Bill to drop personal property tax not feasible now, panel decides
DENVER — The business personal property tax is a toll few people like, but equally few lawmakers are willing to get rid of it, particularly at a time when K–12 education is faced with millions of dollars in budget cuts.
At least, that was the final argument Thursday from legislators in the Senate Finance Committee against a measure to phase the tax out over several years.
Sen. Mark Scheffel, R-Parker, hoped to do away with the tax over the next eight years, saying the state and local governments would lose millions in tax revenues as a result, but they would gain in sales and income taxes from the additional jobs he hopes it would generate.
The tax is assessed on all equipment owned by businesses, and Colorado is one of only a few states that still has the tax.
“This is the tax that there’s very little disagreement about,” Scheffel said. “It’s considered a job killer, an economic inhibitor. At the same time, this tax brings in a lot of money, as much as about $1 billion … and the money goes to really good things.”
While the state relies on the tax for general purposes, it is considered the backbone tax for many local governments, particularly school districts.
Under Scheffel’s bill, which the committee ultimately killed, equipment purchased after next year would have been exempted from it over time. That, however, would lead to a $260 million loss in state revenues by 2019, most of which would have come from what the state normally spends on public schools.
But there’s little will to get rid of it, particularly after Gov. John Hickenlooper announced earlier this week the state would have to cut K–12 spending by an unprecedented $375 million.
“I don’t think I have ever voted against one of these issues that ever came before us with business personal property tax,” said Sen. Cheri Jahn, D-Wheat Ridge. “I could not agree more that it’s an egregious tax, but I’m not willing to pit jobs versus education. Before I whack education, which is key to economic development, I need to know what budget I’m looking at. I can’t go on a hope that we’ll be OK when this (phaseout) hits.”
Sen. Pat Steadman, D-Denver, said a good education system that can prepare people for the workforce is central to economic development, but he couldn’t support the measure without knowing its long-term impacts.
“I’m not with you on a billion-dollar cut without a plan for where those billion dollars come from,” Steadman said. “I don’t want to rip the seat belts out of the car, put the kids in and tell them to drive to Moffat, saying that when you get there, figure out what new you can put in the car that will function as a safety mechanism.”