Final
STAFF SUMMARY OF MEETING

SENATE COMMITTEE ON FINANCE

Date:03/23/2006
ATTENDANCE
Time:10:10 AM to 11:50 AM
Brophy
*
Shaffer
X
Place:SCR 354
Taylor
*
Teck
X
This Meeting was called to order by
Tupa
*
Senator Veiga
Veiga
X
Sandoval
*
This Report was prepared by
Jason Schrock
X = Present, E = Excused, A = Absent, * = Present after roll call
Bills Addressed: Action Taken:
HB06-1060
HB06-1209
HB06-1275		Laid Over
Amended, Referred to the Committee of the Whole
Amended, Referred to the Committee of the Whole

10:10 AM -- House Bill 06-1060

Senator Veiga, chair, called the meeting to order. Senator Entz, prime sponsor, explained the provisions of HB 06-1060 which modifies the definition of a "farm operation" in the statutes that govern agriculture and livestock sales and use tax exemptions to include horticultural and floricultural activities. He stated that Colorado must create the exemption to better compete with other states' and countries' horticultural and floricultural industries.

The following persons testified on the bill:

10:14 AM -- Mr. Mike Gilsdorf, Arapahoe Acres Nursery, spoke in favor of the bill. He explained that his company, which grows horticultural produce, would qualify for the sales and use tax exemption provided by the bill and that his other retail and wholesales stores would not. He indicated that his horticultural produce company is classified as agricultural and that the taxation of his operations should be treated the same as other agricultural companies. He indicated that the bill would help his company compete with companies in other states.

10:21 AM -- Mr. Bill Kluth, Tagawa Greenhouses, Inc., spoke in favor of the bill. He discussed the importance of the horticultural and floricultural industries to the state's economy and explained that businesses in these industries are highly impacted by the costs of doing business. He indicated that business costs were high in the state and thus there was less money for investment. He stated that it is difficult to compete with other states and that his business may have to relocate outside the state. He indicated that the bill would help his business compete.

The committee discussed prior legislation to classify horticulture land as agricultural. This bill relates only to sales and use tax and is not a property tax issue.


10:29 AM

Senator Entz discussed how the bill would fit under the spending requirements of Referendum C. He stated that horticulture companies should be treated the same as agriculture companies and that the bill only pertains to producers, not wholesalers and retailers.

Senator Teck discussed the need for the General Assembly to look to the long-term in deciding whether the bill would help the state, regardless of Referendum C's provisions. Senator Brophy discussed whether the lack of a sales tax exemption drove equipment buyers out of the state for purchases and thought that equipment used for agriculture and horticulture should be treated the same for taxation purposes.

Senator Teck also discussed whether the size of the exemption would have a significant impact on the horticultural and floricultural industries. He also wondered whether the tax exemption would help equipment sellers more than the horticultural and floricultural industries.


10:41 AM

Senator Veiga explained her opposition to using Referendum C money for the tax exemption.
BILL:HB06-1060
TIME: 10:41:30 AM
MOVED:Brophy
MOTION:Motion to refer HB 06-1060 to the Committee on Appropriations. The motion failed on a tie vote.
SECONDED:
VOTE
Brophy
Yes
Shaffer
No
Taylor
Yes
Teck
Yes
Tupa
No
Veiga
No
Sandoval
Excused
Final YES: 3 NO: 3 EXC: 1 ABS: 0 FINAL ACTION: TIE


10:42 AM

The bill was pulled off the table.
10:43 AM -- House Bill 06-1209

Senator Mitchell, prime sponsor, explained the provisions of HB 06-1209 which extends the period that the state income tax return will include a voluntary contribution designation benefitting the Colorado Special Olympics Fund from tax year 2006 through tax year 2008. He discussed the amount of the contributions for the checkoff and stated that it generally receives the third highest amount of contributions. He introduced representatives from the Special Olympics. Senator Teck commented on the bravery of participants in the Special Olympics.

The following people testified on the bill:

10:47 AM -- Ms. Gayle Pundsack, Special Olympics Colorado, spoke in favor of bill. She explained that funding for the checkoff provides for transportation, equipment, uniforms, and event expenses. She stated that the number of participants in Special Olympics increase each year and thus funding needs increase each year. She explained that the Special Olympics were more than just a sports program; it helps with socialization, life skills, and self-esteem.

10:51 AM -- Ms. Erin Hollaway, Special Olympics participant and spokesperson, spoke in favor of bill. She discussed how Special Olympics had changed her life. From the program she has gained pride and self-worth and she is now employed full-time and lives independently in her own home. She also serves on the Board of Directors for Special Olympics and is a messenger for Special Olympics.

Senator Mitchell closed by discussing a Special Olympics soccer match he witnessed that stuck with him in which the game ended in a tie and a participant ended up shouting: "everybody wins."
BILL:HB06-1209
TIME: 10:59:16 AM
MOVED:Tupa
MOTION:Motion to adopt L.002 (Attachment A). The amendment extends the checkoff until tax year 2016, rather than 2008. The motion passed without objection.
SECONDED:
VOTE
Brophy
Shaffer
Taylor
Teck
Tupa
Veiga
Sandoval
Excused
Not Final YES: 0 NO: 0 EXC: 1 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:HB06-1209
TIME: 11:01:13 AM
MOVED:Shaffer
MOTION:Motion to refer HB 06-1209, as amended, to the Committee of the Whole with favorable recommendation. The motion passed on a 6 -0 vote.
SECONDED:
VOTE
Brophy
Yes
Shaffer
Yes
Taylor
Yes
Teck
Yes
Tupa
Yes
Veiga
Yes
Sandoval
Excused
Final YES: 6 NO: 0 EXC: 1 ABS: 0 FINAL ACTION: PASS



11:02 AM -- House Bill 06-1275

Senator Brophy, prime sponsor, explained the provisions of HB 06-1275 which requires the state property tax administrator to use the income approach in determining the actual value of wind energy property. The amended bill applies only to facilities beginning operation in 2006 or later.

The following people testified on the bill:

11:05 AM -- Mr. Ken Fehringer, Feetz Community, spoke in favor of the bill. He stated that a wind farm in his county has generated government revenue and that it is good for the environment. He discussed the benefits of the construction of more wind turbines in his county.

11:07 AM -- Mr. Brent Orr, representing farmer-owned wind projects, spoke in favor of the bill. He discussed the implications of the expiration of the federal production tax credit. He indicated it is difficult right now to get new wind turbines in the state because the demand for wind turbines is outpacing supply. He commented on the increased revenue for local governments due to more wind turbines. He also explained how property tax revenue is declining due to the current approach to determining the value of wind energy property and that the bill would cause steadily increasing revenue for local governments in the long term.

11:14 AM -- Mr. Jack McClavey, Logan County, spoke in favor of the bill. He explained that the bill would help farmers and the economy.

11:16 AM -- Mr. Travis Berry, Colorado Competitive Council, spoke in favor of the bill. He indicated that wind energy development is a positive benefit for communities and the economy as a whole.

11:17 AM -- Mr. Doug Carter, Invenergy, spoke in favor of the bill. He indicated that a former Colorado Supreme Court Justice believes that the bill is constitutional. He stated that wind turbines are currently being placed in states where it is most economical and that the demand for wind turbines is outpacing supply. Further, other states are more competitive in attracting wind turbines than Colorado. He hoped that the bill would help Colorado compete for wind turbines.

11:20 AM -- Mr. Landon Gates, Colorado Farm Bureau, spoke in support of the bill. He explained that the bill would create rural economic development opportunities and that wind turbines are beneficial for farmers because farmers can generate income from them and they do not take up much of their land for farming. He commented on the difficulty created by the scheduled 2007 expiration of the federal production tax credit for long-term planning. He also stated that certain areas of the state are at a competitive advantage for attracting wind turbines because they have better wind and thus it is not practical to simply allow local governments to compete for wind turbines.

Senator Teck indicated that he liked the intent of the bill but was concerned with having different assessment processes for the same type of property. He was concerned about the potential of a successful lawsuit against the practice which could cause significant revenue problems for local governments in the future.

11:25 AM -- Ms. JoAnn Groff, State Property Tax Administrator, did not take a position on the bill and indicated that her office would not determine whether the bill was constitutional or not. She indicated that the bill is assumed constitutional if it is passed by the General Assembly. She discussed constitutional issues regarding the valuation of property in state statute. She commented on a precedent that determined that a tax law was constitutional because the law treated taxpayers similarly in the amount they paid, even though the methodology for levying the tax was different.

Ms. Groff continued by discussing how the bill would cause wind energy properties beginning operation in 2007 and those before 2007 to have the same property tax bill amount over a 20 year period even though in any given year there would be different amounts paid by the old and new facilities. She indicated that facilities beginning operation in 2007 will likely pay more than existing facilities after the 20-year period. She indicated that there are only four existing facilities currently. She also explained that if an existing facility were to be replaced in the future it would still not be classified as a new wind facility under the bill.

Senator Brophy commented on the implications of the advancement of wind energy technology to the wind energy facility valuation process in the future.


11:36 AM

Senator Teck again discussed his concern over the nonuniformity of the valuation process for new and existing facilities that would be caused by the bill. The committee discussed the constitutionality of bill, the original fiscal note for the bill, and how its amendments have impacted the fiscal impact.

11:42 AM -- Mr. Doug Carter, Invenergy, came back to the table and discussed the constitutionality of the bill. He explained that the wind energy industry would most likely not file a lawsuit regarding the differing valuation methodology proposed by the bill.

Senator Teck guaranteed that there will be an appeal to the Board of Assessment of Appeals in the future when a company sees that it is being treated differently from another company. He also expressed concern about the precedent the bill would set for other types of property in the state.

Mr. Carter stated that it was important to look at the bill as a way to attract more wind energy facilities and help the state compete with other states.


11:47 AM

Senator Brophy closed by discussing the need to attract wind energy facilities to the state now.
BILL:HB06-1275
TIME: 11:48:16 AM
MOVED:Brophy
MOTION:Motion to adopt L.002 (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:HB06-1275
TIME: 11:49:17 AM
MOVED:Brophy
MOTION:Motion to refer HB 06-1275, as amended, to the Committee of the Whole. The motion passed on a 6 - 1 vote.
SECONDED:
VOTE
Brophy
Yes
Shaffer
Yes
Taylor
Yes
Teck
No
Tupa
Yes
Veiga
Yes
Sandoval
Yes
Final YES: 6 NO: 1 EXC: 0 ABS: 0 FINAL ACTION: PASS


11:50 AM

The committee recessed.