Tax break debate could preview Colo. budget fight

DENVER — House Democrats pushed back on a Republican proposal to cut business taxes today, triggering a vigorous debate that foreshadows the likely battle next week when the chamber takes on the state budget.

Democrats said a proposal to exempt taxes on equipment businesses buy in 2012 and 2013 will reduce school funding and that Republicans should postpone the debate until the House considers the budget. House Democratic Leader Sal Pace tried to delay the bill, prompting an immediate response heard across the chamber by Republican Leader Amy Stephens. “No, we’re not laying it over,” she said.

That was just the beginning of a debate that took most of the morning, a day after lawmakers ended a stalemate on the proposed 2011 budget. The GOP-led House gave initial approval to the bill, but it faces one more vote before it can clear the chamber.

Douglas County Republican Rep. Chris Holbert, the sponsor of House Bill 1141, said the proposal is “an economic stimulus” for businesses.

“We don’t need more businesses going out of business. We don’t need more people unemployed. We don’t need fewer businesses, we need more of them,” he said. Republicans argued that the tax break will lead to more revenue for the state to use on education.

Rep. Mark Ferrandino, a Denver Democrat, criticized the bill, saying it would send a strong, negative message to schools and students.

“We’re going to tell school districts and children, ‘You’re going to eat it,’” said Ferrandino, who successfully argued for an amendment to the bill that the state will compensate counties to make up for the loss in business property tax revenue.

Rep. Mark Waller, an El Paso County Republican, said he was bothered by the “implication that we don’t care about school kids in the state of Colorado, and that we in some way need to show them a good faith effort that we’re going to fund them fully in the years to come.”

“And I’m here to tell you, we want to do that every single year,” he said. Waller then supported the amendment, although he didn’t think it was necessary.

An analysis of the bill’s fiscal impact conducted by the nonpartisan Legislative Council staff said it would reduce school district property tax revenue by $37.5 million fiscal year 2013-14 and $76.3 million in 2014-15.

“How are we paying for this? There’s no answer,” Pace said, in arguing that the bill should be delayed.

The Colorado Senate planned to start work on the 2011-12 budget Thursday. Senators said they hoped to have the appropriately nicknamed “Long Bill” over to the House for consideration there next week.

The spending plan gives Republicans mixed success on repealing taxes. Democrats agreed to ax sales taxes on software and agricultural products such as animal medicine. In exchange, Democrats were able to reduce a proposed $332 million cut to education to about $250 million. The budget retains other taxes the GOP wanted to undo, such as a sales tax on soda and higher vehicle fees.

“I just also want to remind members that we are still in budget negotiations,” said Democrat Su Ryden of Arapahoe County. “I think it’s a very, very delicate balance that we have tentatively agreed to.”

Read House Bill 1141:


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