Senate Committee on Finance (02/07/2006)

Final
STAFF SUMMARY OF MEETING

SENATE COMMITTEE ON FINANCE

Date:	02/07/2006	ATTENDANCE

Time:	02:03 PM to 02:52 PM	Brophy	*
		Shaffer	X
Place:	SCR 354	Taylor	X
		Teck	X
This Meeting was called to order by		Tupa	*
	Senator Sandoval	Veiga	X
		Sandoval	*
This Report was prepared by
	Jason Schrock
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
SB06-048 SB06-124		Amended, Referred to Appropriations Referred to the Committee of the Whole

02:03 PM -- Senate Bill 06-048

Senator Veiga, chair, called the meeting to order. Senator Tapia, prime sponsor, explained the provisions of SB 06-048 which re-establishes the pilot program initially created through House Bill 05-1046 that allowed for gifts, grants, and donations to be accepted by the Director of Research of the Legislative Council in order to pursue the possibility of creating a dynamic model for analyzing tax policy changes. A Legislative Council Staff (LCS) memorandum discussing dynamic modeling issues was distributed to the committee (Attachment A). Senator Tapia emphasized that the bill does not require that a dynamic model be acquired and used. It only requires a study on the acquisition of a model. The bill requires the LCS director to report to the Executive Committee on any recommendations regarding the acquisition of a model. He explained how the necessary amount of donations were not received by the deadline last year. He discussed how the use of a dynamic model was not successful in some states. However, the acquisition and use of a dynamic model should be something on the horizon for the state. He stated that the bill would not cost the state money.

The following persons testified on the bill:

02:10 PM -- Mr. Kirk Mlinek, Director, LCS, discussed how the $120,000 in donations required in order to begin the dynamic model study was not deposited into an account by September 1, 2005, as required by HB 05-1046. However, he was aware that there were commitments from donors of up $120,000. He indicated that a variety of economic development organizations were the prime contributors.

Senator Tapia indicated that the bill states that only tax policy bills would be analyzed by a dynamic model. However, he would like to use a model to analyze other policy changes, such as the impacts of sending a mother to prison. He indicated that the study on a dynamic model could look at this possibility. Mr. Mlinek stated that he knew of no state that models such policy changes, but that the issue could be looked at.

02:19 PM

Senator Teck discussed his efforts with former Senator Shroeder to develop or acquire a dynamic model with the University of Denver's business school. He indicated that Colorado would need a customized model and that the state needs to take steps to develop a model.

Senator Tapia explained that HB 05-1046 allows LCS to make recommendations about the possibility of expanding the scope of bills modeled beyond tax policy bills.

Mr. Mlinek explained that dynamic impacts may not occur for up to 10 or 15 years and that the dynamic effects can be minimal.

02:26 PM -- Mr. Mike Mauer, Chief Economist, LCS, indicated that the benchmarks used to evaluate whether a model is effective should be whether the model helps the General Assembly make decisions and the number of bills that the model can be used for.

In response to Senator Shaffer, Mr Mauer indicated that it is hard to evaluate the performance of a model to see if its actual results are similar to the model's predicted results because there too many factors that affect the state's economy. The state is part of the global economy and exogenous, unpredictable factors can impact the economy significantly.

In response to Senator Tupa, Mr. Mauer indicated that preliminary research has not found any states using a dynamic model to evaluate non-tax policy issues, such as spending on child care. He indicated that there was a lack of data available for such modeling. He also explained that prediction errors are magnified as a forecast time horizon is expanded.

02:35 PM -- Mr. Clarke Becker, Economic Developers' Council of Colorado, testified in favor of the bill. He believe that the discussion on the drawbacks of dynamic modeling was premature. He explained that a dynamic model would provide the General Assembly a needed tool to help make decisions. He indicated that there was a commitment from the private sector for money for the dynamic model study.

Senator Teck discussed how the General Assembly could provide assistance in the data acquisition for a model. However, it will be a long process to develop a useful model.

02:40 PM

Senator Tapia closed by emphasizing that the bill just requires a study on the acquisition of a dynamic model. He discussed Amendment L.001 (Attachment B).

02:43 PM -- Mr. Ed DeCecco, Office of Legislative Legal Services, explained the provisions of the bill. The bill provides no timelines for when the dynamic model study must be completed.


BILL:	SB06-048
TIME:	02:46:13 PM
MOVED:	Teck
MOTION:	Motion to adopt L.001 (Attachment B). The motion passed without objection.
SECONDED:
		VOTE
	Brophy
	Shaffer
	Taylor
	Teck
	Tupa
	Veiga
	Sandoval
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	SB06-048
TIME:	02:47:42 PM
MOVED:	Teck
MOTION:	Motion to refer SB 06-048, as amended, to the Committee on Appropriations. The motion passed on a 7 - 0 vote.
SECONDED:
		VOTE
	Brophy	Yes
	Shaffer	Yes
	Taylor	Yes
	Teck	Yes
	Tupa	Yes
	Veiga	Yes
	Sandoval	Yes
Final YES: 7 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: PASS

02:48 PM -- Senate Bill 06-124

Senator Tapia, prime sponsor, explained the provisions of SB 06-124 which directs the State Treasurer to transfer the fund balance of moneys in the Electronic Benefits Transfer (EBT) Service Fund to the General Fund. A Joint Budget Committee document summarizing the bill was distributed to the committee (Attachment C).


BILL:	SB06-124
TIME:	02:50:32 PM
MOVED:	Shaffer
MOTION:	Motion to refer SB 06-124 to the Committee of the Whole with favorable recommendation. The motion passed on a 6 - 1 vote.
SECONDED:
		VOTE
	Brophy	No
	Shaffer	Yes
	Taylor	Yes
	Teck	Yes
	Tupa	Yes
	Veiga	Yes
	Sandoval	Yes
Final YES: 6 NO: 1 EXC: 0 ABS: 0 FINAL ACTION: PASS

02:52 PM

The committee recessed.