Date: 02/03/2009

Final
BILL SUMMARY for HB09-1127

HOUSE COMMITTEE ON BUSINESS AFFAIRS AND LABOR

Votes: View--> Action Taken:
Moved amendment L.001 (Attachment B). The motion
Moved to refer House Bill 09-1127, as amended, to 		Pass Without Objection
PASS



10:45 AM -- House Bill 09-1127

Representative Miklosi, prime sponsor, presented House Bill 09-1127 concerning the creation of a credit against state income tax for an investment that creates jobs in a small business located in Colorado and distributed a fact sheet about the bill (Attachment A). This bill provides an income tax credit for investments in small businesses based in Colorado. The first tax year for which the credit can be claimed is 2011. To qualify for the credit, an investor must invest in a business for at least three consecutive years. The investment in the third year must be at least $100,000 in cash or capital, such as equipment or buildings, that is provided in exchange for debt or equity in the business. The investment in the first two years must total at least $25,000. The business must have fewer than 20 employees at the time of initial investment.

The amount of the credit is equal to a percentage of the investment made in the third year. The percentage is based on the number of full time employees hired by the business over the three-year period of the investment. The maximum percentage is 75 percent.

As an example, if an investment in a qualifying business was $500,000 in the third year of a three-year investment and the business employed an additional 25 full time workers since the time of the initial investment, the amount of the credit would be $150,000 ($500,000 x 30%).

Any credit that exceeds the amount of the taxpayer's income tax liability can be refunded to the taxpayer or carried forward and applied to future tax years. The credit can also be transferred to another taxpayer to apply against their tax liability. Taxpayers can claim a credit for a maximum of three years for investments in the same business.

An investor must apply for and receive a tax credit certificate from the Governor's Office of Economic Development. The tax credit certificate must then be presented to the Department of Revenue with the investor's income tax return. The bill requires the Office of Economic Development and the Department of Revenue to share information and specifies penalties for the misrepresentation of qualifications for the credit.

10:50 AM

Representative Miklosi talked about amendment L.001 (Attachment B) and the updated fiscal note if the amendment were to pass that would reduce the fiscal impact (Attachment C). Representative Gagliardi asked about the Office of Economic Development and International Trade's additional workload if all the tax incentive bills pass. Representative Ryden asked Representative Miklosi to give an example of how the percentages would work under the bill.

10:56 AM -- Dave O'Brien, the CEO of Business Catapult, testified in support of the bill along with Kevin Johansen, representing the Angel Capital Summit. Mr. O'Brien talked about entrepreneurs and their impact on the economy. He also talked about the number of angel investors in Colorado and why they invest. Mr. Johansen added some additional points about new businesses and how they grow.

11:09 AM -- Jim Holt, a business owner, testified in support of the bill. He talked about his equipment rental business and the importance of tax incentives in this economy. Representative Liston asked whether his company would use this type of incentive for his business. Mr. Holt talked about the importance of help from others in his current business and another businesses that he has started and since sold. Representative Soper discussed the importance of good wages and jobs for employees. Mr. Holt talked about the benefits he provides his employees.

11:15 AM -- Sheryle Hutter, representing the Colorado Cross-Disability Coalition, the Colorado Developmental Disabilities Council, and herself, testified on the bill and talked about some concerns she had with the bill especially for small business owners. She responded to questions from the committee.

11:21 AM

Representative Miklosi stated that Colorado is not as aggressive as other surrounding states in these types of tax policies. Representative Miklosi responded to questions from the committee.
BILL:HB09-1127
TIME: 11:22:17 AM
MOVED:Balmer
MOTION:Moved amendment L.001 (Attachment B). The motion passed without objection.
SECONDED:Priola
VOTE
Balmer
Bradford
Gagliardi
Liston
Priola
Ryden
Scanlan
Soper
Stephens
Casso
Rice
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:HB09-1127
TIME: 11:22:45 AM
MOVED:Balmer
MOTION:Moved to refer House Bill 09-1127, as amended, to the Committee on Finance. The motion passed 9-2.
SECONDED:Priola
VOTE
Balmer
Yes
Bradford
Yes
Gagliardi
No
Liston
Yes
Priola
Yes
Ryden
Yes
Scanlan
Yes
Soper
Yes
Stephens
Yes
Casso
Yes
Rice
No
Final YES: 9 NO: 2 EXC: 0 ABS: 0 FINAL ACTION: PASS