STAFF SUMMARY OF MEETING
COMMITTEE ON JOINT FINANCE
|Time:||12:21 PM to 01:26 PM|
|This Meeting was called to order by|
|This Report was prepared by|
X = Present, E = Excused, A = Absent, * = Present after roll call
|Bills Addressed: ||Action Taken:|
|Presentation by CHFA|
Presentation about Colorado's Tax Structure
12:22 PM -- Presentation by Colorado Housing and Finance Authority
Mr. Milroy Alexander and Mr. Thomas Hemmings, representing the Colorado Housing and Finance Authority (CHFA), presented to the Joint Finance Committee. The presenters provided a handout, which is included as Attachment A.
Mr. Alexander provided background information about CHFA's organization, oversight, and Board of Directors. He also discussed the mission of the organization and the types of loans that CHFA finances. Mr. Alexander explained that CHFA is primarily a lender, providing loans for single family, multifamily, and military housing, as examples. Mr. Alexander explained that CHFA is not a subprime lender and has never made a subprime loan. He also said that 2006 and 2007 were record years of production for CHFA, and that production slowed in 2008. He stated that for several years, CHFA was a top producing state housing finance agency in the U.S. Mr. Alexander stated that despite recent successes, CHFA faces many challenges in the current economic environment.
Mr. Thomas Hemmings provided the committee with information about the overall housing market and CHFA's current financial condition. He discussed taxable bond costs and loan rates. Mr. Hemmings responded to questions from the committee about loan rates and Fannie Mae and Freddie Mac.
Mr. Hemmings continued his presentation, discussing the assets that CHFA holds, including total assets and net assets. He also provided information about operating revenue and income, and responded to questions from the committee about CHFA's total assets as well as bonds.
Mr. Hemmings provided statistics to the committee about the foreclosure rates in Colorado and the net charge-off for CHFA and Colorado banks. He continued by discussing the agency's bond program and the current ratings of CHFA by the credit rating entities. Discussion and questions ensued about the recent ratings that CHFA received.
Mr. Hemmings explained multifamily and single family bond indentures to the committee. He also discussed interest rate swaps and bond reserve investments.
Mr. Alexander returned and discussed how CHFA is responding to the current financial crisis. He stated that the agency needs investors to buy its bonds and also needs more liquidity. He discussed how CHFA is working at the federal level to bring assistance to state housing finance agencies. Mr. Alexander said CHFA is working to develop new lines of business for all the agency's programs. In addition, Mr. Hemmings discussed housing bonds and different financing structures being used by the agency.
Mr. Hemmings and Mr. Alexander responded to questions from the committee about the single and multifamily home loan programs. They also responded to questions about additional home loan issues, including the Federal Housing Administration (FHA) and programs for home buyers. Mr. Alexander said the agency is still reviewing the proposed federal legislation. Discussion ensued about assisting other homeowners that are struggling but are not in foreclosure.
Mr. Hemmings closed by encouraging individuals to contact their lending entities and call foreclosure telephone hot lines that are available to the public.
01:05 PM -- Presentation about Colorado's Tax Structure
Mr. Ron Kirk, Legislative Council Staff (LCS), presented to the Joint House and Senate Finance Committee. The presentation focused on how Colorado ranks in its tax structure to other states in the U.S. He provided the committee with a summary of the presentation (Attachment B) and a memorandum about how Colorado compares in state and local taxes (Attachment C). Mr. Kirk stated that two measures are used to calculate the tax rankings. The first measure is based on $1,000 of personal income, and the second measure is based on per capita income rankings. He began by illustrating how a tax dollar that is paid in Colorado is allocated between state, local, and federal governments. He also provided information about the distribution of state and local taxes.
Mr. Kirk stated there are two things that make Colorado's tax structure unique. The first, he explained, is the limits that are placed on revenues and expenditures at the state level. The second factor that makes Colorado unique, he said, is that the state has a very decentralized tax structure, which makes local governments dependent on the revenue that is raised. Mr. Kirk explained that Colorado is the fifth lowest in the nation in combined state and local tax burden. He also provided background about the history of Colorado's tax structure and historical precedents that were set about property taxes.
Mr. Kirk continued the presentation by discussing property taxes. The state ranks 32nd in the nation in combined property taxes per $1,000 in income. He also provided information about sales and use taxes, stating that Colorado ranks 23rd in the nation in combined sales and use taxes per $1,000 in income. Mr. Kirk stated that several of these rankings do not change often because many parts of Colorado's tax code are affected by the federal tax code, which cannot be decided by the Colorado General Assembly.
Mr. Kirk said that state tax burdens move in tandem with federal tax burdens. He said Colorado ranks 28th in the nation (slightly below the medium) on state individual income taxes per $1,000 in income.
Mr. Kirk concluded the presentation by providing information about the main tax sources for local governments and the breakdown of who pays property taxes in Colorado. Mr. Kirk responded to questions from the committee about the history of Colorado's tax system, flat tax rates of the past, individual income taxes, and tax rankings. He also responded to questions about the research that is conducted by the Department of Revenue about taxes paid in Colorado.
Mr. Kirk responded to questions about severance taxes in Colorado and how this tax burden compares with other states. He stated the rankings in the memorandum are arrived at using U.S. Census Bureau data, and that the $1,000 of personal income measure allows for a smoother comparison between severance taxes in several states. Mr. Kirk responded to questions about the history of severance taxes in the state.
The committee adjourned.