Final
BILL SUMMARY for HB05-1194

HOUSE COMMITTEE ON FINANCE

Votes:
Action Taken:
Moved amendment L.003 (technical amendment). The
Moved amendment L.005 (Attachment P). (The amendm
Moved amendment L.007 (Attachment O). (The amendm
Moved amendment L.009 (Attachment Q). (The amendm
Refer HB 05-1194, as amended, to the Committee on 		Pass Without Objection
FAIL
FAIL
FAIL
PASS



01:44 PM -- House Bill 05-1194 - Concerning A Stable Means Of Funding Budgetary Needs

Representative Romanoff, prime sponsor, began by commenting on the legislature's recent efforts to balance the state's budget given the economic downtown that began in 2001 and the terrorist attacks that happened shortly afterwards. Representative Romanoff said the chief problem Colorado faces is job growth. He stated that businesses are primarily concerned about paying high taxes and have expressed the need for access to an educated workforce. Further, the state is not meeting its needs when it comes to education and transportation. He stated that the state needs a solution to stabilize its fiscal situation. He explained that House Bill 05-1194 is a simple, long-term plan that allows the state to cut taxes and invest in Colorado. This legislation would reduce the state income tax rate and make revenue available for Colorado's vital programs. He distributed a packet of materials on state revenues (Attachment A) and amendment L.003 (Attachment B) to committee members. Representative Romanoff closed by saying House Bill 05-1194 may be the best long-term solution to Colorado's fiscal problems.

The committee discussed the legislature's efforts to address Colorado's fiscal problem during the last session. Representative May commented that none of Colorado's fiscal problems resulted from the TABOR amendment but from mandated spending and revenue declines due to an economic downturn. Representative May continued by discussing the state's need to look at a long-term solution. Representative Romanoff responded by discussing the benefits of a measure that would ask voters to use existing revenues the state collects for Colorado's vital needs and programs.

The committee briefly discussed the 6 percent limit and TABOR. Representative Romanoff commented that Colorado's taxing limitations must be working because the state has the lowest total tax burden of all states.

Representative Witwer commented that under House Bill 05-1194 all future tax refunds under TABOR would be eliminated. He discussed how joint filers and families would be penalized under the plan and others who benefit from other TABOR refund mechanisms would be disadvantaged. He continued by commenting on the number of TABOR refund mechanisms that would no longer be available to lower income persons under the proposal. Representative Witwer closed by saying that any solution will have to meet the expectation of the voters. In response, Representative Romanoff discussed how the proposal would benefit everyone in the long-term by allowing the state to invest in schools, health care, transportation, and other programs that will bring more jobs to Colorado.

The committee briefly discussed the effective date of the state income tax rate reduction in House Bill 05-1194.

Representative Vigil asked Mr. Ed DeCecco, the bill's drafter to respond to several technical questions.

02:10 PM -- Mr. Ed DeCecco, Office of Legislative Legal Services, responded to questions regarding the effective date of the state income tax rate reduction.

The committee continued to discuss the state's revenue and spending limits and the refund mechanisms under TABOR. Representative May discussed the loss to lower income persons should the legislation pass. Representative May commented that under the legislation, the state would be unable to fund TABOR refund mechanisms that benefit the poor, such as the earned income credit. Representative May asked staff to provide an analysis of how the tax cut in the bill would impact low income people given that the earned income credit would no longer be available.

The following persons testified on House Bill 05-1194. Many of those who testified did not speak directly to the bill. However, many commented on the effect the recent budget cuts have had on their lives, families, businesses, or organizations they represent. Many who testified suggested that the legislature find a long-term fix to the state's budget issues. Representatives from the business community commented on the need for a long-term solution that would also lower the business personal property tax burden on businesses. Representatives from public and private organizations commented on how the level of services provided by nonprofit organizations has increased since the economic downturn began in 2001. Others suggested that a rainy day fund be incorporated into House Bill 05-1194 and that the bill also include provisions that would suspend state spending mandates during an economic downturn.

The following persons testified:

02:27 PM -- Mr. Ray Kolibaba, Raytheon Company, testified in support of the legislation. He discussed Raytheon's role in telecommunications and the defense industry. He discussed the importance of an educated workforce and commented that the aerospace industry is a growing industry in Colorado. Mr. Kolibaba reiterated the importance of an educated workforce to the aerospace industry and said it is important for the state to invest in higher education. Representative Garcia asked where the company would be if higher education was de-funded. Mr. Kolibaba responded by saying the company would remain stable for several years and would contract after a period of time without the state's continuing investment in higher education.

02:37 PM -- Mr. Chuck Berry, President of the Colorado Association of Commerce and Industry (CACI), distributed a handout from the CACI Board (Attachment B) and commented that CACI has not taken a position on any of the budgetary measures that are being debated by the legislature. Businesses strongly encourage the General Assembly to put a measure on the ballot that would allow the state to remain economically healthy. He continued by saying businesses are concerned about the financial health of higher education, transportation, and other state programs. Mr. Berry closed by saying CACI would like the General Assembly to consider permanent tax relief for businesses from the business personal property tax. A long-term phase out of the business personal property tax may be the most realistic approach.

The committee briefly discussed the 6 percent limit. Mr. Berry commented that the 6 percent limit is a very reasonable limit. Once TABOR was adopted by voters, it constitutionalized the 6 percent limit. The committee continued to discuss the need for a decrease in the business personal property tax burden on small businesses and the state backfill issues that accompany a phase-out of the tax.

02:55 PM -- Mr. Larry Wall, President of Colorado Health and Hospital Association, commented that the association's board has not yet taken a position on any specific measure before the General Assembly. He commented that any voter-supported solution must be long-term. He asked the legislature to work with the Governor toward a long-term bipartisan solution.

02:56 PM -- Ms. Gail Clapper, Director of the Colorado Forum, distributed a fact sheet on the Colorado Forum (Attachment C) and introduced Dr. Al Yates.

02:59 PM -- Dr. Al Yates, Colorado Forum, explained that the Colorado Forum is a coalition of business men and women. The forum is very concerned about the state's fiscal health. He discussed the importance of a long-term solution that should maintain the right to vote on tax increases while maintaining a cap on the growth rate of state government. Dr. Yates closed by saying that any solutions should be modified to allow the state's revenue limits to grow with the economy. He commented that House Bill 04-1194 appears to be a long-term solution to the budgetary issues the state faces.

03:06 PM -- Mr. Harry Lewis, Colorado Forum, commented that the forum is a strong supporter of representative democracy. He continued by saying that the crisis the state is facing must be fixed. The state must invest in the present and the future. He urged them to find a compromise to the state's fiscal problem that would allow for the investment in the state. He discussed the need for any long-term fix to be a simple solution that involves all stakeholders

03:09 PM -- Mr. Dick Robinson, Robinson Dairy, commented that the key to the state's fiscal issues is a single solution that the voters will pass. He cautioned the legislature about having two competing proposals that are submitted to the voters to fix the budget. Mr. Robinson closed by discussing the efforts of the Dan Ritchie commission to look at a solution to the budgetary problem.

03:13 PM -- Ms. Gail Clapper, Director of the Colorado Forum, briefly discussed the need for a long-term fix to the state's fiscal problems.

03:27 PM -- Ms. Betty Lehman, Executive Director of the Autism Society of Colorado, testified in support of the measure and commented on her son, Eli, and the challenges he faces as an autistic child. Ms. Lehman commented on the importance of the children's extensive support medical waiver program and talked about the lack of help for adults and children with developmental disabilities. Ms. Leeman discussed the importance of on-going state funding to help autistic children.

03:27 PM -- Mr. Sam Mamet, Colorado Municipal League, and Ms. Jane Urschel, Colorado Association of School Boards, both testified in support of the measure. A handout was distributed on some of the tax policy issues that affect local governments (Attachment D).

03:32 PM -- Mr. Don Bain, board member for the Denver Metro Chamber of Commerce, commented that all sides of the budgetary debate should be heard. Mr. Bain urged the General Assembly to find a long-term solution that will benefit everyone.

03:36 PM -- Ms. Chris Russell, representing herself, discussed the importance of state programs that help children with special needs especially early intervention programs. Ms. Russell distributed a handout on "Developmental Disabilities" (Attachment E) to committee members and testified in support of the legislation.

03:40 PM -- Ms. Andrea Montague and Ms. Liz Palmquist, Colorado Protectors of Public Schools, both testified in support of the legislation. Ms. Montague commented on the need for a budget-fix that will help children and schools in the long-term. Ms. Palmquist commented on the need to invest in public education.

03:46 PM -- Ms. Leandrea Pfluger, representing herself, distributed a handout on her presentation (Attachment F) and testified in support of the legislation.

03:49 PM -- Mr. Penfield Tate, representing himself, distributed a handout from the "Bell Action Network" on House Bill 05-1194 (Attachment G) and discussed the Bell publication "Ten Years of TABOR." He discussed the benefits of House Bill 05-1194, citing the elimination of TABOR's ratchet effect as one benefit of the legislation. He commented that TABOR's spending limit is restrictive and that the emergency reserve provisions do not allow the state to create an effective emergency reserve fund. He discussed the impact of tax cuts made in the late 90's by the General Assembly. Mr. Tate closed by applauding Denver University's effort to find a solution to the budgetary crisis through the Dan Ritchie study conducted by the Daniels School of Business.

04:00 PM -- Mr. John Parvensky, President for the Colorado Coalition for the Homeless, urged the committee to support House Bill 05-1194 so that important health and human service programs can continue to be funded. He urged the legislature to reform TABOR so that the state can continue to fund programs for indigent persons.

04:06 PM -- Ms. Mari Lynn Glidden, President of First Bank of Arapahoe County, testified in support of the legislation.and urged the legislature to strive for a long-term fix to the budgetary situation.

04:09 PM -- Ms. Charlie Shimanski, President and Chief Operating Officer of the Colorado Association of Nonprofit Organizations (CANPO), distributed a news article (Attachment H) and fact sheet on CANPO (Attachment I) to committee members. He commented on the role of nonprofit organizations to provide heath and human services that the state no longer provides. Mr. Shimanski closed by commenting on the need for the state to continue to support nonprofit organizations in Colorado.

04:14 PM -- Ms. Julianne Thon, representing herself, discussed the importance of state funding programs for challenged children. She distributed a handout on her son (Attachment J) who was diagnosed at age two with mitochondrion disorder. She urged the state to find a solution to the state's budget problems that may allow the state to fund programs such as the children extensive support program.

04:19 PM -- Ms. Peg Long, Executive Director for the Colorado Association of Family and Children Agencies, testified in support of the legislation.

04:20 PM -- Dr. Jerry Yager, Executive Director for Denver Children's Home, testified in support of the measure and discussed the need for the state to fund foster care in Colorado. He urged the legislature to look at a solution to the budgetary issue that will aid children and families. Dr. Yager closed by saying that the recent budgetary cuts have reduced the state's ability to help children in foster care homes.

04:25 PM -- Ms. Carol Meredith, representing the Arc of Arapahoe and Douglas Counties, talked about the effect of the recent budgetary cuts on children with developmental disabilities and urged the legislature to find a budgetary solution that will help fund programs that help children with developmental disabilities.

04:29 PM -- Mr. John Giardino, representing his son Alec and himself, testified in support of the legislation. He urged the legislature to find a solution to the budget issues that would enable the state to fund a uniform education for every child in Colorado.

04:34 PM -- Ms. Debbie Woodward, President of the Statewide Economic Development Council of Colorado, commented on the importance of a bipartisan, long-term solution to Colorado's budgetary problem. She urged the legislature to work toward a solution that would help everyone in Colorado.

04:38 PM -- Mr. Bill Becker, Adams County Economic Development Council, urged the legislature to find a bipartisan solution to Colorado's budget problems that will help Colorado retain and create jobs.

04:41 PM -- Ms. Barbara O'Brien, Colorado Children's Campaign, testified in support of the legislation and distributed a handout entitled "Restoring Budget Cuts to Children's Programs" (Attachment K) to committee members. Ms. O'Brien discussed the budgetary cuts that impact children's programs and urged the legislature to fund a long-term solution to the state's budgetary problems.

04:45 PM -- Ms. Sue Sheridan Jarrett, representing herself, testified in support of the legislation. Ms. Jarrett commented on the need for the state to continue to fund education and transportation needs in Colorado. She commented on TABOR's unintended consequences and the need to reform TABOR. She closed by discussing the importance of a fiscally conservative well run government.

04:53 PM -- Ms. Anna Davis, Nine-to-Five National Association of Working Woman, also representing herself, commented on the importance to funding child care assistance programs. She pointed out that these programs help woman who continue their education and are very important to the people of Colorado.

04:57 PM -- Mr. Herbert Homan, Colorado Senior Lobby, stated that the Lobby supported House Bill 05-1194 and the need to solve Colorado's budgetary crisis. He discussed the need for the state to find a way out of the fiscal "morass" that it has dealt with over the last three years. He also discussed the many state programs that have been cut that affect seniors and the effect of TABOR on state health and human service programs. Mr. Homan discussed the need for TABOR to be modified to allow the state to create a rainy day fund.

05:05 PM -- Ms. Lynn Robinson, Executive Director for Easter Seals Colorado, discussed the effects of the state budgetary cuts on their organization and commented on the need for the state to fund programs that help families that consist of children with disabilities.

05:06 PM -- Mr. James K. Hoffmeister, representing himself, distributed a handout on the unintended consequences of TABOR (Attachment L) to committee members. He commented that he supported House Bill 05-1194 because it would allow the state to retain the revenues that it has accumulated over the years and use these revenues to fund vital public services such as transportation, health care, and education.

05:12 PM -- Mr. Brandon Williams, representing himself, discussed the budget cuts that have affected mental health programs and the disabled. He testified in support of House Bill 05-1194.

 05:19 PM -- Ms. Lesleigh Wiggs Monahan, private attorney in family law, representing herself, testified in support of House Bill 05-1194 and commented on the impact of the budgetary cuts on the courts and judicial system. TABOR cuts affecting the judicial branch have been significant. She explained that the consequences of an expanding population and the TABOR cuts have had an adverse impact on the judicial system and the ability of family law litigants to resolve their cases.

05:24 PM -- Ms. Terri McMaster, Director of Lutheran Advocacy Ministry, discussed how the recent budget cuts have affected health and human service programs in Colorado. She commented that the ministry supports any budgetary solution that restores the cuts that have been made to these programs.

05:27 PM -- Mr. Miller Hudson, Executive Director for the Colorado Association of Public Employees, testified in support of House Bill 05-1194. He commented that Colorado has the smallest per capita workforce in the United States. He talked about the adverse effect of TABOR on state employees. Mr. Hudson closed by speaking about the high cost of health care for state employees and discussed the need for the legislature to address the issue.

05:30 PM -- Mr. Nelson Bach, Capitol Hill United Ministries, distributed a statement on the state's budget problems (Attachment M) to committee members and commented on the need for the legislature to solve the issue.

05:34 PM -- Ms. Sally Isaacson, representing herself, commented on Colorado programs that are failing due to the TABOR amendment. She urged the legislature to work together to solve the state's fiscal problems.

05:38 PM -- Ms. Vicki Agler, National Federation of Independent Businesses (NFIB), commented that NFIB has not yet taken a position on any budget-fix proposal. She commented that should a proposal go forward, it should address the needs of the business community by permanently lowering the business personal property tax burden on businesses in Colorado.

05:45 PM -- Mr. Ben Stein, Deputy State Treasurer, testified in opposition of House Bill 05-1194 and commented on the need for any budgetary fix to allow for a rainy day fund that would address a future economic downturn. As a bill moves forward, it should also address suspending state spending mandates during an economic downturn.

Representative Romanoff distributed amendment L.003 (Attachment N) and explained that it makes a technical change.
BILL:HB05-1194
TIME: 05:50:06 PM
MOVED:Garcia
MOTION:Moved amendment L.003 (technical amendment). The motion passed without objection by those members present.
SECONDED:Judd
VOTE
Benefield
Cloer
Crane
Frangas
Garcia
Jahn
Marshall
Massey
May M.
McCluskey
Witwer
Judd
Vigil
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection
BILL:HB05-1194
TIME: 05:57:31 PM
MOVED:McCluskey
MOTION:Moved amendment L.007 (Attachment O). (The amendment would make the earned income credit permanent.) The motion failed on a 9-4-0 vote.
SECONDED:May M.
VOTE
Benefield
No
Cloer
Yes
Crane
No
Frangas
No
Garcia
No
Jahn
No
Marshall
No
Massey
No
May M.
Yes
McCluskey
Yes
Witwer
Yes
Judd
No
Vigil
No
Not Final YES: 4 NO: 9 EXC: 0 ABS: 0 FINAL ACTION: FAIL
BILL:HB05-1194
TIME: 06:00:42 PM
MOVED:May M.
MOTION:Moved amendment L.005 (Attachment P). (The amendment would have sunset the measure on July 1, 2010.) The motion failed on a 7-6-0 vote.
SECONDED:McCluskey
VOTE
Benefield
No
Cloer
Yes
Crane
Yes
Frangas
No
Garcia
No
Jahn
No
Marshall
No
Massey
Yes
May M.
Yes
McCluskey
Yes
Witwer
Yes
Judd
No
Vigil
No
Not Final YES: 6 NO: 7 EXC: 0 ABS: 0 FINAL ACTION: FAIL
BILL:HB05-1194
TIME: 06:05:29 PM
MOVED:Massey
MOTION:Moved amendment L.009 (Attachment Q). (The amendment would have adjusted fiscal year spending to five and three-tenths percent of the overall state economy.) The motion failed on a 8-5-0 vote.
SECONDED:Witwer
VOTE
Benefield
No
Cloer
Yes
Crane
No
Frangas
No
Garcia
No
Jahn
No
Marshall
No
Massey
Yes
May M.
Yes
McCluskey
Yes
Witwer
Yes
Judd
No
Vigil
No
Not Final YES: 5 NO: 8 EXC: 0 ABS: 0 FINAL ACTION: FAIL
BILL:HB05-1194
TIME: 06:13:12 PM
MOVED:Garcia
MOTION:Refer HB 05-1194, as amended, to the Committee on Appropriations. The motion passed on a 10-3-0 vote.
SECONDED:Frangas
VOTE
Benefield
Yes
Cloer
No
Crane
No
Frangas
Yes
Garcia
Yes
Jahn
Yes
Marshall
Yes
Massey
Yes
May M.
No
McCluskey
Yes
Witwer
Yes
Judd
Yes
Vigil
Yes
Final YES: 10 NO: 3 EXC: 0 ABS: 0 FINAL ACTION: PASS