Bill Summary for Bill Number HB05-1319

Final
BILL SUMMARY for HB05-1319

HOUSE COMMITTEE ON FINANCE

Votes:

Action Taken:

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11:43 AM -- House Bill 05-1319 - Concerning State Child Care and Child Tax Credits

Representative Solano, prime sponsor, explained that House Bill 05-1319 makes the refundable Colorado child care credit that becomes available in years when there is a TABOR surplus permanent beginning January 1, 2006. Representative Solano distributed a Legislative Council Staff memorandum on the fiscal assessment of amendment L.001 (Attachment A) and asked staff to explain how the amendment changes the fiscal impact of the bill. Representative Vigil, chair, asked Mr. Mike Mauer, Chief Economist for Legislative Council Staff to explain the amendment.

11:46 AM -- Mr. Mike Mauer, Chief Economist for Legislative Council Staff began by explaining current law as it applies to the refundable child care tax credit. Mr. Mauer explained amendment L.001 decouples the tax credit from the passage of House Bill 05-1194 as the introduced version of House Bill 05-1319 did and makes the credit effective January 1, 2005. Mr. Mauer said given the adoption of L.001, as long as there is a sufficient TABOR surplus available through the forecast period to allow the credit to be implemented each year whether or not the bill, as amended by L.001 is passed, there will be no effect on state General Fund revenues through FY 2009-10.

But Mr. Mauer continued to explain that if (and when) the state experiences a "ratchet effect" under TABOR in the future, the state would see its base decline less under current law than the amount that would occur under the bill. Under the bill, the state would collect less revenue during a ratchet down and would therefore ratchet down further, lowering the TABOR base for all future years.

Representative Witwer commented that it may not be possible to fund all of the programs that the General Assembly is looking at expanding while enacting more tax credits and deductions for other taxpayers. The committee discussed the measures that are being debated by the General Assemble that are tied to the passage of House Bill 05-1194. The committee continued to discuss the funding requirements the state has for other programs.

The committee discussed whether a provision is needed that would require annual re-authorization to make the credit available each year. Mr. Mauer pointed out the if House Bill 05-1194 passes, the credit under House Bill 05-1319 would reduce General Fund revenues by the amounts in the March 30, 2005, fiscal note because House Bill 05-1194 eliminates the TABOR surplus for five years. Mr. Mauer discussed the funding requirements for House Bill 05-1319 with and without the passage of House Bill 05-1194 in the November 2005 General Election.

The following persons testified:

11:57 AM -- Ms. Barbara O'Brien, Colorado Children's Campaign, testified in support of the legislation. Ms. O'Brien asked the committee to find a way to make Colorado's tax policy reflect social policies that support families with children without being a burden on the state's budget.

11:59 AM -- Ms. Cathy Wanstrath, Children's Legislative Cooperatives, urged the committee to support House Bill 05-1319 and pointed out a way to make the child care provider tax credit more fair for child care providers who have children at home while taking care of other children.

Representative Vigil commented that more time may be need to draft amendments that mitigate the committee's concerns regarding funding and the need to re-authorize the credit each year. After a brief committee discussion, Representative Vigil pulled the bill off the table and commented that it may be scheduled in the upcoming two weeks in the House Finance Committee.

12:06 PM

Adjourn.