House Committee on Finance (05/01/2009)

Final
STAFF SUMMARY OF MEETING

HOUSE COMMITTEE ON FINANCE

Date:	05/01/2009	ATTENDANCE

Time:	03:19 PM to 05:05 PM	Apuan	*
		Benefield	*
Place:	LSB A	Gerou	X
		Kagan	X
This Meeting was called to order by		Kefalas	X
	Representative Judd	Lambert	X
		Roberts	E
This Report was prepared by		Summers	*
	Jason Schrock	Swalm	X
		Frangas	X
		Judd	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
SB09-290 SB09-233 SB09-297		Amended, Referred to the Committee of the Whole Referred to Appropriations Referred to the Committee of the Whole

03:19 PM -- Senate Bill 09-290

Representative Judd, chair, called the meeting to order. Representative Riesberg, prime sponsor, explained the provisions of SB 09-290 which changes the review process for cash-funded capital construction projects at state institutions of higher education. The bill was recommended by the Capital Development Committee (CDC).

Representative Riesberg indicated that increases in student fees to help fund capital projects generally do not have a TABOR impact to the state since state institutions of higher education are designated as enterprises. The committee also discussed how the bill would speed up the process for certain higher education capital construction projects. It discussed the CDC's role in approving the projects.

03:27 PM

Representative Riesberg continued by discussing how student fees are used to help finance construction projects. He also explained how SB 09-290 would allow certain cash funded projects to begin construction in a faster amount of time. Under the bill, state institutions of higher education are permitted to begin a construction project with approval of the school's governing board if:

funding for construction is from cash funds;
the building is operated and maintained with cash funds or with state funds (in the case of academic buildings);
the project was included in the most recent 2-year projection provided by CCHE to the CDC; and
the project is not part of the Higher Education Revenue Bond Intercept Program.

If these conditions are not met, a project would go through the existing review process.

The committee discussed whether the projects affected by the bill would still have the same transparency and accountability as they would under the current review process. Representative Riesberg indicated that institutions' two-year construction plans - which include the projects affected by the bill - are reviewed by the Colorado Commission on Higher Education, the Office of State Planning and Budgeting, and the CDC. Further, institutions provide periodic updates on their construction projects. Representative Riesberg indicated that the CDC, higher education institutions, and other interested parties were involved in drafting the bill.

The following person testified:

03:36 PM -- Mr. John Karakoulakis, representing the Colorado Department of Higher Education, indicated that the state's institutions of higher education were all agreeable to the bill.

Representative Riesberg concluded by asking for support for the bill and discussing the proposed amendments. Members of the committee received copies of Amendment L.010 (Attachment A), Amendment L.011 (Attachment B), and Amendment L.012 (Attachment C).


BILL:	SB09-290
TIME:	03:37:12 PM
MOVED:	Kefalas
MOTION:	Adopt Amendment L.010 (Attachment A) . The motion passed without objection.
SECONDED:	Benefield
		VOTE
	Apuan	Excused
	Benefield
	Gerou
	Kagan
	Kefalas
	Lambert
	Roberts	Excused
	Summers
	Swalm
	Frangas
	Judd

Not Final YES: 0 NO: 0 EXC: 2 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	SB09-290
TIME:	03:38:13 PM
MOVED:	Benefield
MOTION:	Adopt Amendment L.011 (Attachment B). The motion passed without objection.
SECONDED:	Kefalas
		VOTE
	Apuan	Excused
	Benefield
	Gerou
	Kagan
	Kefalas
	Lambert
	Roberts	Excused
	Summers
	Swalm
	Frangas
	Judd

Not Final YES: 0 NO: 0 EXC: 2 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	SB09-290
TIME:	03:39:16 PM
MOVED:	Benefield
MOTION:	Adopt L.012 (Attachment C). The motion passed without objection.
SECONDED:	Kefalas
		VOTE
	Apuan	Excused
	Benefield
	Gerou
	Kagan
	Kefalas
	Lambert
	Roberts	Excused
	Summers
	Swalm
	Frangas
	Judd

Not Final YES: 0 NO: 0 EXC: 2 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	SB09-290
TIME:	03:40:20 PM
MOVED:	Benefield
MOTION:	Refer Senate Bill 09-290, as amended, to the Committee of the Whole. The motion passed on a 9 - 0 vote.
SECONDED:	Kagan
		VOTE
	Apuan	Excused
	Benefield	Yes
	Gerou	Yes
	Kagan	Yes
	Kefalas	Yes
	Lambert	Yes
	Roberts	Excused
	Summers	Yes
	Swalm	Yes
	Frangas	Yes
	Judd	Yes

Final YES: 9 NO: 0 EXC: 2 ABS: 0 FINAL ACTION: PASS

03:41 PM -- Senate Bill 09-233

Representative Judd presented SB 09-233 for Representative Liston, the prime sponsor of the bill, who was unable to be at the hearing. The bill allows a mixed-use residential property in which less than 25 percent of its square footage is used for nonresidential purposes to be assessed entirely at the residential assessment rate for property tax years 2010 and 2011. Properties in which the portion used for nonresidential purposes exceeds 2,000 square feet are not eligible. Representative Judd indicated that the bill was sponsored by the Joint Select Committee on Job Creation and Economic Growth. He discussed the impacts of the bill on local government property tax revenue and state school finance expenditures.

The committee discussed the bill's provisions that prohibit its implementation until the Governor's Office of Economic Development and International Trade receives $344,000 to offset the estimated increased school finance costs to the state as a result of the bill.

03:48 PM

Representative Judd indicated that he did not know whether local governments were opposed to the bill. Representative Summers thought that collecting property tax revenue due from the nonresidential portion of mixed-use properties was not worth the effort. The committee discussed the federal tax implications for taxpayers that would be affected by the bill.

Representative Judd distributed a statement of support for the bill (Attachment D), a letter of support for Senate Bill 09-233 from Cloud Cover Hats, a small business in Paonia, Colorado (Attachment E), and a record of the Senate's third reading, final vote on the bill (Attachment F). The bill passed the Senate on a 35 - 0 vote.

The following persons testified:

03:51 PM -- Ms. JoAnn Groff, representing the Colorado Division of Property Taxation, discussed how mixed-use residential properties are assessed. She indicated that the sponsors' and the Joint Select Committee on Job Creation and Economic Growth's intent for the bill is to make it easier for small businesses to operate out of a home. She thought it would be difficult to know which types of counties would be most impacted by the bill over time, but that counties that are experiencing less residential properties and gaining more types of other properties would probably be the most affected. She believed that high rise residential buildings that have commercial properties on the bottom floors would likely not be impacted by the bill because their commercial property portion is generally too large to be covered by the bill. She thought that such properties were not intended to qualify under the bill.

The committee discussed the potential new economic activity and increased tax revenue that could result from making it easier to run small businesses out of homes.

04:01 PM

Ms. Groff indicated that it is often difficult for assessors to know whether homes have small businesses being run out of them. She indicated that the bill would more likely affect properties with signage on them indicating that the home provides services, such as accounting services. Representative Gerou thought that there are many professionals doing consulting work from their homes that could benefit from the bill.

The committee continued to discuss how the bill would be implemented and which types of properties the bill would apply to.

04:09 PM -- Ms. Natalie Mullis, Chief Economist, Legislative Council Staff, explained that the requirement that $344,000 be received for the bill to be implemented represented the amount needed to offset the estimated two-year school finance impact of the bill and that local governments would experience a revenue loss.

04:12 PM

Representative Judd concluded the discussion of the bill and indicated that he would vote for the bill, though he was not sure whether he would be voting for it if he were not presenting it for Representative Liston. He stated that he was not sure who the bill would benefit because many small businesses in homes will continue to not be identified by assessors; thus, only a very small number of businesses would benefit.

Representative Judd moved SB 09-233 to the Committee of the Whole with a favorable recommendation. Representative Kefalas seconded. Representative Judd and Representative Kefalas withdrew their motions after it was determined that the bill should be referred to the Committee on Appropriations.


BILL:	SB09-233
TIME:	04:14:48 PM
MOVED:	Judd
MOTION:	Refer Senate Bill 09-233 to the Committee on Appropriations. The motion passed 8 -1.
SECONDED:	Kefalas
		VOTE
	Apuan	Excused
	Benefield	No
	Gerou	Yes
	Kagan	Yes
	Kefalas	Yes
	Lambert	Yes
	Roberts	Excused
	Summers	Yes
	Swalm	Yes
	Frangas	Yes
	Judd	Yes

Final YES: 8 NO: 1 EXC: 2 ABS: 0 FINAL ACTION: PASS

04:16 PM -- Senate Bill 09-297

Representative Judd, prime sponsor, explained the provisions of SB 09-297 which modifies state law concerning the approval of contracts for projects funded through the federal stimulus package (the American Recovery and Reinvestment Act of 2009). He indicated that the bill would make it easier for the state to spend the stimulus money if necessary under certain conditions. He summarized the existing system for the state spending of money on projects. He indicated that because there are a lot of checks and oversight, the state's processes for spending money can take more time than is allowable under the guidelines for spending the stimulus money. Thus, the bill provides for a waiver, if needed, for state agencies to spend the stimulus money more quickly. He discussed the process for agencies to obtain a waiver allowed by the bill.

The following persons testified:

04:20 PM -- Matt Futch, representing the Governor's Energy Office (GEO), testified in support of the bill. He explained why the bill was needed. He stated that it provides a clear process for state agencies to receive and use the federal stimulus money. He also discussed the bill's provisions that allow the state to spend the stimulus money more quickly than allowed under current law. He discussed the ways in which the spending of the money will be transparent and accountable. For example, there are federal government guidelines designed to make the stimulus spending accountable and there will be a state board monitoring how the money will be spent.

The committee discussed when the state's guidelines for the monitoring of the spending of the stimulus money will be in place. It also discussed what types of projects the money must be used for by the GEO. Representative Lambert asked about the implications of using one-time stimulus money to fund energy-related incentive programs. Mr. Futch indicated that the GEO is considering using some of the money to create a revolving loan fund program that could be a perpetual program.

04:33 PM

Representative Swalm discussed his concerns with the impetus on spending the federal stimulus money quickly.

04:40 PM -- Gene Camp, representing the Colorado Public Utilities Commission (PUC), testified in support of the bill. He discussed how utility companies can use the federal stimulus money to improve energy consumption and energy systems. The committee discussed the types of energy projects the federal stimulus money could be used for in the state.

04:47 PM

The committee continued to discuss the spending of federal stimulus money and the potential consequences of the need to spend the money relatively quickly. Mr. Camp indicated he was not concerned with any negative consequences of spending the money quickly because the PUC has a good process for selecting energy-related projects to fund. The committee discussed whether the money will be spent effectively and whether it will beneficially affect consumers and energy consumption in the state.

04:52 PM -- Herman Stockinger, representing the Colorado Department of Transportation (CDOT), testified in support of the bill. He discussed the existing guidelines for CDOT's spending of federal stimulus money. He stated that CDOT has strict deadlines for the spending of the money and that if the department does not spend a certain amount of money by an upcoming deadline, it will lose all of its federal stimulus funds. It would also lose any money from other states that do not spend a portion of their money by the set deadlines.

He indicated that CDOT has already obligated 95 percent of the money it must obligate by the June 30, 2009, deadline, and that he is confident that the department will meet its deadlines. He stated that CDOT did not want, nor intend, to use the waiver provided by SB 09-297. However, he thought the bill was necessary just in case CDOT encounters unexpected future delays.

04:56 PM

Representative Gerou discussed her concerns with the large federal government debt resulting from the federal stimulus.

Mr. Stockinger indicated that the federal stimulus money would increase CDOT's budget by about $400 million in both FY 2008-09 and FY 2009-10. However, even with the stimulus money, CDOT's budget in these years is less than its FY 2007-08 budget because of the poor economy and weak tax revenue.

Representative Lambert discussed his concerns with the large national debt and the requirement that the stimulus money be spent quickly.

Representative Kagan stated that the debate on SB 09-297 should not focus on the merits of the federal stimulus package, but on ensuring that Colorado can spend its share without losing any to other states.

Representative Frangas mentioned his desire to talk with the sponsors of the bill and other interested parties about how projects relating to carbon sequestration may be part of the state's use of federal stimulus money.

05:03 PM

Representative Judd concluded the discussion on SB 09-297 and asked for the committee's support for the bill.

Representative Gerou discussed with the committee the issue of whether the bill was only a tool for the spending of the federal stimulus money.


BILL:	SB09-297
TIME:	05:04:29 PM
MOVED:	Judd
MOTION:	Refer Senate Bill 09-297 to the Committee of the Whole. The motion passed 8 - 2.
SECONDED:	Benefield
		VOTE
	Apuan	Yes
	Benefield	Yes
	Gerou	Yes
	Kagan	Yes
	Kefalas	Yes
	Lambert	No
	Roberts	Excused
	Summers	Yes
	Swalm	No
	Frangas	Yes
	Judd	Yes

Final YES: 8 NO: 2 EXC: 1 ABS: 0 FINAL ACTION: PASS

05:05 PM

The committee adjourned.