Ref C spending front and center

Legislature not expected to advance tax relief measures

David Milstead, Rocky Mountain News

Published January 3, 2006 at midnight

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Colorado businesses might think that with the Colorado fiscal crunch eased thanks to Referendum C, now might be the perfect time to sell tax breaks that stimulate industry in the name of job creation.

Actually, say political observers, the exact opposite is true for the 2006 legislative session - and perhaps several sessions thereafter.

"The political dynamic is such that no tax-reduction or relief measures would have any chance of passage for the next five years," said Tim Jackson, president of the Colorado Auto Dealers Association. "It's just a fact of life."

Others who bring business issues to the attention of the General Assembly are not quite as blunt as Jackson.

Still, they say most of the action for business in this session will come not from what they might propose, but what they might oppose: a second round of worker-friendly bills sponsored by the Democratic majority, entering its second year of statehouse control after a historic political victory in 2004.

While business statehouse watchers will track specific legislation, such as attempts to change the workers compensation system, they'll also keep close tabs on the biggest task of the session: spending Ref C money.

Freed from TABOR restraints

Referendum C freed the state temporarily from the restraints of TABOR, the Taxpayer's Bill of Rights, allowing the government to keep revenue for the next five years it would ordinarily have returned to taxpayers. Proponents of the measure - which included many members of the business community and chambers of commerce - argued the measure was needed to eliminate a "ratchet effect" that occurred when state revenues shrank in the last recession, keeping future TABOR increases artificially low.

While voters embraced Referendum C, they rejected a companion measure that would have allowed the state to borrow funds to kick-start capital projects such as transportation. That defeat may create wrangling over the use of the extra Ref C dollars, something business will keep an eye on.

"For Ref C, it's more than just watching - it's ensuring that the process is sound and accountable," said Tamra Ward, the vice president of public affairs for the Denver Metro Chamber of Commerce. "We spent a lot of resources talking about why Ref C was important. Now we think we need to continue to be a watchdog - a friendly watchdog, but a watchdog nonetheless."

Ward said the chamber held a late-December meeting of Ref C "stakeholders," such as the Colorado Contractors Association, the Colorado Education Association, the Colorado Association of School Executives and representatives from the state's higher-ed institutions. The purpose was to develop a list of points of agreement so the groups can be seen as speaking more in unison, rather than separately, in whatever Ref C debate breaks out.

"That's one way we hope to move this along," Ward said.

Chuck Berry, president of the Colorado Association of Commerce and Industry, the state chamber of commerce, said he sees the Ref C spending choices as "the overriding, overarching challenge of this session."

Fighting worker-friendly bills

At the same time, CACI will fight, as it did last session, any of several bills that proponents painted as worker-friendly but business fought as costly and unnecessary.

CACI's 2005 hit list included bills that would have allowed workers comp patients to choose their own doctors, prevented the state from using a contractor that sent work offshore and allowed workers to examine their personnel files.

Another bill CACI will oppose if it is introduced this year is legislation that would require Colorado employers to give workers time off for parental responsibilities. Sen. Peter Groff, who sponsored the measure in 2005, said, "It's time for us to start standing up for kids, and start standing up for parents. Business has any number of lobbyists in this building, but children generally don't."

Berry said CACI "believe(s) our members accommodate their workers who want to take time off . . . we believe it's wrong for the legislature to come up with one single employer mandate that would apply to every employer in the state."

The National Federation of Independent Business, whose membership is overwhelmingly small business, has affordable health insurance as its No. 1 priority, said director Tony Gagliardi.

That will likely put the organization in opposition to legislators who say their legislation improves health care for individuals. Gagliardi said NFIB will likely oppose any attempt to undo any of the reforms to Colorado's workers comp insurance program put in place 10 years ago.

"We have a good workers comp system that's working. Is it perfect? No, no plan is. But if workers comp rates start going back up, the first ones hurt are small independent businesses," Gagliardi said.

Items on wish list

Defending the workers comp program is also a "big agenda item" for Colorado Concern, a little-known group of roughly 80 CEOs across a wide spectrum of industry. A bill to allow workers comp recipients to choose their own doctor "would open up a lot of the cost containment in the last reform," said William Mutch, the group's executive director.

While some of the sponsors of last year's pro-worker bills have announced intentions to try again, others have been quiet. Some of the bills may return with changes to make them more palatable to business.

"If it died once with a veto from the governor, you ought to think twice with the same governor and the same legislative body," noted Sen. Jennifer Veiga, D-Denver, who will chair the Business, Labor and Technology Committee.

Elimination of the business personal-property tax remains on the wish list of many in industry. Most of Colorado's taxes, from income to residential property tax, compare favorably with other states'. But Colorado's law levying business property tax not only on land and buildings, but also on production equipment, has made the state an expensive place to be a manufacturer.

The tax "is a job-killing issue for a lot of businesses," said Colorado Concern's Mutch. But "without a backfill, or some other way to address the loss of revenue the local (governments) have, you could raise taxes on some businesses while you reduce it for others."

Telecom equipment companies will make another attempt at a bill that removes the sales tax on their products, said Steve Durham, a lobbyist with Colorado Winning Edge who counts Qwest as a client. "Last year, it passed the Senate and two house committees, so with a little more money floating around, it might do better."

Still, he acknowledged, "any tax reduction faces a steep, uphill fight. I wouldn't say it's impossible, but it'll face long odds."

2006 legislative session

Some issues that business interests will be keeping an eye on:

• Referendum C spending• Workers compensation• Leave for parental responsibilities• Health insurance• Business personal property tax

David Milstead is finance editor of the Rocky Mountain News. He can be reached at milstead@RockyMountainNews.com or 303-892-2648.

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