Senate Committee on Business, Labor and Technology (01/26/2009)

Final
STAFF SUMMARY OF MEETING

SENATE COMMITTEE ON BUSINESS, LABOR AND TECHNOLOGY

Date:	01/26/2009	ATTENDANCE

Time:	01:33 PM to 03:06 PM	Foster	X
		Harvey	X
Place:	SCR 354	Mitchell	X
		Scheffel	X
This Meeting was called to order by		Tochtrop	*
	Senator Veiga	Heath	X
		Veiga	X
This Report was prepared by
	Hillary Smith
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
SB09-040 SB09-071 SB09-076		Amended, Referred to the Committee of the Whole Postponed Indefinitely Amended, Referred to Finance

01:34 PM -- Senate Bill 09-040

Senator Hodge presented Senate Bill 09-040. Senate Bill 09-040 makes several modifications to the recording requirements for documents related to a manufactured home. These changes include rules regarding the submission of information for recording, requesting title, deeds, certificates, abandonment, and other legal real or personal property documentation concerning manufactured housing. Senator Hodge stated that Senate Bill 09-040 is a clean up of a 2008 bill regarding the titling and reporting for manufactured and mobile homes. She distributed prepared Amendment L.001 (Attachment A). Senator Hodge requested that the witnesses be allowed to provide more detail about the bill.

The following individuals testified:

01:35 PM -- Meghan Pfanstiel, Executive Director of the Rocky Mountain Home Association, testified with Pam Nielsen, Motor Vehicle Manager for Larimer County Clerk and Recorders Office, in support of the bill. Ms. Pfanstiel explained that she and Ms. Nielsen were part of task force called the "Mobile Homes Working Group," and listed the agencies involved in the task force. Ms. Pfanstiel discussed the agencies and departments that support Senate Bill 09-040. Ms. Pfanstiel stated that last year's bill was an overhaul of the requirements related to manufactured homes, but that more changes still needed to be made, particularly for issues involving long-term land leases. Ms. Pfanstiel gave an example of how last year's bill did not adequately address long-term land lease issues. Ms. Nielsen discussed other technical changes made by the bill and why they were necessary to help the recording process.

01:41 PM -- Ms. Pfanstiel indicated that throughout the bill, the task force worked with the state Department of Motor Vehicles to find ways to eliminate expensive and lengthy bonding procedures, particularly for abandoned homes.

01:42 PM -- Ms. Nielsen continued her discussion of the technical aspects of the bill. She spoke about bonding requirements for homes that are over 25 years old that would be eliminated by the bill, and also discussed new options for home inspections, lien filing methods, and for collecting proof of identification in a manner that complies with the federal Driver's Privacy Protection Act of 1994.

01:45 PM -- Ms. Pfanstiel discussed language in the bill that concerns certificates of removal. She also indicated that the Division of Property Taxation had requested that the bill update certain definitions. She stated that Amendment L.001 adds additional language to those definitions. Ms. Pfanstiel responded to a question from Senator Tochtrop concerning who pays for the removal of a home; Ms. Pfanstiel indicated that a park owner is generally responsible for the cost of removing a home because the tenant has usually been evicted for nonpayment.


BILL:	SB09-040
TIME:	01:48:45 PM
MOVED:	Tochtrop
MOTION:	Moved to refer Senate Bill 09-040, as amended, to the Committee of the Whole. (See vote on Amendment L.001 in following vote sheet). The motion passed on a 5-0 roll call vote.
SECONDED:
		VOTE
	Foster	Yes
	Harvey	Excused
	Mitchell	Excused
	Scheffel	Yes
	Tochtrop	Yes
	Heath	Yes
	Veiga	Yes

Final YES: 5 NO: 0 EXC: 2 ABS: 0 FINAL ACTION: PASS


BILL:	SB09-040
TIME:	01:48:59 PM
MOVED:	Tochtrop
MOTION:	Moved prepared Amendment L.001 (Attachment A). The motion passed without objection.
SECONDED:
		VOTE
	Foster
	Harvey
	Mitchell
	Scheffel
	Tochtrop
	Heath
	Veiga

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

01:50 PM -- Senate Bill 09-071

Senator Hodge presented Senate Bill 09-071. Senate Bill 09-071 prohibits a ticket reseller from charging more than the face value of a ticket plus $5 or 25 percent, whichever is greater. The bill authorizes the Attorney General or a district attorney to bring an action against a reseller who violates the prohibition and to order the reseller to forfeit the tickets or the proceeds of the tickets. Additionally, an event sponsor is prohibited from charging fees greater than 10 percent of the face value of an event ticket. Senator Hodge indicated that Senate Bill 09-071 was suggested to her by a constituent. Senator Hodge requested that the proponents be allowed to testify first.

The following individuals testified:

01:50 PM -- Tori Pater, a musician representing himself, artists, and venues, testified in support of the bill. Mr. Pater discussed the current ticket-selling system. He stated that ticket brokers act as scalpers, and that the money from ticket sales often goes to the ticket broker rather than to the artist or to the venue. Mr. Pater stated that a free market price should be split between the artist and the venue, and argued that the presence of a third party negatively impacted the artists and venues. Mr. Pater read an e-mail from Kris Norris, a mother who was frustrated by the practice of brokers selling tickets for more than face value (Attachment B). Mr. Pater said that the markup the bill would still allow ticket brokers to charge is generous.

01:56 PM -- Terry Walsh, representing himself and other sports fans, testified in support of the bill. Mr. Walsh discussed recent sporting events such as the World Series. He discussed the use of "bots," electronic systems that scalpers use to buy large amounts of tickets in order to resell them for a higher price, and stated that such practices prevent the average fan from being able to afford tickets. Mr. Walsh said that the bill would put the tickets back in the hands of average fans. Responding to a question, Mr. Walsh explained that "bots" allow scalpers to bypass the security features on ticket websites, either through software or through "outsourcing," thereby enabling the scalpers to purchase more tickets than otherwise allowed, or to purchase those tickets before other consumers. Mr. Walsh stated that such techniques are not available to the general public.

02:00 PM -- Lori Goodman, representing Eric Martinez, a musician and business owner, read a statement from Mr. Martinez expressing his support of the bill (Attachment C). In his statement, Mr. Martinez expressed his opposition to the practice of inflating ticket prices without the consent of the artist or venue owner. Mr. Martinez asked the committee to vote yes on the bill, thereby making tickets more accessible for more people.

02:01 PM -- John Tipton, representing artists and consumers, testified in support of the bill. Senator Harvey said that people still go to see athletic and musical events even if the tickets are marked-up, and that the market exists because the consumers are willing to pay the marked-up price. Discussion ensued between Senator Harvey and Mr. Tipton regarding whether the bill would fix the problem of artists losing money to a third party. Senator Harvey said that the current system harms artists, but not fans, who pay the market price. Senator Harvey stated that it was not appropriate for the legislature to attempt to influence the prices set by the free market, and that the bill was not an appropriate way to fix the current problems in the system. Mr. Tipton later provided the members of the committee with a handout titled "Aggressive Ticket Brokering and Colorado: Vote Yes on SB 71" (Attachment D).

02:07 PM -- Bret Berman, representing artists, talent buyers, promoters, and others involved in the ticket-buying system, testified in support of the bill. Mr. Berman described the current ticket-buying system, and stated that agents, promoters, and other entities in the system take on significant amounts of risk in order to put on shows that are not "marquee acts," such as Madonna or a Broncos game. Mr. Berman said that if scalping is allowed to continue, consumers will still pay to see marquee events, but the money paid to scalpers will be diverted from those who took risks in order to present the events. Mr. Berman stated that promoters and agents will then be unable to promote smaller, up-and-coming acts, and that fans who buy scalped marquee event tickets at high prices will be unable to buy tickets to see non-marquee events. Mr. Berman predicted that up-and-coming acts that are not supported now will not exist in the future, when current marquee acts are gone, and that a loss of marquee acts in the future will lead to a loss in possible taxes and revenue. He addressed Senator Harvey's statements about the market and indicated that he agreed that the bill did not put the revenue in the hands of those taking the risk, but argued that the bill would put limits in place to prevent people from abusing the current system.

02:12 PM -- Senator Foster said that she had spoken to promoters who had indicated that they did not support the bill, and had given many of the same reasons that Mr. Berman had given in support. Mr. Berman asked for a clarification of the promoters' arguments in opposition to the bill, and added that because promoters do not make money from service charges or from scalped tickets, he did not understand how a limit in ticket fees would affect the promoters' bottom line. Mr. Berman argued that the bill would actually give promoters more revenue because more fans would be able to see more events, and there would be more acts to fill larger venues in later years. Senator Harvey asked Mr. Berman to clarify who he was and who he represented, and Mr. Berman indicated that he worked for Grooveshark, an internet music service that was supported by advertising, and that he had previously worked for two local booking companies, Partners in Music and Crescendo Artists.

02:16 PM -- Floyd Youngblood, representing Fans 4 Fairness, testified in opposition to the bill. Mr. Youngblood explained that Fans 4 Fairness is a group that was created last year in response to the Denver Broncos' attempts to limit their fans' ability to resell their tickets. Mr. Youngblood discussed legislation passed last year that enabled fans to resell their tickets, and also addressed legislation that prohibits the use of "bots" in ticket purchasing. He stated that an average fan is able to keep buying season tickets if given the opportunity to resell some tickets at a higher price in order to offset the cost of the season tickets. Mr. Youngblood argued that ticket brokers offer a benefit to the average fan, allowing them to sell their tickets early, and that then it is the ticket broker who bears the risk for the sale. He added that the bill puts a cap on potential profit, but does not put a cap on potential losses, and that the free market should be allowed to work.

02:20 PM -- Roger Jones, General Manager and co-owner of Alliance Tickets, spoke on behalf of his company and the Colorado Association of Ticket Brokers. Mr. Jones spoke about the economic impact the bill would have on ticket brokers. Mr. Jones asked the members to consider how a bill that limits a company's ability to generate revenue and grow will affect its abilities to provide for its employees.

02:25 PM -- Mr. Jones responded to a question from Senator Harvey concerning how his business obtained tickets. He indicated that the vast majority of tickets his company sells are from season ticket holders who are reselling or by concert fans wishing to recoup their investments. Responding to a question from Senator Harvey, Mr. Jones stated that his company does not use "bots," and that association members supported last year's legislation that outlawed their use. Senator Heath asked how many of Mr. Jones' company's transactions would exceed the 25 percent mark-up cost stipulated by the bill. Mr. Jones indicated that very few transactions would exceed the 25 percent cap because his company would not be able to acquire tickets at such a high price. Mr. Jones stated that the members of the association would be restricted by the 25 percent cap, whereas individuals would not, and therefore those individuals could make more money selling the tickets on-line. Senator Heath asked for a clarification of the definition of a "reseller." Senator Hodge replied that under the bill, anyone could be a reseller, including individuals such as season ticket holders who resell their tickets; Senator Hodge indicated that such resellers would be subject to the same fee cap as a broker. In response to a question from Senator Heath, Mr. Jones questioned how it would be possible to regulate the individual in the same way that a company would be regulated.

02:30 PM

Senator Harvey asked to clarify if the season ticket holders who were protected by Senator Tochtrop's bill last year would now be prevented from selling. Senator Harvey asked if Senate Bill 09-071 would undermine last year's bill. Senator Hodge replied that Senator Harvey was correct, and that she had drafted an amendment to try to exclude individual ticket holders, but that it would have made the bill too convoluted.

02:32 PM

Senator Foster took a moment to explain her reasons for voting to postpone Senate Bill 09-071 indefinitely.


BILL:	SB09-071
TIME:	02:32:01 PM
MOVED:	Harvey
MOTION:	Moved to postpone Senate Bill 09-071 indefinitely. The motion passed on a 7-0 roll call vote.
SECONDED:
		VOTE
	Foster	Yes
	Harvey	Yes
	Mitchell	Yes
	Scheffel	Yes
	Tochtrop	Yes
	Heath	Yes
	Veiga	Yes

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

02:35 PM

The committee recessed.

02:37 PM -- Senate Bill 09-076

The committee reconvened. Senator Heath presented Senate Bill 09-076. Senate Bill 09-076 creates the Employment and Technology Training Fund for automation initiatives at the Department of Labor and Employment. It diverts 20 percent of employer surcharge taxes to the Technology Fund, which reduces to 30 percent the amount of taxes deposited into the Unemployment Compensation Trust Fund. The bill allows money to be transferred back to the Trust Fund if needed. Senator Heath distributed prepared Amendment L.001 (Attachment E). Senator Heath discussed the aging computer system at the Department of Labor and Employment and the pressures facing the system. He explained how the Employment and Technology Training Fund will be funded, and stated that his bill applies good business practices since the system is not going to be able to last.

02:40 PM

Senator Heath explained that Amendment L.001 changes language in the bill concerning when the Executive Director will transfer funds back to the Trust Fund. Senator Heath indicated that the bill puts many safeguards in place for the new fund. Senator Mitchell expressed his concerns about the bill. Senator Mitchell stated that needs such as overhead and information infrastructure are generally met by ongoing appropriation, and that Senate Bill 09-076 may parallel a situation in transportation where a separate revenue stream is created and maintained instead of calling on appropriations. Senator Mitchell also expressed concern that the new fund will become another "cash pot" that will be raided in the event of a budget crunch. Senator Heath responded that hopefully the legislators will safeguard the Unemployment Insurance system, but that it was true that no one could promise that the fund would not be raided in the future. Senator Heath added that capital equipment needs are separate from administrative needs.

02:46 PM

Senator Foster asked whether every department must have a maintenance budget, and whether this new fund would be a maintenance fund to help systems that are currently struggling to handle claims. Senator Foster wanted to ensure that the money in the new fund would be used to upgrade the technology of the system currently in place. Senator Heath replied that the fund would provide for replacement as opposed to maintenance, and that the outdated systems would be replaced with a new generation of technology.

02:48 PM

Senator Harvey asked if the Department of Labor and Employment currently was able to use Unemployment Insurance Trust Funds to replace its system. Senator Heath requested that the representative from the Department of Labor and Employment be allowed to answer Senator Harvey's question.

02:49 PM -- Mike Cullen, Director of the Unemployment Insurance Office within the Colorado Department of Labor and Employment, stated that the intent of the bill was to set aside money so that the office can begin to replace its antiquated computer systems. Mr. Cullen noted that the bill does not provide for maintenance, but that the bill gives the department a method of accumulating the money over time to replace the system. Mr. Cullen indicated that there is not currently adequate money within the Trust Fund to replace the systems. Mr. Cullen discussed the system currently in place, which was installed in 1985 and is very difficult to maintain and to change. Once the new system is in place, the department will go through the normal process of asking for money to maintain it. Senator Harvey asked for a clarification of how the Unemployment Insurance Trust Fund is funded. Mr. Cullen explained the different taxes that contribute to the Trust Fund and how the bill would affect the funding. Senator Harvey asked how the department is currently funding its technology and maintenance needs. Mr. Cullen responded that the department isn't doing it very well, and that it has limited money above its needs for running day-to-day operations and making small changes. Mr. Cullen discussed the failed Genesis Project from 1988 that was contracted with Accenture. Mr. Cullen responded to a question from Senator Harvey about the Solvency Tax surcharge and explained how it is calculated, what causes it to go into effect, and how long it has been in effect. Senator Harvey continued to ask follow-up questions.

02:56 PM

Mr. Cullen responded to a question from Senator Harvey concerning a period during the last recession when the legislature raided funds before they got to the Trust Fund. Mr. Cullen indicated that it takes time for the balance to drop low enough for the Solvency Tax surcharge to kick in. Senator Harvey asked why the funds weren't diverted when there was a lot of money before. Mr. Cullen explained that the Accenture contract for the Genesis Project wasn't settled until 2005, and that it was not possible to divert while the project was still ongoing. Senator Veiga asked Mr. Cullen to address Senator Mitchell's question about whether it was possible to protect the new fund from being raided. Mr. Cullen said that Senator Mitchell was correct in stating that the fund would be subject to raid. Mr. Cullen said that funds were raided in the past during recessionary times, and that he hopes that in the future, the Unemployment Insurance Trust Fund will be protected as legislators recognize its importance to Colorado citizens. Mr. Cullen also indicated that the language within the bill allowing the Executive Director to move the funds back to the Trust Fund may be one way to protect the new fund.

02:59 PM

Senator Veiga indicated that it may be a problem for businesses to suddenly have to contribute to information technology needs. Mr. Cullen stated that the current systems are old, hard to maintain, and that his department struggles to provide needed services. Mr. Cullen said that the systems have to be replaced, and that it is necessary to start looking ahead and putting money away now.

03:01 PM -- Dara Hessee, Legislative Liaison for the Governor's Office of Information Technology (OIT), spoke on behalf of John Conley, Deputy Chief Information Officer for OIT. Ms. Hessee indicated that OIT supports the bill and is heavily involved in such projects. She stated that the bill would provide a stable funding source for critical systems that need to be refreshed, and indicated that the systems are written in old programming language and that the skills needed to support the systems are harder to come by as state employees retire. Ms. Hessee said that OIT believes that the project will succeed under the current OIT Information Technology Consolidated Model and Project Governance Structure. She discussed OIT's role in helping to approve and govern major information technology projects such as this one. She discussed OIT's established project controls that increase project success, and stated that OIT helps set deadlines, control budgets, and determine whether a project is viable. Ms. Hessee discussed the Executive Governance Committee process, which is a new model designed to improve projects' success, and indicated that the model has had great success already. Ms. Hessee indicated that OIT would be working closely with the department to govern the project if the bill is passed.


BILL:	SB09-076
TIME:	03:05:12 PM
MOVED:	Heath
MOTION:	Moved prepared Amendment L.001 (Attachment E). The motion passed without objection.
SECONDED:
		VOTE
	Foster
	Harvey
	Mitchell
	Scheffel
	Tochtrop
	Heath
	Veiga

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


BILL:	SB09-076
TIME:	03:05:36 PM
MOVED:	Heath
MOTION:	Moved to refer Senate Bill 09-076, as amended, to the Committee on Finance. The motion passed on a 6-1 roll call vote.
SECONDED:
		VOTE
	Foster	Yes
	Harvey	Yes
	Mitchell	No
	Scheffel	Yes
	Tochtrop	Yes
	Heath	Yes
	Veiga	Yes

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

03:06 PM

The committee adjourned.