Final
Recommendations from the Advisory Board
ECONOMIC DEVELOPMENT
Votes:
Action Taken:
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02:52 PM -- Recommendations from the Advisory Board, Mr. Brian Vogt, Chair, Advisory Board to the Committee on Economic Development
Mr. Brian Vogt, Office of Economic Development and International Trade (OEDIT), and Chair of the Advisory Board to the Committee on Economic Development, discussed the upcoming Colorado Tech Week. Information on the event was distributed to the committee (Attachment R). He also discussed recent job creation announcements from Juniper Bank and Corporate Express. Since the beginning of September, 2,000 new jobs have been announced in the state. All of them received incentive grants from the state. He stated that the incentives are performance-based; the incentive is not provided unless the job has been created.
Mr. Vogt continued by discussing the recommendations of the advisory board. A copy of the board's recommendations and summary of activities was distributed to the committee (Attachment S). He stated that many of the topics discussed by the advisory board generated ideas that do not require legislation. For example, OEDIT plans to develop an ombudsman role to connect the Advance Colorado Center and universities to develop a streamlined process for technology transfer. The advisory board also noted the need for greater public awareness of the importance of infrastructure needs in Colorado and the link between roads, bridges, water, energy, and lifestyle amenities and economic development.
Mr. Vogt explained that he would like both the economic development committee and the Governor to support each other's legislative package. He stated that the advisory board's recommended bills will add needed tools for Colorado’s ability to attract and retain jobs, especially since the state will soon run out of the money provided by the federal government for economic development incentives. The advisory board's recommended bills include:
Job Creation Tax Credit:
This bill would create an income tax credit for businesses that create net new jobs. The credits are based on the average wage of all new employees hired during the tax year for which the credit is claimed. A business may only claim the credit once for each employee hired. In order to claim to credit, the new job created by the employer must be full-time and the job must be maintained for at least one year. Furthermore, the total number of employees must exceed the employer’s average over the preceding three years. The legislature may wish to add an alternative-qualifying criterion that deals with a majority of total sales of products or services outside of Colorado.
Net Operating Loss (NOL) by a Biotech Company:
This bill would allow bioscience companies to take advantage of their losses and help them grow their business. Approved businesses will be able to sell their unused NOLs to any Colorado corporate taxpayer for a percentage of the value of the tax benefits. The buying individual or company, which buys the NOLs, pays less taxes and the bioscience business has immediate cash to spend on working capital, equipment, office or lab space, or other operating expenses. He indicated that the bill was modeled after a program in New Jersey.
Expanding the EZ Investment Tax Credit:
The existing enterprise zone (EZ) program provides a 3 percent investment tax credit based on the amount invested in business equipment used in an EZ business. Trucks and trailers are the only types of equipment within an enterprise zone that are not eligible for the investment tax credit under current state law. This bill would expand the credit so that it can be claimed for trucks and trailers.
Film Industry Rebate Incentive:
This bill would create incentives for the film industry. He explained that the average feature film would spend around $100,000 a day when it shoots in Colorado. Economic indicators also estimate that for every dollar spent on the production, an additional $2.50 is spent in the wider economy. Therefore, the advisory board recommended the following film industry incentives:
- 10-20 percent tax rebate on production payroll in Colorado with Colorado residents;
- 50 percent sales tax reduction on production expenditure including equipment rented from Colorado companies;
- additional 25 percent exemption if the film has Colorado content, locations, characters, words and/or culture;
- 100 percent hotel tax waiver after 14 days of continual occupation;
- 50 percent reduction of duties at ports of entry/weigh stations; and
- total exemption of duties on over-length vehicles brought into state for production purposes.
Dynamic Modeling Legislation:
This bill would be similar to last year’s HB 05-1046 and would require the Director of Legislative Council to establish a pilot program for the purpose of developing or procuring a dynamic model to analyze the economic impact of a bill that makes a tax policy change. The difference between the proposed legislation and last year’s bill would be the timeframe. This new bill would be implemented as soon as possible, but no later than the 2008 legislative session.
Tourism Funding
: This bill would be similar to last year’s HB05-1281. It would authorize an income tax credit equal to 100 percent of the total contribution made to the Colorado Travel and Tourism Additional Source Fund. This fund is continuously appropriated to the Colorado Tourism Office. Contributions are to be used for travel and tourism promotion. A cap on the aggregate sum of total contributions to the fund could be linked to the Colorado Visitor Return on Investment Economic Study or, as was the case in last year’s bill, it could be a specific pre-chosen number.
Representative Borodkin discussed her desire to look at narrowing the conditions necessary to qualify for the job creation tax credit bill recommended by the advisory board.
Senator Bacon discussed concerns over moving the Colorado Council on the Arts from the Colorado Commission on Higher Education to OEDIT. Mr. Vogt indicated that he thought it was a good idea and that it could increase coordination between the arts industry and economic development and tourism efforts. The committee discussed moving the Arts Council into OEDIT.
Senator Evans discussed the need for Mr. Vogt to clarify that the Governor would support the committee's legislative package if the committee would support the Governor's legislative package.
03:19 PM
Representative Massey discussed his idea to incentivize support for the study of math and sciences at higher education institutions in the state. Mr. Vogt commented that the importance of having students educated in math and science came up repeatedly during the advisory board's discussions. The committee discussed the idea.
Mr. Vogt clarified that the committee does not have to adopt all the advisory board's recommendations, including the Governor's legislative package. He stated that he was looking to see if the committee could at least provide support to the advisory board's recommendations. Senator Bacon stated that the committee needs to see legislation in order to consider whether it can support it.
Senator Evans discussed the possibility of creating a consensus on the Governor's legislative package, the advisory board's recommendations, and the committee's legislative package. He stated that it was important to find out the Governor's position on legislation. Representative Borodkin indicated that she wanted the committee to consider each recommendation individually, not as a package. The committee continued to discuss the committee's meeting on November 2nd to make final recommendations.
Senator Evans said he would work on the bills from the Governor's legislative package from last year. Representative Lindstrom indicated he may work on the proposed tourism legislation. Ms. Carolyn Siegel, advisory board member, stated that the AFL-CIO did not support all the recommendations of the advisory board and that it wanted to continue to provide input on the legislation as the process continues.
03:39 PM
The committee adjourned.