly (and clearly), Hanks took 45 minutes to read the 18-page bill.

“To the good people of Colorado, I’m sure that cleared it up like a shotgun blast in the bottom of a pond. This is a mess,” he said.

That was followed by Rep. Colin Larson, R-Littleton, who noted a legal opinion referenced in the bill, and read that at length, for the next three hours, often very slowly.

Western Slope lawmakers whose districts include coal mines took the last two hours of the debate to talk about the impact of raising severance taxes would have on those mines and their communities. 

The district represented by Rep. Perry Will, R-New Castle, includes much of the state's coal mines. He said that Moffat County gets 63% of its tax base from companies that generate energy, including coal mines, and that includes the top 10 taxpayers in the county.

"These are businesses and industries we're targeting," Will said. "We've suffered enough ... they are the jobs, they are the industry. There's very little else."

Rep. Matt Soper, R-Delta, talked about the consolidation of schools and closures of businesses. Each coal job generates five more jobs in the community. The bill will hasten the demise of an industry where two of the three mines in his community are already gone.

The bill's next step is a final vote on Saturday.*

This story has been updated with two corrections: An earlier version said the final vote would likely be on Monday; the House, working on Saturday, took up that final vote. The earlier version also had an incorrect amount for the current business exemption; that amount applies to a different section of statute that is not an issue in HB 1312.

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