Lawmakers debate future of enterprise zone tax credits

DENVER — A House panel debated three enterprise zone measures Wednesday, one of which would make the other two obsolete.

In addition to a measure that would cap tax credits that companies located within enterprise zones can claim, the panel also eyed a bill that would narrow the size of the zones.

A third measure that was introduced into the Legislature earlier this week, however, would take away all income tax credits and the sole sales tax credit offered under the zones.

But after hours of testimony on all three, the panel approved the least controversial one and delayed until Friday a vote on the other two: House Bill 1200 to cap the credits and HB1396 to do away with them altogether.

Senate Bill 162, which would narrow the size of the zones, cleared the House Finance Committee on a unanimous vote.

Rep. Joel Judd, D-Denver, sponsor of the measure to end the credits, said there’s little point to having them because they aren’t the major reasons why businesses locate in Colorado. It’s such things as education and transportation, and money saved from the credits should be used to improve those things, he said.

His HB1396 would do away with a sales tax credit on machinery used inside an enterprise zone and seven income tax credits, including those for investments made to a business, job training and rehabilitation of a vacant building.

“It’s not even among the top 10 things they look at,” Judd told the committee that he chairs.

HB1200 is expected to save the state about $25 million a year, while eliminating the credits altogether would save up to $77 million a year.

Opponents said capping the credits or eliminating them altogether would lead to more companies laying off workers, which would exacerbate unemployment rates in enterprise zones and reduce income to the state.

“Colorado’s unemployment rate is about 7.6 percent, so my concern is risking any more job losses,” said Rep. Cheri Gerou, R-Evergreen. “I think this will cost people jobs.”

Rep. Dickey Lee Hullinghorst, D-Niwot, said she believes those fears are overblown.

Under HB1200, the total amount of tax credits businesses could request in any year would be capped at $250,000. Hullinghorst said the measure would affect only a small fraction of Colorado businesses, 30 out of about 5,500 located in enterprise zones.

Even those companies affected by the cap still would be able to take advantage of the credits if they spread them out over the 12 years that the law already allows, she said.

Enterprise zone proponents from around the state said while it might make sense to pass laws to make the zones work better, it doesn’t make sense to take away the only tool they have to attract businesses to areas that need them most.

“The program is critical for Colorado,” said Preston Gibson, president of the Jefferson (County) Economic Council. “Its elimination would be the nail in the coffin for many small businesses. This is one of the few tools we have, especially in rural Colorado.”

The Colorado Enterprise Zone Program began in 1986 to promote economic development in areas of the state that are in the deepest financial trouble, particularly those with high unemployment rates.

Currently, there are 16 such zones in the state, including one in Mesa County.


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