First Regular Session Sixty-eighth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 11-0692.01 Nicole Myers HOUSE BILL 11-1238 HOUSE SPONSORSHIP Duran, SENATE SPONSORSHIP (None), House Committees Senate Committees Economic and Business Development A BILL FOR AN ACT Concerning the creation of job quality standards for businesses that receive certain forms of state assistance. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) The bill requires a business to satisfy certain job quality standards as part of the qualification process to receive certain forms of state moneys (assistance) in an amount of $10,000 or more. Assistance includes: A loan or grant from the Colorado economic development commission; A state income tax credit; A state sales tax exemption; A procurement contract that is awarded by a state agency; and Any other incentive offered by the state or any state agency that involves the business receiving state moneys. Any business that intends to receive assistance must receive a prequalification letter from the office of economic development (office) before the business is eligible to receive such assistance. The prequalification letter shall verify that the business meets certain job quality standards, notify the business that it is required to submit an annual report that details its performance in maintaining such standards, and notify the business that the office is allowed to stop, readjust, or recapture all or part of the assistance given to the business due to noncompliance with the job quality standards. The bill requires any business that intends to receive assistance from the state to certify to the office that it satisfies specified job quality standards and that it will maintain the standards for a minimum of 5 years after the date that the business receives the assistance. For the first 5 years after receiving assistance, each business must file an annual progress report with the office that contains specified information about the business and the nature and quality of the jobs that the business created. The office is required to collect and organize the information regarding each business that received assistance in the previous calendar year and to post the information on its web site. If a business that received assistance does not fulfill the specified job quality standards, the office is required to recapture all or a portion of the moneys expended on assistance from the business. The bill requires the office to promulgate rules for the administration of the job quality standard requirements. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Article 48.5 of title 24, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW PART to read: PART 4 JOB QUALITY STANDARDS 24-48.5-401. Legislative declaration. (1) The general assembly hereby finds and declares that: (a) When businesses maintain or create jobs that pay employees low wages and offer employees poor benefits, the jobs often impose hidden taxpayer costs on the citizens of the state. Such hidden costs may consist of payments for the cost of medicaid, food stamps, earned income tax credits, and other forms of public assistance to the working poor and their families; and (b) Citizen input concerning economic development incentives, the state contracting process, corporate incentives, tax exemptions, and tax credits has been impeded by a lack of readily accessible information regarding state expenditures for such purposes and the outcomes resulting from such expenditures. (2) The general assembly further finds and declares that to improve the effectiveness of government expenditures to promote jobs and to ensure that such expenditures achieve the goal of raising the living standards for working families, it is necessary to collect and analyze information regarding such government expenditures and to enact safeguards for their use. In addition, the general assembly finds and declares that it is necessary to make the information regarding government expenditures that is collected and analyzed available for public review. 24-48.5-402. Definitions. As used in this part 4, unless the context otherwise requires: (1) "Assistance" means any loan or grant of ten thousand dollars or more per year that is offered to a business by the Colorado economic development commission created in section 24-46-102, any state income tax credit of ten thousand dollars or more per year that is allowed pursuant to article 22 or 30 of title 39, C.R.S., any sales tax exemption of ten thousand dollars or more per year that is allowed pursuant to article 26 or 30 of title 39, C.R.S., any procurement contract worth ten thousand dollars or more per year that is awarded by a state agency, and any other incentive offered by the state or any state agency that will result in a business's receipt of state moneys in an amount of ten thousand dollars or more per year. "Assistance" also means anything of value or any service for a business arranged for or provided for by the state or any political subdivision of the state including job training, improvements, or other services. (2) "Business" means a private for-profit enterprise that is doing business in the state. (3) "Office" means the Colorado office of economic development created in section 24-48.5-101. 24-48.5-403. Assistance for businesses - eligibility requirements - prequalification letter. (1) A business shall be ineligible to receive assistance until the business applies to the office to become prequalified to receive assistance and the office issues a prequalification letter to the business. The prequalification letter shall: (a) Verify that the business meets the job quality standards specified in section 24-48.5-404 and notify the business that it is expected to maintain such standards for the first five years after the assistance is received; (b) Notify the business that it is required to submit an annual report to the office pursuant to section 24-48.5-405 that details the business's performance in maintaining the job quality standards specified in section 24-48.5-404; and (c) Notify the business that the state, through the office, may stop, readjust, or recapture all or part of the assistance given to the business pursuant to section 24-48.5-406 due to noncompliance with the job quality standards. (2) A business that intends to receive assistance shall provide the prequalification letter from the office along with the business's application for the assistance to the state agency, office, or program that offers the assistance. If the assistance is in the form of an income tax credit, the letter shall be provided with the income tax return on which the business claims the credit. (3) The office shall provide a business with a prequalification letter within fourteen days of a business's application to the office for the letter. Notwithstanding the provisions of subsection (1) of this section, a business shall not be prohibited from applying for assistance if it has not received the prequalification letter from the office, but shall submit the prequalification letter to the state agency, office, or program that offers the assistance upon receipt of the letter from the office. (4) A letter issued to a business pursuant to this section shall be valid for five years from the date of issuance so long as the business complies with the reporting requirements in section 24-48.5-405. (5) Any information submitted to or compiled by the office in connection with the requirements of this section shall be open to inspection by the public; except that such information shall not be open for inspection by the public if the business successfully demonstrates that: (a) If made public, the information would divulge the business's trade secrets; or (b) The information is likely to cause substantial harm to the competitive position of the business. 24-48.5-404. Job quality standards - requirements. (1) Any business that intends to receive assistance shall certify to the office, prior to receiving such assistance, that the business satisfies the job quality standards specified in subsection (2) of this section and that it will maintain the standards for a minimum of five years after the date that the business received the assistance. The office may rely on such certification, but may verify that the certification is accurate, as deemed necessary and appropriate by the office. (2) The job quality standards include, but need not be limited to, the following: (a) Subject to the provisions of paragraphs (b) and (c) of this subsection (2), the business pays a wage to every employee that is at least twenty-five percent above the average wage that is paid to similar employees in similar industries in the county in which the business is located; (b) The business provides or offers health benefits to every employee of the business. A business may include its costs for providing health benefits to every employee in the calculation of the wage requirement specified in paragraph (a) of this subsection (2). (c) The business may provide or offer a retirement plan to every employee and may make an annual contribution to the plan on behalf of every employee who participates in the plan. A business may include its costs for providing a retirement plan to every employee in the calculation of the wage requirement specified in paragraph (a) of this subsection (2). (d) At least fifty percent of the new jobs created or jobs maintained by the business are permanent full-time positions; (e) At least sixty percent of the new jobs created or jobs maintained by the business are filled by Colorado residents, graduates of a state institution of higher education, or, if the assistance is awarded based on the business's creation of new jobs, persons who were receiving unemployment benefits in Colorado prior to being hired by the business; (f) On average, the business retains at least fifty percent of its employees for a year or longer after the employees are hired; (g) The business has an official employee leave policy that allows employees to take paid sick leave; and (h) The business allows employees to take paid leave for the purposes specified in the "Parental Involvement in K-12 Education Act", article 13.3 of title 8, C.R.S. (3) Notwithstanding the provisions of subsection (2) of this section, a business is ineligible to receive assistance if the office determines that: (a) Any full-time employee employed by the business or a dependent child of such employee receives medicaid, food stamps, or any other type of public assistance; except that the provisions of this paragraph (a) shall not apply if the full-time employee or child of such employee receives medicaid, food stamps, or any other type of public assistance due to the employee or child's disability, age, veteran status, or unemployment; or (b) The business has had more than two violations of state or federal wage or labor laws as specified in the federal "Fair Labor Standards Act of 1938", 29 U.S.C. sec. 201 et seq., as amended, or as specified in articles 4 to 10 of title 8, C.R.S., in the five years prior to applying for assistance. 24-48.5-405. Reporting requirements - disclosure. (1) Each business that receives assistance shall file an annual progress report with the office. The business shall submit the progress report to the office within thirty days after each anniversary of receipt of the assistance for the first five years after the business received the assistance. The progress report shall include, but need not be limited to, the following: (a) The name of the business that received the assistance and the name of the chief officer of the business, if applicable; (b) The address and phone number of the primary office of the business that received the assistance; (c) The amount of assistance that the business received during the previous year; (d) The nature of the assistance that the business received, including the state agency, office, or program through which the assistance was received; (e) The date on which the business received the assistance; (f) The number of new full-time and part-time jobs created and retained by the business during the previous year; (g) Payroll or other data to verify the number of new full-time and part-time jobs created by the business; except that such payroll data shall not include the name of any employee or any other identifying information regarding any employee; (h) The average annual compensation level of employees who fill the new full-time and part-time jobs created; (i) A statement as to whether the business that received the assistance reduced employment at any other site controlled by the business in the state as a result of automation, merger, acquisition, corporate restructuring, or other business activity; (j) The type and amount of health benefits offered to employees by the business, including any costs that are required to be covered by the employees; (k) A description of the leave benefits and retirement plan that the business offers to each of its employees; (l) The number of employees employed by the business; (m) The number of paid sick days that an employee is entitled to annually, based on the business's sick leave policy; (n) The number of paid hours of leave that an employee is entitled to for purposes of the "Parental Involvement in K-12 Education Act", article 13.3 of title 8, C.R.S.; (o) The number of employees who are employed by the business who are Colorado residents; (p) The number of employees who are employed by the business who are graduates of a state institution of higher education; (q) The number of employees who are employed by the business who were receiving unemployment benefits in Colorado prior to being hired by the business; (r) The number of employees who are employed by the business who are permanent employees; (s) The number of employees who are employed by the business who have been employed by the business for over a year; and (t) Any other information reasonably required by the office to evaluate the progress of the business that received the assistance and the effectiveness of awarding the assistance. (2) The progress report submitted to the office shall include a signed certification of the chief officer of the business that received the assistance as to the accuracy of the progress report. (3) Any business that receives assistance shall file the progress report required by subsection (1) of this section in addition to any other reporting requirement that may exist in connection with the individual form of assistance. A business that receives multiple forms of assistance in a year is required to submit only one annual report required pursuant to this section. (4) (a) The office shall collect and organize the information submitted to the office each year pursuant to subsection (1) of this section and shall include such information, and any other information deemed necessary or appropriate by the office, in an annual disclosure pursuant to paragraph (b) of this subsection (4). (b) On or before January 31, 2013, and on or before January 31 of each year thereafter, the office shall post on its web site information regarding every business that received assistance in the previous calendar year. 24-48.5-406. Recapture. (1) Any business that receives assistance shall maintain the job quality standards specified in section 24-48.5-404 for at least five years after receipt of the assistance. (2) If the job quality standards specified in subsection (1) of this section are not fulfilled, the office shall recapture up to one hundred percent of the moneys expended on assistance from the business that received the assistance. The office shall determine the actual percentage of the moneys expended on assistance that will be recaptured from the business. (3) The office shall provide notice and explanation to the business that received the assistance of its intent to recapture the assistance and state the amount to be recaptured. The business shall remit such amount to the office within sixty calendar days after the date of the notice. The office shall cause recaptured moneys to be credited to the fund from which the assistance originated or, if no such fund exists, to the general fund. (4) Within thirty days after any recapture pursuant to this section, the office shall post information regarding the recapture on its web site. The information posted shall include, but need not be limited to, the name of the business from which assistance was recaptured, the reason for recapture, and the amount recaptured. (5) The provisions of this section shall not apply if a business ceases to operate due to a natural disaster or due to financial difficulties that are not due to any misconduct or mismanagement on the part of the business. 24-48.5-407. Rules. (1) The office shall promulgate rules for the administration of this part 4 in accordance with the "State Administrative Procedure Act", article 4 of this title. The rules shall include, but need not be limited to: (a) A process that enables the office to create a prequalification letter as required by section 24-48.5-403; (b) A method to allow a business to certify that it satisfies the job quality standards as specified in section 24-48.5-404; (c) A method for the office to verify, as it deems necessary, the information certified to the office in connection with the job quality standards specified in section 24-48.5-404; (d) A procedure for working with the department of revenue, the office, and any other entity that offers assistance to businesses regarding a process by which the office may be notified when a business receives assistance; and (e) A procedure to recapture, pursuant to section 24-48.5-406, moneys associated with the assistance that a business has received in the event that the business does not maintain the job quality standards specified in section 24-48.5-404. (2) The office shall promulgate rules pursuant to subsection (1) of this section in cooperation with the department of revenue, the Colorado economic development commission, and any other entity deemed necessary and appropriate by the office. 24-48.5-408. State-awarded contracts - goals. In awarding assistance to a business in the form of state contracts, the state of Colorado seeks to award state contracts consistent with federal goals to ensure that there are equal opportunities for minority-owned, women-owned, persons with disabilities-owned, and veteran-owned businesses. SECTION 2. Act subject to petition - effective date. This act shall take effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly (August 10, 2011, if adjournment sine die is on May 11, 2011); except that, if a referendum petition is filed pursuant to section 1 (3) of article V of the state constitution against this act or an item, section, or part of this act within such period, then the act, item, section, or part shall not take effect unless approved by the people at the general election to be held in November 2012 and shall take effect on the date of the official declaration of the vote thereon by the governor.