House Committee on Finance (03/08/2006)

Final
STAFF SUMMARY OF MEETING

HOUSE COMMITTEE ON FINANCE

Date:	03/08/2006	ATTENDANCE

Time:	01:38 PM to 05:30 PM	Benefield	X
		Cloer	X
Place:	HCR 0107	Crane	X
		Frangas	X
This Meeting was called to order by		Garcia	X
	Representative Vigil	Harvey	X
		Jahn	X
This Report was prepared by		Kerr	X
	Ron Kirk	Marshall	X
		Massey	X
		McCluskey	X
		Judd	X
		Vigil	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
HB06-1344 HB06-1050 HB06-1114 HB06-1163 HCR06-1002 HB06-1296 HB06-1360 HB06-1361 HB06-1365		Amended, Referred to Appropriations Amended, Laid Over Laid Over Amended, Laid Over Laid Over Postponed Indefinitely Referred to Appropriations Amended, Referred to Appropriations Laid Over

01:39 PM -- House Bill 06-1344 - Concerning Domestic Partnerships Between Same-Sex Couples

Representative Plant, prime sponsor, briefly explained the provisions in the bill.

The following persons testified:

01:42 PM -- Ms. Carmen Lowler, representing herself and the Colorado League of Women Voters, testified in support of the bill. Ms. Lowler commented that members of the gay and lesbian community pay taxes and are like other responsible persons in the community. Ms. Lowler discussed the issues that the older gay and lesbian community face and closed by commenting on the issues of legal standing under the bill and the importance of recognizing same-sex partners who have common living arrangements.

01:48 PM -- Mr. Michael Brewer, Equal Rights Colorado, testified in support of the legislation. Mr. Brewer closed by discussing the fee in the bill.

Representative Crane distributed amendments L.005 (Attachment A) and L.006 (Attachment B) to the committee members. He explained that amendment L.005 creates the Civil Rights Division Cash Fund as a fund that would receive money from an increased fee that would offset any General Fund funding requirements in the bill. Amendment L.006 increases the fee from $7 to $52 to offset the need for any General Fund funding. After a brief committee discussion each amendment was moved by Representative Crane.


BILL:	HB06-1344
TIME:	01:50:11 PM
MOVED:	Crane
MOTION:	Moved amendment L.005. (The amendment creates the Civil Rights Division Cash Fund as a fund that would receive money from an increased fee that would offset any General Fund funding requirements in the bill.) The motion passed on a 7-6-0 vote.
SECONDED:	Kerr
		VOTE
	Benefield	No
	Cloer	Yes
	Crane	Yes
	Frangas	No
	Garcia	No
	Harvey	Yes
	Jahn	No
	Kerr	Yes
	Marshall	Yes
	Massey	Yes
	McCluskey	Yes
	Judd	No
	Vigil	No
Not Final YES: 7 NO: 6 EXC: 0 ABS: 0 FINAL ACTION: PASS


BILL:	HB06-1344
TIME:	01:59:21 PM
MOVED:	Crane
MOTION:	Moved amendment L.006. (The amendment increases the fee from $7 to $52 to offset the need for any General Fund funding.) The motion passed on a 7-6-0 vote.
SECONDED:	Kerr
		VOTE
	Benefield	No
	Cloer	Yes
	Crane	Yes
	Frangas	No
	Garcia	No
	Harvey	Yes
	Jahn	No
	Kerr	Yes
	Marshall	Yes
	Massey	Yes
	McCluskey	Yes
	Judd	No
	Vigil	No
Not Final YES: 7 NO: 6 EXC: 0 ABS: 0 FINAL ACTION: PASS


BILL:	HB06-1344
TIME:	02:00:26 PM
MOVED:	Frangas
MOTION:	Refer House Bill 06-1344, as amended, to the Committee on Appropriations. The motion passed on a 8-5-0 vote.
SECONDED:	Judd
		VOTE
	Benefield	Yes
	Cloer	No
	Crane	No
	Frangas	Yes
	Garcia	Yes
	Harvey	No
	Jahn	Yes
	Kerr	No
	Marshall	Yes
	Massey	No
	McCluskey	Yes
	Judd	Yes
	Vigil	Yes
Final YES: 8 NO: 5 EXC: 0 ABS: 0 FINAL ACTION: PASS

02:04 PM -- House Bill 06-1050 - Concerning A Budget Stabilization Fund

Representative Buescher and Representative Hall, explained the provisions in House Bill 06-1050 that create a rainy day fund from several funding sources. Representative Buescher distributed amendment L.003 and discussed it (Attachment C). Representative Buescher said the amendment changes the funding sources for the rainy day fund and also allows money in the fund to be used for any purpose with a two-thirds vote of the legislature. Funding sources include: an annual General Fund appropriation of $5 Million (appropriation is optional if the fund balance is at least 5% of total General Fund appropriations under the 6% limit of the preceding fiscal year or if General Fund revenue is estimated to limit General Fund appropriations to growth of less than 4%.); $10 million of the tobacco settlement money that is credited to the General Fund annually; and 10% of excess General Fund reserves.) Staff distributed a March 2006 memorandum on a comparison of 2006 rainy day fund legislation (Attachment D).

Representative Hall commented on the need and importance of a state emergency fund and said that once General Fund revenues sink below 4 percent, the budget stabilization fund would kick in. Representative Buescher commented on the 5 percent threshold that was selected as the level for the budgetary reserve.

The committee discussed the tobacco settlement funding component in the bill. Representative Buescher commented on his concern about placing fiscal policy changes in the Colorado Constitution.

The following person testified:

02:23 PM -- Mr. Herb Homan, Colorado Senior Lobby, testified in support of the original bill. Mr. Homan commented that the state needs a rainy day fund and with the amendment, he would more strongly support the bill. Mr. Homan commented on the appropriations process and said that it resembles a "mine field". Mr. Homan closed by saying that earlier versions of a rainy day fund was not as comprehensive as the 2006 legislation.

The committee engaged in a brief discussion about the funding mechanisms in the bill. Representative Vigil, Chairman, placed the bill on the table for action and the committee adopted amendment L.003. Representative Vigil, took the bill off the table for action to allow the sponsors time to combine provisions of the rainy day fund bills and allow the committee time to hear testimony on the other rainy day fund legislation.


BILL:	HB06-1050
TIME:	02:27:09 PM
MOVED:	Harvey
MOTION:	Moved amendment L.003. (The amendment changes the funding sources for the rainy day fund and also allows money in the fund to be used for any purpose with a two-thirds vote of the legislature. Funding sources include: an annual General Fund appropriation of $5 Million (appropriation is optional if the fund balance is at least 5% of total General Fund appropriations under the 6% limit of the preceding fiscal year or if General Fund revenue is estimated to limit General Fund appropriations to growth of less than 4%.); $10 million of the tobacco settlement money that is credited to the General Fund annually; and 10% of excess General Fund reserves.) The motion passed without objection by those members present. Representative Vigil, Chairman, took the bill off the table to allow the committee to hear testimony on the remaining rainy day fund bills. All rainy day fund bills will be heard "for action only" on a future date determined by the Chairman of the House Finance Committee.
SECONDED:	McCluskey
		VOTE
	Benefield
	Cloer
	Crane
	Frangas
	Garcia
	Harvey
	Jahn
	Kerr
	Marshall
	Massey
	McCluskey
	Judd
	Vigil
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

02:31 PM -- House Bill 06-1114 - Concerning the Creation of a Rainy Day Fund

Representative Lundberg, prime sponsor, explained the bill to the committee and the on-going need for the bill. After a brief committee discussion, the bill was taken off the table for action.

02:37 PM -- House Bill 06-1163 - Concerning A Budget Stabilization Fund

Representative Penry, prime sponsor, explained the provisions of House Bill 06-1163 and distributed amendment L.004 (Attachment E) to committee members. Representative Penry asked staff to distribute a memorandum on the fiscal assessment of the amendment (Attachment F). He explained that rather than selling as much of Colorado's future tobacco master settlement payments as is financially feasible, L.004 sells a portion of the state's future payments. In particular, L.004 sells all but an annual amount of $70 million. In order to maximize the return to the state, L.004 specifies that the least risky portion of each year's payment be pledged to the sale and eliminates the limit on the term of securitization. The committee discussed the amendment and bill.

02:46 PM -- The following persons testified:

02:46 PM -- Mr. Ben Stein, Deputy State Treasurer, testified in support of the bill and distributed a handout on securitization of money from the settlement agreement (Attachment G) and an article on tobacco payments to the states (Attachment H) found in the Wall Street Journal. Mr. Stein discussed the handouts and commented on reasons to use moneys from the Master Settlement Agreement to fund a rainy day fund.

Mr. Stein explained that securitization is the structuring of a stream of cash flows into a liquid security for sale to investors. Securitization would yield the state a lump-sum payment of about $759 million if the state pledges about 46 percent of its Tobacco Securitization Revenues. Mr. Stein continued by discussing the transfer of risk from the state to investors under a securitization scenario. Mr. Stein closed by saying that the state could sell rights to the cash flows for 60 years and get about $1.5 billion in up-front money. After some comments, the committee discussed the transfer of risk under the bill and whether the fund should be protected by the constitution.

02:59 PM -- Mr. Russell Heise, RBC Capital Markets, testified in support of the bill.

03:03 PM -- Mr. Tony Milo, Colorado Contractors Association, testified in support of the legislation and discussed the need for a state emergency fund.


BILL:	HB06-1163
TIME:	03:06:43 PM
MOVED:	Massey
MOTION:	Moved amendment L.004. (Rather than selling as much of Colorado's future tobacco master settlement payments as is financially feasible, L.004 sells a portion of the state's future payments. In particular, L.004 sells all but an annual amount of $70 million. In order to maximize the return to the state, L.004 specifies that the least risky portion of each year's payment be pledged to the sale and eliminates the limit on the term of securitization.) The motion passed without objection by those members present. Representative Vigil, Chairman, took the bill off the table to allow the committee to hear testimony on the remaining rainy day fund bills. All rainy day fund bills will be heard "for action only" on a future date determined by the Chairman of the House Finance Committee.
SECONDED:	Judd
		VOTE
	Benefield
	Cloer
	Crane
	Frangas
	Garcia
	Harvey
	Jahn
	Kerr
	Marshall
	Massey
	McCluskey
	Judd
	Vigil
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection

03:06 PM -- House Concurrent Resolution 06-1002 - Concerning a Constitutional Rainy Day Fund

Representative Gardner, prime sponsor, explained the provisions of the resolution that create a rainy day fund. He distributed amendment L.001 (Attachment I) to committee members. Representative Gardner explained that the resolution would use General Fund revenue retained by the state under Referendum C in excess of the amount estimated to be retained in the Blue Book during state fiscal years 2005-06 through 2009-10 as a funding source. Additional money from any legal source can be transferred or appropriated to the fund. He explained that there is no funding cap in the resolution. Representative Gardner said that beginning in FY 2010-11, money can be transferred from the fund to the General Fund if revenue is insufficient to allow for at least 5 percent growth in General Fund appropriations. The transfer would require an affirmative vote of two-thirds of each house of the General Assembly.

The committee discussed the funding sources in the resolution and the amendment that if adopted would change the funding sources.

The following person testified:

03:18 PM -- Mr. Ben Stein, Deputy State Treasurer, discussed the issue of whether a rainy day fund should be established in the State Constitution or be a statutory fund. Mr. Stein commented on how bond-rating agencies would view a constitutional rainy day fund as compared to a statutory fund. He closed by discussing possible funding sources along with a floor for the fund set at an amount of 5 to 10 percent of the General Fund Budget.

After a brief committee discussion, the bill was laid over.

03:37 PM -- House Bill 06-1296 - Concerning Penalties for Violations of Illegal Possession of Alcohol by Underage Persons.

Representative Penry, prime sponsor, explained that House Bill 06-1296, increases penalties for illegal possession or consumption of alcohol by a minor, removing a court's discretion to order certain penalties such as community service and allowing the Department of Revenue to administratively revoke a minor's driver's license for a second or subsequent offense prior to conviction in a court of law. It requires a minor convicted of illegally possessing or consuming alcohol to pay a $25 surcharge which would be credited to the newly-created Administrative Hearing Fund. First-time offenders would be eligible to apply for a probationary license.

After a brief committee discussion, Representative Vigil, Chairman, placed the bill on the table for action.


BILL:	HB06-1296
TIME:	03:45:15 PM
MOVED:	Frangas
MOTION:	Refer House Bill 06-1296 to the Committee on Appropriations. The motion failed on a 7-5-0 vote.
SECONDED:	Harvey
		VOTE
	Benefield	No
	Cloer	Absent
	Crane	No
	Frangas	Yes
	Garcia	No
	Harvey	Yes
	Jahn	No
	Kerr	Yes
	Marshall	No
	Massey	No
	McCluskey	Yes
	Judd	Yes
	Vigil	No
Not Final YES: 5 NO: 7 EXC: 0 ABS: 1 FINAL ACTION: FAIL


BILL:	HB06-1296
TIME:	03:47:53 PM
MOVED:	Garcia
MOTION:	Moved to postpone House Bill 06-1296 indefinitely. The motion passed on a 8-4-0 vote.
SECONDED:	Judd
		VOTE
	Benefield	Yes
	Cloer	Absent
	Crane	Yes
	Frangas	No
	Garcia	Yes
	Harvey	No
	Jahn	Yes
	Kerr	No
	Marshall	Yes
	Massey	Yes
	McCluskey	No
	Judd	Yes
	Vigil	Yes
Final YES: 8 NO: 4 EXC: 0 ABS: 1 FINAL ACTION: PASS

03:48 PM -- House Bill 06-1360 - Concerning Incentives for Bioscience Discoveries

Representative Riesberg, prime sponsor, explained that House Bill 06-1360 creates the Bioscience Discovery Evaluation Grant Program to improve and expand the evaluation of new bioscience discoveries at research institutions with the intent of accelerating the development of new products and services. Administration of the grant program would be provided by the Office of Economic Development (OED) in the Governor's office in consultation with a Colorado bioscience membership organization. Representative Riesberg closed by saying that the bill establishes a grant application process for grants of up to $150,000 per bioscience research project.

The following persons testified:

03:52 PM -- Mr. David Allen, University of Colorado, testified in support of the legislation and distributed handouts on the legislation (Attachment J). Mr. Allen said that House Bill 06-1360 will create jobs and generate new tax revenue. He urged the committee to support the legislation.

04:19 PM -- Mr. Tom Clark, Metro Denver Chamber of Commerce, testified in support of the legislation. Mr. Clark maintained that the bioscience industry in Colorado holds great growth potential and will provide Colorado with significant returns in terms of tax revenue.

04:31 PM -- Dr. Michael Salem, National Jewish Center, testified in support of the legislation. He closed by saying that House Bill 06-1360 is important legislation for small businesses in Colorado.

04:43 PM -- Dr. Richard Duke, Colorado Bioscience Association, testified in support of the measure.

04:51 PM -- Ms. Sue Halk, Colorado Software Internet Provider, testified in support of the legislation.


BILL:	HB06-1360
TIME:	04:54:12 PM
MOVED:	Massey
MOTION:	Refer House Bill 06-1360 to the Committee on Appropriations. The motion passed on a 10-2-1 vote.
SECONDED:	Frangas
		VOTE
	Benefield	Yes
	Cloer	Yes
	Crane	Yes
	Frangas	Yes
	Garcia	Yes
	Harvey	No
	Jahn	Excused
	Kerr	Yes
	Marshall	Yes
	Massey	Yes
	McCluskey	Yes
	Judd	No
	Vigil	Yes
Final YES: 10 NO: 2 EXC: 1 ABS: 0 FINAL ACTION: PASS

04:57 PM -- House Bill 06-1361 - Concerning Incentives for Bioscience Companies

Representative Green, prime sponsor, explained that House Bill 06-1361 creates the Colorado Bioscience Research Program to enhance the access of bioscience companies to research infrastructure at research institutions. Representative Green said that this would be accomplished by offering research incentives to offset the indirect costs associated with research services performed by research institutions. Administration of the program would be provided by the Office of Economic Development (OED) in the Governor's office in consultation with a Colorado bioscience membership organization. The bill establishes a process by which a company may request an incentive, and establishes eligibility criteria for the incentives. Representative Green said that each research incentive awarded may not exceed the lessor of the indirect costs associated with the research project, or $20,000 per project. A bioscience company may not receive research incentives totaling more than $40,000 within any 12-month period. Representative Green closed by saying that professionals in the bioscience industry are very highly paid having an average industry salary of $63,000 per year.

The following persons briefly testified:

05:09 PM -- Ms. Kathy Delehoy, Colorado State University, testified in support of the legislation.
05:10 PM -- Mr. Alex Franzusoff, Globe Immune, testified in support of the legislation.

05:11 PM -- Mr. Michael Browning, University of Colorado Health Sciences Center, testified in support of the bill.


BILL:	HB06-1361
TIME:	05:13:06 PM
MOVED:	McCluskey
MOTION:	Moved amendment L.001 (Attachment K). (The amendment advances the cash fund expenditure and funding from FY 2005-06 to FY 2006-07.) The motion passed without objection by those members present.
SECONDED:	Massey
		VOTE
	Benefield
	Cloer
	Crane
	Frangas
	Garcia
	Harvey
	Jahn
	Kerr
	Marshall
	Massey
	McCluskey
	Judd
	Vigil
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	HB06-1361
TIME:	05:13:42 PM
MOVED:	Frangas
MOTION:	Refer House Bill 06-1361, as amended, to the Committee on Appropriations. The motion passed on a 10-3-0 vote.
SECONDED:	Jahn
		VOTE
	Benefield	Yes
	Cloer	Yes
	Crane	Yes
	Frangas	Yes
	Garcia	No
	Harvey	No
	Jahn	Yes
	Kerr	Yes
	Marshall	Yes
	Massey	Yes
	McCluskey	Yes
	Judd	No
	Vigil	Yes
Final YES: 10 NO: 3 EXC: 0 ABS: 0 FINAL ACTION: PASS

05:15 PM -- House Bill 06-1365 - Concerning Performance-Based-Budgeting

Representative Frangas, prime sponsor, explained the provisions of the bill. Effective July 1, 2009, Representative Frangas said that House Bill 06-1365 repeals the requirement in current law that the ongoing review procedure for existing programs in state government be based on implementation of a zero-based budgeting program. In its place, this bill requires the Joint Budget Committee (JBC), in cooperation with the Legislative Audit Committee, to implement a performance-based budget for state fiscal years beginning with FY 2009-10. The bill identifies the goals and objectives of a performance-based budget. Representative Frangas clarified that "Performance-based budget" is defined as a budget in which all appropriations to and expenditures by a state agency or institution shall be expressly linked to the goals and objectives of the state agency or institution and that requires performance measures that are designed to both measure efforts to achieve goals and objectives and to strive for savings.

Representative Vigil commented on the need for more accountability in state agencies. Representative Massey discussed whether the bill as introduced would apply to K-12 school districts. The committee engaged in a discussion on whether the bill needed clarification to exclude K-12 school districts from the provisions in the bill. After a brief discussion, Representative Vigil, Chairman, laid over House Bill 06-1365 to allow the sponsor and the drafting office time to assess whether the bill should be amended to exclude school districts.

05:31 PM

Adjourn.