Final
STAFF SUMMARY OF MEETING
HOUSE
COMMITTEE ON
FINANCE
Date:
02/10/2005
ATTENDANCE
Time:
09:54 AM
to
12:53 PM
Benefield
X
Cloer
X
Place:
HCR 0107
Crane
X
Frangas
X
This Meeting was called to order by
Garcia
X
Representative
Vigil
Jahn
*
Marshall
X
This Report was prepared by
Massey
X
Ron Kirk
May M.
X
McCluskey
X
Witwer
X
Judd
X
Vigil
X
X = Present, E = Excused, A = Absent, * = Present after roll call
Bills Addressed:
Action Taken:
HB05-1085
HB05-1158
HB05-1049
Amended and Referred to the Committee on Approp.
Amended and Referred to the Committee of the Whole
Amended and Referred to the Committee on Approp.
09:55 AM -- House Bill 05-1085 - Concerning An Income Tax Credit For Higher Education
Representative Paccione, prime
s
ponsor, distributed; an Internal Revenue Service publication on the Hope Credit (Attachment A); amendment L.002 (Attachment B); amendment L.003 (Attachment C); and a Legislative Council Staff memorandum on the impact of amendment L.002 (Attachment D). Representative Paccione explained that amendment L.002 allows the state credit for higher education to mirror the lifetime Hope credit allowed under federal law.
Representative Garcia commented on the total amount of education credits that could be taken under both federal and state law. Representative Paccione clarified that a person claiming the state credit could never capture a combined credit that exceeds a student's tuition. The committee discussed the individuals who would be able to capture the credit under House Bill 05-1085 and the higher education institutions that would allow a person to qualify for credits.
Representative Paccione clarified that qualifying higher education institutions can only be institutions that receive state funds. The committee discussed opening up the credit to private institutions that do not receive state funds. Representative Paccione commented that such a change would increase the fiscal impact.
Representative Vigil asked Mr. Ed DeCecco, Office of Legislative Legal Services, (OLLS, drafter) to respond to several questions about issues regarding House Bill 05-1085.
10:14 AM --
Mr. Ed DeCecco, (OLLS), discussed the institutions in Colorado that would allow a person to qualify for the state income tax credit under House Bill 05-1085.
The committee discussed a ten-year sunset date. Mr. Ed DeCecco discussed a conceptual amendment that would clarify that the total credits claimed under both state and federal law could not exceed total tuition. The committee continued to discuss opening the credit up to all institutions of higher education in Colorado.
The following persons testified:
10:34 AM --
Ms. Treon Boossen, Concerned Parents of Colorado, testified in support of the legislation.
10:38 AM --
Mr. John Giardino, Colorado Mountain College, testified in support of the legislation. Mr. Giardino requested that House Bill 05-1085 be amended to include Colorado Mountain College because it is not a qualifying college under House Bill 05-1085 but is supported by local property taxes and a small amount of state funds.
The committee discussed allowing private institutions to be added to the bill as qualifying institutions.
BILL:
HB05-1085
TIME:
10:43:24 AM
MOVED:
Garcia
MOTION:
Moved amendment L.002. (The amendment would restrict certain types of institutions, for example private higher education institutions, from being qualifying institutions for purposes of claiming the tuition tax credit). The motion passed on a 11-2-0 vote.
SECONDED:
Benefield
VOTE
Benefield
Yes
Cloer
No
Crane
No
Frangas
Yes
Garcia
Yes
Jahn
Yes
Marshall
Yes
Massey
Yes
May M.
Yes
McCluskey
Yes
Witwer
Yes
Judd
Yes
Vigil
Yes
Not Final YES:
11
NO:
2
EXC:
0
ABS:
0
FINAL ACTION:
PASS
BILL:
HB05-1085
TIME:
10:44:49 AM
MOVED:
Vigil
MOTION:
Moved an amendment to L.002 that would add Aims Community College and Colorado Mountain College as qualifying higher education institutions for purposes of claiming the tuition tax credit. The motion passed without objection by those members present.
SECONDED:
Massey
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:
HB05-1085
TIME:
10:55:27 AM
MOVED:
Garcia
MOTION:
Moved amendment L.003 (technical change affecting the title). The motion passed without objection by those members present.
SECONDED:
Cloer
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:
HB05-1085
TIME:
10:56:04 AM
MOVED:
Marshall
MOTION:
Refer HB 05-1085, as amended, to the Committee on Appropriations. The motion passed on a 13-0-0 vote.
SECONDED:
Jahn
VOTE
Benefield
Yes
Cloer
Yes
Crane
Yes
Frangas
Yes
Garcia
Yes
Jahn
Yes
Marshall
Yes
Massey
Yes
May M.
Yes
McCluskey
Yes
Witwer
Yes
Judd
Yes
Vigil
Yes
Final YES:
13
NO:
0
EXC:
0
ABS:
0
FINAL ACTION:
PASS
11:00 AM -- House Bill 05-1158 - Concerning the Voice Over Internet Protocol Tax Freedom Act
Representative Knoedler, prime sponsor, distributed: amendment L.001 (Attachment E), a strike below; amendment L.002 (Attachment F); a news commentary article on Voice over Internet Protocol (VoIP) (Attachment G); and a Legislative Council Staff memorandum on a fiscal assessment of amendment L.001 (Attachment H). Representative Knoedler discussed VoIP.
Representative Knoedler explained that cable companies and smaller Internet phone companies such as Vonage (a New Jersey-based VoIP provider) have been the initial providers of Voice over Internet Protocol (VoIP), a service that allows subscribers to send and receive voice communications over the Internet using a broadband connection. VoIP converts the voice signal from subscribers' telephones into a digital signal that travels over the Internet. The digital signal is then converted back at the other end so that subscribers can speak to anyone with a regular phone number. Representative Knoedler commented that when placing a VoIP call using a phone with an adapter, the user hears a dial tone and dials just as regular telephone users. Some VoIP services may also allow subscribers to make a call directly from a computer using a conventional telephone or a microphone.
Representative Vigil questioned whether home rule municipalities can be included in the bill.
The following persons testified:
11:10 AM --
Mr. Jeff Garrett, Qwest Communications, testified in support of the measure. Mr. Garrett indicated that Qwest's Direct Service Line network would allow customers to subscribe to VoIP. Since the network infrastructure is in place, Qwest expects that VoIP will be a service used in every state including Colorado. He stated that VoIP should be free from government regulation and state and local government taxation and that the passage of House Bill 05-1158 will ensure that VoIP becomes available to everyone in Colorado. When asked about the cost to subscribe to VoIP, Mr. Garrett responded by saying that most VoIP providers charge about $39 to make calls anywhere around the world.
11:18 AM --
Mr. Bob Barton, Tax and Research Manager for Qwest, discussed the taxes and fees that are imposed on Broadband users. Mr. Barton discussed the jurisdictional issues involved with knowing where a VoIP call originates from.
The committee discussed the taxes and fees that are assessed on phone services. Mr. Barton commented that the federal excise tax is being applied to Vonage's VoIP service. The committee discussed whether House Bill 05-1158 is premature and whether the General Assembly should wait until the federal government decides on whether state and local governments should tax VoIP users.
11:39 AM --
Ms. Jessica Wright, Executive Director for American Electronics Association, testified in support of the legislation. Ms. Wright commented that one research group estimates that 40 percent of all households in Colorado will use VoIP by 2009. House Bill 05-1158 will allow companies to develop and begin providing VoIP service in Colorado. Ms. Wright commented that VoIP is an emerging technology that should be allowed to develop before it is taxed.
11:50 AM --
Mr. Ken Fellman, Mayor of Arvada, representing local governments, and the Colorado Municipal League, testified in opposition to the bill. Mr. Fellman commented that the bill is not needed because the federal government will be making a decision on whether VoIP should be taxed. He suggested that state legislation is not needed and would compromise local government sales tax revenues that fund a city's operating budget. The revenues that a local government derive from a sales tax on phone service pays for vital services such as fire and police protection. Mr. Fellman discussed the Federal Communications Commission Vonage decision regarding the state regulation of VoIP and commented that the federal government would soon be issuing a decision on whether to tax VoIP services. Mr. Fellman commented that if VoIP takes off as expected, local governments will lose significant sales tax revenues that fund vital local government services. Mr. Fellman noted the state needs to wait and see what Congress does before House Bill 05-1158 is passed. If VoIP subscribers really need a tax break, the state should offer users an income tax credit.
The committee discussed whether an issue of double taxation could occur should House Bill 05-1158 not be enacted. Representative Knoedler commented that DSL service must first be in place before VoIP is possible to use. If persons who subscribe to DSL service are assessed a local government sales tax on the service, and if the same person is taxed on VoIP, they would be paying a double tax.
Representative Vigil commented that if VoIP users were not taxed, it would be unfair to persons who have a traditional land-line phone service to continue to pay taxes and fees on phone services.
BILL:
HB05-1158
TIME:
12:13:25 PM
MOVED:
Witwer
MOTION:
Moved amendment L.001 (strike below). The motion passed without objection by those members present.
SECONDED:
Cloer
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:
HB05-1158
TIME:
12:17:37 PM
MOVED:
Witwer
MOTION:
Moved amendment L.002 as a technical amendment to L.001. The motion passed without objection by those members present.
SECONDED:
Massey
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:
HB05-1158
TIME:
12:18:43 PM
MOVED:
Cloer
MOTION:
Refer HB 05-1158, as amended, to the Committee of the Whole. The motion passed on a 7-6-0 vote.
SECONDED:
May M.
VOTE
Benefield
No
Cloer
Yes
Crane
Yes
Frangas
No
Garcia
No
Jahn
Yes
Marshall
No
Massey
Yes
May M.
Yes
McCluskey
Yes
Witwer
Yes
Judd
No
Vigil
No
Final YES:
7
NO:
6
EXC:
0
ABS:
0
FINAL ACTION:
PASS
12:23 PM -- House Bill 05-1049 - Concerning An Income Tax Credit Against the Business Personal Property Tax
Representative McCluskey, prime sponsor, explained House Bill 05-1049 provides an income tax credit for qualifying Colorado businesses equal to 50% of the business personal property taxes paid to the local school district general operations on equipment first used on or after January 1, 2005. Representative McCluskey distributed a spreadsheet to committee members on state revenue gains from eligible investments made under House Bill 05-1049 (Attachment I).
The following persons testified:
12:27 PM
-- Ms. Dianne Orf, Colorado Mining Association, testified in opposition toward the bill. Ms. Orf commented on the mining industries that are exempted from claiming the credit under the bill. These industries should be included in the legislation.
12:33 PM
-- Mr. Preston Gibson, President of the Jefferson Economic Council, testified in support of the legislation. He explained that the bill will help Colorado by attracting primary employers which will bring in new wealth to the state because they sell most of their products to out-of-state customers. Mr. Gibson discussed the out-of-state businesses that compete with Colorado businesses. He noted that the bill gives Colorado another tool to keep companies in Colorado and attract more businesses to the state.
12:37 PM
-- Mr. Bill Becker, President of Adams County Economic Development Council, testified in support of the legislation. He explained that the legislation will help attract primary employers to Colorado which pay higher wages and are capital intensive. Thus, they generate a lot of revenue to local governments in terms of business personal property taxes. He closed by saying that the bill will reduce business personal property taxes for businesses.
BILL:
HB05-1049
TIME:
12:45:21 PM
MOVED:
Judd
MOTION:
Moved a conceptual amendment that would sunset the income tax credit after 10 years. (Amend printed bill, page 3, line 9, after "2007,", insert "but prior to January 1, 2018,".) The motion passed on a 7-6-0 vote.
SECONDED:
Frangas
VOTE
Benefield
Yes
Cloer
No
Crane
No
Frangas
Yes
Garcia
Yes
Jahn
Yes
Marshall
Yes
Massey
No
May M.
No
McCluskey
No
Witwer
Yes
Judd
Yes
Vigil
No
Not Final YES:
7
NO:
6
EXC:
0
ABS:
0
FINAL ACTION:
PASS
BILL:
HB05-1049
TIME:
12:52:50 PM
MOVED:
McCluskey
MOTION:
Refer HB 05-1049, as amended, to the Committee on Appropriations. The motion passed on a 9-4-0 vote.
SECONDED:
Jahn
VOTE
Benefield
Yes
Cloer
Yes
Crane
Yes
Frangas
No
Garcia
No
Jahn
Yes
Marshall
No
Massey
Yes
May M.
Yes
McCluskey
Yes
Witwer
Yes
Judd
No
Vigil
Yes
Final YES:
9
NO:
4
EXC:
0
ABS:
0
FINAL ACTION:
PASS
12:53 PM
Adjourn.