First Regular Session Sixty-eighth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 11-0035.02 Duane Gall HOUSE BILL 11-1243 HOUSE SPONSORSHIP Pace and Massey, SENATE SPONSORSHIP Tochtrop, House Committees Senate Committees State, Veterans, & Military Affairs A BILL FOR AN ACT Concerning the use of funding derived from the state-supervised lottery to stimulate economic development, and, in connection therewith, authorizing the lottery commission to create one or more keno games and establishing a grant program, funded by keno proceeds, to reverse the offshoring of Colorado jobs to foreign countries. 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 authorizes and directs the Colorado lottery commission to create a keno game and reallocates the portion of future increases in revenues attributable to keno activity that would otherwise "spill over" to the state's general fund as follows: 50% to the Colorado travel and tourism promotion fund; and 50% to a newly created program to provide one-time grants to Colorado businesses to reverse the offshoring of jobs. Of this portion, any available unspent moneys may be directed to the Colorado credit reserve program, operated by the Colorado economic development commission and the Colorado housing and finance authority, as needed. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. 24-35-208, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SUBSECTION to read: 24-35-208. Commission - powers and duties - rules. (4) (a) The commission shall promulgate rules pursuant to subsection (1) of this section for the administration of one or more forms of keno. The rules must include, at a minimum: (I) The method to be used in selling keno tickets, but all sales must be on a cash-only basis; (II) The method of paying prizes on winning keno tickets; and (III) The manner and amount of compensation, if any, to be paid to licensed sales agents necessary to provide for the adequate availability of keno tickets to prospective buyers and for the convenience of the public. (b) (I) The commission shall establish and approve all instructions governing keno games. The instructions must include, at a minimum: (A) The method for determining keno game winners; (B) The establishment of claim periods; (C) The price of keno tickets; (D) The numbers and sizes of prizes; and (E) The method for selecting and validating winning keno tickets. (II) The commission shall publish all approved instructions governing keno games in a clearly identifiable section on the official web site of the state lottery. The published instructions are binding on purchasers and claimants of keno tickets. (c) The commission shall separately account for the proceeds of keno activity. To the extent that there are net proceeds of lottery activity allocable to the general fund under section 3 (1) (b) (III) of article XXVII of the state constitution and not required for repayment of the state's obligations under article 43.7 of title 22, C.R.S., the commission shall transfer all of such proceeds that are identifiable as proceeds of keno activity, net of the commission's expenses, to the state treasurer, who shall credit such proceeds as follows: (I) One-half to the Colorado travel and tourism promotion fund created in section 24-49.7-106; and (II) One-half to the bringing Colorado jobs home grant fund created in section 24-48.5-113. SECTION 2. Part 1 of article 48.5 of title 24, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SECTION to read: 24-48.5-113. Bringing Colorado jobs home grant program - cash fund - creation - definitions - criteria - administration. (1) (a) There is hereby created in the state treasury the bringing Colorado jobs home grant fund, referred to in this section as the "fund". The fund consists of moneys transferred to the fund pursuant to paragraph (b) of this subsection (1) and any proceeds resulting from the conduct of keno games authorized by the lottery commission in accordance with section 24-35-208 (4). (b) The moneys in the fund are subject to annual appropriation by the general assembly to provide grants to businesses in Colorado to reverse the trend of offshoring of jobs outside the United States. The state treasurer may invest the moneys in the fund not expended or otherwise encumbered as provided by law. The state treasurer shall credit all interest and income derived from the investment and deposit of moneys in the fund to the fund. Any unexpended and unencumbered moneys remaining in the fund at the end of a fiscal year remain in the fund and the state treasurer shall not credit or transfer the moneys to the general fund or another fund; except that, in any fiscal year in which the available moneys in the fund exceed the amount needed for grants to qualified applicants, the office may, in consultation with the Colorado economic development commission, request the state treasurer to transfer such excess moneys to the Colorado economic development fund, created in section 24-46-105, for use by the Colorado economic development commission and the Colorado housing and finance authority in operating the Colorado credit reserve program in accordance with section 24-46-104 (1) (n). (2) The office shall develop criteria for the issuance of grants to businesses using moneys from the fund. Grants must be targeted to offset the costs of, and provide incentives for, the creation or reestablishment in Colorado of manufacturing jobs or primary jobs that would be available in Colorado but for the offshoring of labor to foreign countries. The criteria must include, at a minimum: (a) Geographical diversity among grant recipients, with no more than one-third of the total amount of grants awarded by the office in any fiscal year going to recipients in any one of Colorado's congressional districts. The office shall seek guidance and input from local sources when choosing among grant applicants in different geographic areas of the state. (b) Contractual requirements for quarterly reporting by grant recipients on their use of grant funds; and (c) Grant conditions that require each applicant to certify: (I) The specific jobs that will be created or reestablished using grant moneys; (II) The mean and median salaries of the jobs that will be created or reestablished using grant moneys; (III) That all jobs created or reestablished using grant moneys include, and will continue to include, full benefits; (IV) The cost differential in the applicant's costs compared to the costs for a similar business in a competing foreign country. The cost differential must include any impact of the foreign country's incentive programs and may include: (A) Specific costs for labor, utilities, taxes, and any other costs of a competing foreign country's site; and (B) The cost structure of the applicant's industry in the competing foreign country. (V) That without the grant awarded pursuant to this section, the applicant would not establish or expand its business in this state. Such certification must include documentary evidence that: (A) The applicant could reasonably and efficiently locate the project in a foreign country; (B) At least one foreign country is being considered for establishment or expansion of the applicant's business; (C) Receipt of the grant applied for pursuant to this section is a major factor in the applicant's decision; and (D) Without the grant applied for pursuant to this section, the applicant is not likely to establish or expand its business in Colorado. (3) In making its decision whether to award a grant under this section, the office shall consider only the following: (a) The economic health of this state; (b) The economic viability of the proposed jobs that would be created or reestablished in Colorado; (c) The economic benefits to the state of the jobs; and (d) The maximum amount of the grant needed to induce the applicant to create or reestablish the jobs in Colorado. (4) The office may retain its actual direct and indirect costs of administering this section, not to exceed ten percent of the available principal amount transferred to the fund in any fiscal year. (5) As used in this section: (a) "Office" means the Colorado office of economic development created in section 24-48.5-101. (b) "Offshoring" means the practice of moving business processes or services to another country to reduce costs. SECTION 3. The introductory portion to 24-49.7-106 (1) and 24-49.7-106 (1) (a), Colorado Revised Statutes, are amended to read: 24-49.7-106. Colorado travel and tourism promotion fund - Colorado travel and tourism additional source fund - creation - nature of funds. (1) There is hereby created a fund in the state treasury to be known as the Colorado travel and tourism promotion fund, which shall be is administered by the board and which shall consist consists of: (a) All moneys transferred thereto in accordance with sections 12-47.1-701 (4) 12-47.1-701 (4), 24-35-208, and 38-13-116.7 (3), C.R.S.; and SECTION 4. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.