Senate Committee on Finance (02/12/2009)

Final
STAFF SUMMARY OF MEETING

SENATE COMMITTEE ON FINANCE

Date:	02/12/2009	ATTENDANCE

Time:	10:33 AM to 12:13 PM	Brophy	X
		Heath	X
Place:	SCR 354	Isgar	*
		King K.	X
This Meeting was called to order by		Scheffel	X
	Senator Sandoval	Hudak	X
		Sandoval	X
This Report was prepared by
	Elizabeth Hanson
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
SB09-121 SB09-052 SB09-022 SB09-124		Amended, Referred to the Committee of the Whole Referred to Appropriations Amended, Referred to Appropriations Referred to Appropriations

10:33 AM

The meeting was called to order. A quorum was present.

10:33 AM -- Senate Bill 09-121

Senator White, prime sponsor, presented Senate Bill 09-121, a bill related to the tax treatment of employee meals by restaurants. The bill eliminates the requirement that free or reduced-priced meals provided to employees of restaurants be considered as part of their wages in order for the meals to be exempt from sales and use taxes. Senator White stated that the Colorado Department of Revenue (DOR) has determined that restaurants have to show that employee meals are part of their wages. If the meals are not included as part of a wage, he stated, then the restaurant owes a back tax. The bill, he said, brings the tax law and current practice into conformance.

The following witnesses testified:

10:38 AM -- Mr. Philip Horwitz, representing DOR, testified about the bill. He stated the department has no position on the bill or whether there should be a tax exemption for restaurants from sales taxes. Mr. Horwitz stated that the $400,000 fiscal impact does not include any audit or additional amount of money, but only what is self reported by the restaurants. Mr. Horwitz responded to questions from the committee about the self reporting requirements of the employer, how the department determines whether it is included in the W2, and the tax treatment of employee wages, and the tax liability of the restaurant employer. He further explained to the committee the tax impact if the meal is included as part of employee wage. Finally, Mr. Horwitz addressed questions about Colorado's income tax forms.

10:54 AM -- Mr. Robert Williams, representing The Bailey Company, testified about the bill and provided the committee with background about of his current tax dispute with the DOR. Mr. Williams responded to questions from the committee about employee meals and the tax liability his company is facing.

10:59 AM -- Mr. Mark Stanley, representing the Phantom Partners Corporation, testified about the bill. Mr. Stanley stated that tracking this tax burden on employee meals is onerous for businesses. He said that because of the current interpretation by DOR, the benefit to employees is disappearing in restaurants. Mr. Stanley responded to questions from the committee about the meals and how many restaurants are being impacted.

11:07 AM -- Ms. Christine O'Donnell, representing the Colorado Hotel and Lodging Association, testified in support of the bill. Ms. O'Donnell said she supports the bill because it clarifies the law on sales taxes. Ms. O'Donnell stated that one of the restaurants in the association is involved in a dispute with DOR auditors and the company faces a $48,000 tax liability. She responded to questions about the dispute, the clarity of the tax law, and the effective date of any proposed legislation.

11:12 AM -- Mr. Pete Meersman, representing the Colorado Restaurants Association,. testified in support of the bill. He distributed a handout about the Fair Labor Standards Act (FLSA) (Attachment A) and the Employer's Tax Guide to Fringe Benefits, published by the IRS (Attachment B). Mr. Meersman stated that because of the FLSA, employee meals are part of lodging, and fringe benefits are not subject to a sales tax. He stated the association tells restaurant employers that employee meals are exempt. Mr. Meersman expressed disagreement with the fiscal note, and responded to questions from the committee about how many restaurants are paying the sales taxes at present.

11:20 AM -- Mr. Jason Schrock, Legislative Council Staff (LCS), responded to questions from the committee about the fiscal note. He stated that the estimate came from a sample of restaurants that are claiming sales taxes revenue on the Colorado tax forms. He also stated that there is no way for the DOR to determine the amount of sales tax revenue that restaurants are currently not paying. Discussion ensued about the fiscal note.

11:30 AM -- Mr. Mark Stanley returned to the table and answered questions about the Colorado tax form and tax filing for restaurants.

11:32 AM

Senator Sandoval closed public testimony. She disclosed that she is a restaurant owner but will be voting on SB 09-121 because the bill does not benefit her personally. Discussion ensued about whether the bill should be sent to the Committee on Appropriations or the Committee of the Whole.


BILL:	SB09-121
TIME:	11:32:41 AM
MOVED:	King K.
MOTION:	Refer Senate Bill 09-121, as amended, to the Committee of the Whole. The motion passed 7-0.
SECONDED:
		VOTE
	Brophy	Yes
	Heath	Yes
	Isgar	Yes
	King K.	Yes
	Scheffel	Yes
	Hudak	Yes
	Sandoval	Yes

Final YES: 7 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: PASS


BILL:	SB09-121
TIME:	11:33:40 AM
MOVED:	King K.
MOTION:	Add a Safety Clause to Senate Bill 09-121. The motion passed without objection.
SECONDED:
		VOTE
	Brophy
	Heath
	Isgar
	King K.
	Scheffel
	Hudak
	Sandoval

Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

11:37 AM

The committee recessed.

11:39 AM -- Senate Bill 09-052

The committee reconvened.

Senator Bacon, prime sponsor, presented Senate Bill 09-052, which increases the amount of funding for university research activities by diverting the revenue collected from waste tire fees to the State Education Fund. Senator Bacon stated this research helps to create jobs and new business.

The following witnesses testified on the bill:

11:41 AM -- Ms. Kathi Delehoy, representing Colorado State University, testified about the bill. She stated that the university did $300 million dollars in research last year, and that the waste tire fund is important to research efforts in Colorado. She also stated that these funds are significant because the university can leverage the funding into other federal and matching dollars available for research. Research creates new businesses and new jobs in Colorado, she explained.

11:43 AM -- Mr. P. Craig Taylor, representing the Colorado School of Mines, testified about the bill. He said he is doing research that employs graduate students and other individuals, and these efforts are important to developing renewable energy.

11:45 AM -- Mr. Steine Sture, representing the University of Colorado, testified in support of the bill because it would create more jobs, more businesses and make Colorado more competitive in the national economy. He stated that state matching is a must in order to be viewed as competitive for research dollars, which eventually creates jobs and companies in the renewable energy and biosciences industries.

Discussion ensued about the work that Colorado universities are doing to encourage research.

11:47 AM

Senator Sandoval closed public testimony.


BILL:	SB09-052
TIME:	11:47:56 AM
MOVED:	Heath
MOTION:	Refer Senate Bill 09-052 to the Committee on Appropriations. The motion passed 5-1, with one excused.
SECONDED:
		VOTE
	Brophy	No
	Heath	Yes
	Isgar	Excused
	King K.	Yes
	Scheffel	Yes
	Hudak	Yes
	Sandoval	Yes

Final YES: 5 NO: 1 EXC: 1 ABS: 0 FINAL ACTION: PASS

11:49 AM -- Senate Bill 09-022

Senator Bacon, prime sponsor, presented Senate Bill 09-022. Senator Bacon stated SB 09-022 increases the annual limit the Colorado State Land Board can invest in the School Development Fund. He distributed a copy of Amendment L.003 (Attachment C) to members of the committee, and explained that the amendment allows the State Land Board to spend the additional money incrementally over several years.

Senator King distributed Amendment L.004 (Attachment D) to members of the committee.

The following witnesses testified:

11:53 AM -- Mr. Steve Holdren, representing the Colorado State Land Board, testified about the bill. He provided background about the board, and he explained that the commission has been allowed to take money that would normally be invested in the trust and invest it the development fund. He said this has been an excellent tool for the commission.

11:55 AM -- Mr. John Brejche, Colorado Land Board, testified about the bill and provided background about how much the board has invested in the development fund. He stated the Board has identified projects and areas for investment.

11:55 AM -- Mr. Tobin Follenweider, representing the Colorado Land Board, testified about the bill. He stated that he manages the trust fund and assists in drafting its annual reports.

11:56 AM -- Mr. Bruce Caughey, representing the Colorado Association of School Executives, testified in support of the bill. He stated that the organization he represents looks out for these lands on behalf of students. Mr. Caughey stated that he appreciates the work of the State Land Board and supports the legislation.

11:58 AM -- Ms. Karen Wick, representing the Colorado Education Association, testified in support of the bill. She said the bill is a sensible approach that will also increase the value of the school lands.

11:59 AM

Senator Sandoval closed public testimony.


BILL:	SB09-022
TIME:	11:59:47 AM
MOVED:	Hudak
MOTION:	Refer Senate Bill 09-022, as amended, to the Committee on Appropriations. The motion passed 7-0.
SECONDED:
		VOTE
	Brophy	Yes
	Heath	Yes
	Isgar	Yes
	King K.	Yes
	Scheffel	Yes
	Hudak	Yes
	Sandoval	Yes

Final YES: 7 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: PASS


BILL:	SB09-022
TIME:	11:59:56 AM
MOVED:	Hudak
MOTION:	Adopt Amendment L.003 (Attachment C). The motion passed without objection.
SECONDED:
		VOTE
	Brophy
	Heath
	Isgar
	King K.
	Scheffel
	Hudak
	Sandoval

Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	SB09-022
TIME:	12:00:07 PM
MOVED:	King K.
MOTION:	Adopt Amendment L.004 (Attachment D). Discussion ensued, and the Chair ruled that the amendment fits under the title. The motion passed without objection.
SECONDED:
		VOTE
	Brophy
	Heath
	Isgar
	King K.
	Scheffel
	Hudak
	Sandoval

Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

12:02 PM -- Senate Bill 09-124

Senator Isgar, prime sponsor, presented Senate Bill 09-124. This bill extends funding for the Department of Agriculture to promote agricultural energy-related projects and research. Senator Isgar explained that the bill would divert revenue from the severance tax fund to the Agriculture Value-Added Cash Fund. He stated that by-products from biomass and other activities have the potential be used for biodiesel and other renewable fuels.

The following people testified on the bill:

12:07 PM -- Mr. Tom Lipetzky, representing the Colorado Department of Agriculture, testified in support of bill. He said the department needs as many tools as possible to support renewable energy programs. He distributed a handout providing background about the department's renewable energy program (Attachment E) and two letters of support for Senate Bill 09-124 (Attachment F).

12:10 PM -- Mr. Benjamin Waters, representing the Rocky Mountain Farmers Union, the Colorado Association of Conservation Districts, and the Colorado Corn Growers Association, testified in support of the bill.

12:12 PM

Senator Sandoval closed public testimony.


BILL:	SB09-124
TIME:	12:13:17 PM
MOVED:	Isgar
MOTION:	Refer Senate Bill 09-124 to the Committee on Appropriations. The motion passed 6-0, with one excused.
SECONDED:
		VOTE
	Brophy	Yes
	Heath	Yes
	Isgar	Yes
	King K.	Yes
	Scheffel	Excused
	Hudak	Yes
	Sandoval	Yes

Final YES: 6 NO: 0 EXC: 1 ABS: 0 FINAL ACTION: PASS

12:13 PM

The committee adjourned.