Senate Committee on Finance (01/27/2009)

Final
STAFF SUMMARY OF MEETING

SENATE COMMITTEE ON FINANCE

Date:	01/27/2009	ATTENDANCE

Time:	01:35 PM to 02:36 PM	Brophy	X
		Heath	X
Place:	SCR 354	Isgar	X
		King K.	*
This Meeting was called to order by		Scheffel	X
	Senator Sandoval	Hudak	X
		Sandoval	X
This Report was prepared by
	Elizabeth Hanson
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
HJR09-1005 SB09-041 Discussion About General Fund Revenue Estimate		Referred to the Committee of the Whole Amended, Referred to the Committee of the Whole Witness Testimony and/or Committee Discussion Only

01:35 PM

The meeting came to order. A quorum was present.

01:37 PM -- House Joint Resolution 09-1005

Senator Sandoval explained to the committee that House Joint Resolution 09-1005 was added to the calendar after it passed the House of Representatives on January 26, 2009. As the prime Senate sponsor of the resolution, Senator Sandoval passed the gavel to Senator Hudak to chair the committee while she presented the resolution.

Senator Sandoval stated that a revenue resolution is passed every year by the General Assembly. The primary purpose of the resolution, she explained, is to provide the General Fund estimate that will be used by the General Assembly to set the following fiscal year's General Fund appropriation. She said that the resolution is sponsored by the chairs of the Senate and House Finance Committees. The resolution states the General Fund appropriation subject to the statutory six percent limit, and the number this year, she stated, is $7.9 billion. She also explained that the sponsors had decided to use the Legislative Council's estimate of General Fund revenue from the December 2008 forecast of $7.2 billion.

Senator Sandoval responded to questions about the resolution, including whether the General Assembly should consider using a lower figure given the current economic situation. She stated that the Joint Budget Committee will review the forecasts from both the Legislative Council and the Governor's Office of State Planning and Budgeting (OSPB) in March 2009 before finalizing the FY 2009-10 budget. Discussion ensued about what alternative figures could be used, the fact that forecasting is inexact, and whether the General Assembly should prepare for the worst and use a different number in the revenue resolution.

Senator Sandoval stated that she would feel more comfortable using the legislative economists' numbers from the December 2008 forecast. She explained that significant time and expertise had already been used to arrive at the best estimate. She further stated that if the resolution passed today, she would make a commitment to go to discuss the issue with the Legislative Council economists. Senator Sandoval also said that the General Assembly has not historically adjusted the numbers from the economic forecasts.

No witnesses signed up to testify, and no amendments to the resolution were offered by committee members.


BILL:	HJR 09-1005
TIME:	01:56:19 PM
MOVED:	Sandoval
MOTION:	Refer HJR 09-1005 to the Committee of the Whole for final action. The motion passed 5-1, with one excused.
SECONDED:
		VOTE
	Brophy	No
	Heath	Yes
	Isgar	Yes
	King K.	Excused
	Scheffel	Yes
	Hudak	Yes
	Sandoval	Yes

Final YES: 5 NO: 1 EXC: 1 ABS: 0 FINAL ACTION: PASS

01:57 PM -- Senate Bill 09-041

Senator Romer, prime sponsor, described Senate Bill 09-041. He noted that he had been working with the Department of Local Affairs (DOLA) to address issues raised by the committee on January 13. Senator Romer distributed copies of two amendments to the committee, including Amendment L.003 (Attachment A) and L.004 (Attachment B). He invited DOLA to testify and explain the amendments further.

The following witness testified:

01:59 PM -- Mr. Bruce Eisenhauer, DOLA, testified about Amendments L.003 and L.004. He stated that DOLA has been working with College Invest, the Colorado Housing and Finance Authority (CHFA), and the City and County of Denver to resolve the issues raised earlier about the private activity bond and the fee allocations. Mr. Eisenhauer stated that DOLA wants to ensure that any allocation fee that is directly assigned to another entity bears the appropriate cost of that allocation. Amendment L.004, he explained, further clarifies that the allocation would occur at the time that the private activity bonds were issued. Therefore, it would not be an up-front fee but a reimbursable fee. Mr. Eisenhauer also said the amendment provides that no more than 30 percent of the cost of the private activity bond could be attached to the particular fee.

Senator Romer stated that the affected parties were comfortable with the 30 percent allocation fee.

Mr. Eisenhauer responded to questions from the committee about several issues, including whether the bill was creating new fees. He stated that the purpose of Senate Bill 09-041 is to clarify what has been in practice and addressed questions about the Department's practice, the Attorney General's opinion, and the impacts of the fee on local governments.

02:08 PM

Senator Romer noted that due to market conditions, this year is not a great time to issue municipal bonds, and stakeholders may need one additional meeting to discuss tax credit issues in the bill before going to the Senate floor. He urged the committee to pass the bill and amendments to the full Senate.

02:08 PM

Senator Sandoval closed public testimony.


BILL:	SB09-041
TIME:	02:09:12 PM
MOVED:	Hudak
MOTION:	Refer SB 09-041 as amended to the Committee of the Whole. The motion passed 6-0, with one excused.
SECONDED:
		VOTE
	Brophy	Yes
	Heath	Yes
	Isgar	Yes
	King K.	Excused
	Scheffel	Yes
	Hudak	Yes
	Sandoval	Yes

Final YES: 6 NO: 0 EXC: 1 ABS: 0 FINAL ACTION: PASS


BILL:	SB09-041
TIME:	02:09:53 PM
MOVED:	Heath
MOTION:	Adopt Amendment L.004 (Attachment B). The motion passed without objection.
SECONDED:
		VOTE
	Brophy
	Heath
	Isgar
	King K.	Excused
	Scheffel
	Hudak
	Sandoval

Not Final YES: 0 NO: 0 EXC: 1 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	SB09-041
TIME:	02:09:57 PM
MOVED:	Heath
MOTION:	Adopt Amendment L.003 (Attachment A). The motion passed without objection.
SECONDED:
		VOTE
	Brophy
	Heath
	Isgar
	King K.	Excused
	Scheffel
	Hudak
	Sandoval

Not Final YES: 0 NO: 0 EXC: 1 ABS: 0 FINAL ACTION: Pass Without Objection

02:09 PM

The committee recessed.

02:15 PM -- Discussion About General Fund Revenue Estimate

The committee reconvened.

Mr. Todd Herreid, Legislative Council Staff (LCS), addressed comments and questions by the committee regarding the revenue resolution and the LCS December 2008 forecast.

Mr. Herreid explained that the resolution is meant to provide guidance to the General Assembly and the Joint Budget Committee (JBC) and that the JBC will review the March 2009 forecast before the Long Bill for FY 2009-1010 is completed. Mr. Herreid responded to questions from committee, including about what number the General Assembly should use and the law requiring the resolution. He noted that the JBC is not under any obligation to use LCS data and it can use OSPB's data.

Mr. Herreid responded to questions about whether the December forecast is too optimistic and stated that LCS may release a forecast update memo in February to give the General Assembly a sense of how the revenue compares to the December forecast. He also responded to questions about corporate income tax revenue and quarterly tax filings. Mr. Herreid further noted that if the forecast changes, the JBC will have to revise the Long Bill accordingly.

Discussion ensued about whether the General Assembly has ever amended a projected revenue estimate for the General Fund from an economic forecast. Mr. Herreid said the December 2008 forecast noted a 7 percent decline in General Fund revenue and LCS is projecting flat revenue growth for the rest of the fiscal year.

The committee raised questions about the differences between the forecast by OSPB and the estimates from LCS, and also discussed cash fund revenue.

02:36 PM

The committee adjourned.