Bill Summary for Bill Number HB10-1174

Date: 02/09/2010

Final
BILL SUMMARY for HB10-1174

HOUSE COMMITTEE ON BUSINESS AFFAIRS AND LABOR

Votes: View-->	Action Taken:
Moved amendment L.001 (Attachment A). The motion Moved amendment L.002 (Attachment B). The motion Moved to postpone House Bill 10-1174 indefinitely.	Pass Without Objection PASS PASS

09:50 AM -- House Bill 10-1174

Representative Frangas, prime sponsor, presented House Bill 1174 concerning an increase in state revenues from the oil and gas severance tax to be used to promote jobs in the state, and, in connection therewith, temporarily halving the amount of the credit based on property taxes paid allowed against the tax on the severance of oil and gas; requiring the Department of Education to distribute 90 percent of the additional tax revenue to public schools for teacher retention; and requiring the Colorado Economic Development Commission to use ten percent of the additional tax revenue to increase the availability of credit to small businesses in Colorado. Under current law, oil and natural gas severance taxpayers can claim a tax credit of 87.5 percent of the local property taxes they pay on the value of their oil and gas production. This bill temporarily reduces the amount of the credit by half for tax years commencing after January 1, 2011, and before January 1, 2013.

The additional severance tax revenue generated by the reduction in the credit will be allocated:

90 percent to a newly-created Teacher Retention Cash Fund; and
10 percent to a newly-created Small Business Credit Cash Fund.

The money credited to the Teacher Retention Cash Fund is required to be appropriated to the Department of Education for teacher retention. The money is required to be distributed to school districts and the Charter School Institute based on student enrollment across the state.

The money in the Small Business Credit Cash Fund is required to be appropriated to the Colorado Economic Development Commission to increase the availability of credit to small businesses through the Colorado Credit Reserve Program. This program is administered by the Colorado Housing and Finance Authority.

09:52 AM

Representative Frangas distributed Amendments L.001 and L.002 (Attachments A and B respectfully). Representative Rice commented on the bill and asked the sponsor some questions.

10:00 AM -- Aron Diaz, representing the Associated Governments of Northwest Colorado, testified against the bill. Mr. Diaz said he realizes that education is struggling, but education's problems are rooted in various constitutional measures and the School Finance Act. He responded to questions from the committee regarding the impact the bill will have on individual property owners and statistics about the industry.

10:07 AM -- Virginia Love, representing the Colorado Competitive Council, testified against the bill. She said they are against the bill for the same reasons they were against Amendment 58. Ms. Love stated that all the other tax increases proposed this session will affect the oil and gas industry as well. She addressed earlier questions regarding the impact the bill would have on individual property owner royalties. Representative Liston asked Ms. Love to further explain her comments on Amendment 58. Ms. Love responded to additional questions.

10:13 AM -- Donnah Moody, representing the Colorado Association of Commerce and Industry, testified against the bill. She said they are against the bill for many of the same reasons as the previous witnesses. Representative A. Kerr asked how the current severance tax revenues are distributed.

10:17 AM -- Stan Dempsey, representing the Colorado Petroleum Association and the Colorado Oil and Gas Association, testified against the bill. Mr. Dempsey talked about the impact the bill will have on the industry especially in counties that have a higher number of taxing districts. He responded to earlier questions from the committee regarding a study from the Fraser Institute. A discussion about the report ensued. Mr. Dempsey also explained how the severance tax receipts are distributed stating that half goes to local government and the other half goes to the Department of Natural Resources. Mr. Dempsey also talked about Amendment 58. Representative Middleton pointed out that the Fraser Institute has only completed the survey for three years and asked Mr. Dempsey to explain the factors that could be responsible for Colorado's drop in rank. Mr. Dempsey responded. Representative Gagliardi asked Mr. Dempsey to provide the number of oil and gas permits that have been pulled over the last few years.

10:41 AM -- Debra Anderson, representing National Association of Royalty Owners (NARO), testified against the bill.

10:48 AM -- Mary Lou Brophy, representing NARO, testified against the bill. She talked about the recent struggles in the industry and how it has impacted her and other owners. Representative Bradford asked some questions regarding the average income for one stripper well.

10:56 AM -- Neil Ray, President NARO, testified against the bill. He talked about the production in various areas around Colorado. Representative Liston asked why Mr. Ray has moved from Colorado to other states.

11:02 AM -- Ed DeCecco, Office of Legislative Legal Services and drafter of the bill, responded to questions from the committee about the amendments.


BILL:	HB10-1174
TIME:	11:02:35 AM
MOVED:	Rice
MOTION:	Moved amendment L.001 (Attachment A). The motion passed without objection.
SECONDED:	Gagliardi
		VOTE
	Balmer
	Bradford
	Casso
	Kerr A.
	Liston
	Middleton
	Priola
	Soper
	Stephens
	Gagliardi
	Rice

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

11:05 AM

Committee members commented on Amendment L.002.


BILL:	HB10-1174
TIME:	11:05:00 AM
MOVED:	Rice
MOTION:	Moved amendment L.002 (Attachment B). The motion passed 6-5.
SECONDED:	Kerr A.
		VOTE
	Balmer	No
	Bradford	No
	Casso	Yes
	Kerr A.	Yes
	Liston	No
	Middleton	Yes
	Priola	No
	Soper	Yes
	Stephens	No
	Gagliardi	Yes
	Rice	Yes

Not Final YES: 6 NO: 5 EXC: 0 ABS: 0 FINAL ACTION: PASS

11:11 AM

Representative Frangas gave some closing comments on the bill. Representative A. Kerr commented on the importance of funding education and expressed his concerns with the bill, including the fact that it is a temporary fix to the problem. He said they need to find a stable source of funding. Representative Soper commented on the bill and mentioned the fact that Amendment 58 was voted down in Colorado.


BILL:	HB10-1174
TIME:	11:17:18 AM
MOVED:	Bradford
MOTION:	Moved to postpone House Bill 10-1174 indefinitely. The motion passed 9-2.
SECONDED:	Balmer
		VOTE
	Balmer	Yes
	Bradford	Yes
	Casso	No
	Kerr A.	Yes
	Liston	Yes
	Middleton	Yes
	Priola	Yes
	Soper	Yes
	Stephens	Yes
	Gagliardi	No
	Rice	Yes

Final YES: 9 NO: 2 EXC: 0 ABS: 0 FINAL ACTION: PASS