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Dan Pilcher CACI Senior Vice President & Chief Operating Officer
E-Mail: dpilcher@COchamber.com
Friday, April 8, 2011
Two Business Tax Bills, Part of State Budget Pact, are Introduced
Two bills were introduced this week in the Colorado General Assembly that address two of the three business tax provisions that are a part of the state budget agreement arrived at by the legislature and the Governor’s Office on Tuesday. CACI and other business organizations lobbied for the inclusion of these two bills in the budget agreement.
HB-1293 would repeal HB-1192 enacted last year that imposed the state sales-and-use tax on “standardized software,” which means software that was downloaded or installed. It also repeals any rules issued by the Colorado Department of Revenue (DOR) and codifies into statute the DOR’s special regulation concerning the sales-and-use tax attributable to the sale of computer software that existed before HB-1192 became law.
The bill was introduced Wednesday and assigned to the House Economic and Business Development Committee. It is scheduled to be heard Tuesday, April 12 when the Committee convenes in Room 112 at 1:30 p.m. HB-1293 is co-sponsored by Representative Amy Stephens (R- Monument), the House Majority Leader, and Representative Carole Murray (R-Castle Rock). The bill does not yet have a fiscal note, so it’s unclear how much money the business community will retain if the bill becomes law.
SB-223, which concerns the vendor’s fee allowance, was introduced Tuesday and was passed by the Senate Appropriations Committee yesterday, thus sending the bill to the Senate Floor for Second Reading. SB-223 is sponsored by Senator Mary Hodge (D-Brighton), who chairs the Joint Budget Committee.
The vendor’s fee allowance--which used to be 3.3 percent of sales tax collected by retailers to offset their real costs for acting as the sales-tax collector for state and local governments—will be partially reinstated to 2.2 percent and then fully brought back after three years. In 2009, the legislature took the vendor’s fee allowance away from retailers when tax revenues fell during “The Great Recession” of 2008-2009, and it had never been restored.
The fiscal note for SB-223 says the state will take in $22.8 million in fiscal year 2011-2012 and then $24.1 million and $25.2 million respectively in the following two fiscal years. In other words, the state’s $22.8 million is 1.1 percent of sales taxes collected by retailers. The budget agreement means that retail businesses will get to keep $45.6 million as their vendor’s fee allowance for the fiscal year beginning July 1st.
SB-72, Civil Remedies Bill Opposed by CACI, Dies in House Committee
On Wednesday, the House State, Veterans and Military Affairs killed on a party-line, five-to-four vote SB-72. SB-72 would have established the “Job Protection and Civil Rights Enforcement Act of 2010,” which would have allowed additional remedies of compensatory and punitive damages in employment discrimination cases brought under state law. Under current law, plaintiffs who win employment discrimination and other types of employment claims recover actual economic damages, such as lost wages.
The House sponsor was Representative Claire Levy (D-Boulder), and the Senate sponsor was Senator Morgan Carroll (D-Aurora).
The CACI Governmental Affairs Council had designated SB-72 as a priority bill for the business community to defeat. This bill was similar to versions that CACI and its business allies in the 2009 and 2010 sessions worked successfully to defeat.
Robin Repass, Counsel with Jackson Kelly PLCC, testified in opposition to the bill on behalf of CACI as a member of the CACI Labor and Employment Council. Here’s an edited version of Robin’s prepared testimony:
We oppose this bill for the following reasons:
SB-72 impacts small businesses beyond what even what the U.S. Congress intended to do in enacting Title VII of the Civil Rights Act of 1964 and the damages/remedies provisions at 42 U.S.C. 1981a as it specifically excluded businesses with under 15 employees from the compensatory and punitive damages provisions.
The federal Act has been amended various times since 1964, including substantial revisions in 1991, which resulted in the damages caps and remedies that this bill is attempting to mimic. Had Congress intended to apply this to businesses of under 15 employees, it would clearly have done so. Yet, the legislative history regarding the 1991 amendments is silent as to any effort to remove the 15 employee barrier in Title VII actions.
SB-72 creates substantial unfairness and prejudice on Colorado small businesses as punitive damages have specifically been made uninsurable by the Colorado Supreme Court (Lira v. Shelter Ins). In most of the states where punitive damages are provided in the state's anti-discrimination statute, punitive damages have not been specifically excluded from coverage and are allowed in some circumstances, such as in vicarious liability claims.
Only six states--Missouri, Nebraska, New Jersey, New York, Rhode Island and Utah--join Colorado in providing blanket exclusion for coverage of punitive damages. Although some states do exclude for intentional conduct or direct liability, they have not entirely excluded them, but do allow them for non-intentional conduct or vicarious liability.
States cited by sponsors of SB-72 that have enacted similar laws do allow insurance for punitive damages: · Minnesota--not prohibited for vicarious liability. · Maryland--not prohibited. · Maine--prohibited for direct liability, but courts have not · specifically excluded outside of Uninsured/Underinsured Motorists' · Insurance (UIM) context. · Illinois--not prohibited for vicarious liability.
SB-72 allows age-discrimination claimants to have remedies beyond what the federal Age Discrimination in Employment Act (ADEA) of 1967 act would allow as the ADEA does not provide for compensatory damages or punitive damages. In the case of willful violations, the ADEA allows liquidated damages by doubling back pay damages, but no additional compensatory or punitive damages;
SB-72 creates unnecessary burdens on state courts for four reasons:
First, remedies already exist for employees under various state-tort remedies, such as civil assault and wrongful termination. Compensatory and punitive damages are allowed under these provisions.
Second, it creates a punitive-damages framework that is at odds with Colorado's statutory exemplary damages scheme in that it proposes a different burden of proof. Current state law requires beyond proof beyond a reasonable doubt, plus evidence that act was done with evil intent and with purpose of injuring plaintiff or with wanton and reckless disregard as to evidence a wrongful motive. The bill proposes a preponderance of evidence standard that the defendant engaged in a discriminatory or unfair employment practice with malice or reckless indifference to the rights of the plaintiff.
Third, Colorado's punitive damages statute does not allow punitive damages to be included in an initial pleading.
Fourth, the bill contains caps that will track federal law, thus conflicting with state law. In Colorado, the current non-economic damages cap with inflation adjustment is $468,010.
SB-72 will increase litigation costs for employers in several ways. Employers will have to respond to claimants' motions as whether or not punitive damages will be allowed. ADEA claimants may file in state court to take advantage of broader remedies under SB-72. Many who now file in federal court now under federal statutes may elect to sue only under state statutes. Employment-law filings account for a large number of filings in federal court, and SB-72 will likely transfer some of these filings to state court, which will over-tax it.
SB-72 carries a fiscal note of $30,771 for fiscal year 2013-2014 and $54,017 for fiscal year 2014-2015 because of the increased burden that it will place on the Colorado Civil Rights Commission (CCRD). But the fiscal note does not contain an analysis of the fiscal impact on the CCRD of claimants who now file only with the federal Equal Employment Opportunity Commission but who may instead file with CCRD to take advantage of more favorable remedies.
The bottom line is that the burden on state courts is unnecessary because employees now have access to: · Federal Title VII if the company has 15 or more workers; · Colorado Anti-Discrimination Act remedies; · State tort claims (assault, wrongful termination, outrageous conduct), etc., with damages caps that are higher than that contemplated by SB-72.
The following business organizations and employers worked with CACI to defeat SB-72: · Colorado Association of Auto Dealers · Colorado Hospital Association · Colorado Competitive Council (C3) · Colorado Civil Justice League · Colorado Concern · Denver Metro Chamber of Commerce · Grand Junction Chamber of Commerce · ACE Group · National Federation of Independent Businesses (NFIB) · Property Casualty Insurers Association · CNA Insurance · Professional Independent Insurance Agents of Colorado · Rocky Mountain Health Plans · State Farm Insurance · Mountain States Employers’ Council · American Insurance Association · Aurora Chamber of Commerce · Broomfield Chamber of Commerce · Douglas County Business Alliance · Metro North Chamber of Commerce · Longmont Chamber of Commerce · Early Childhood Education Association · Independent Bankers of Colorado
House Gives Second Reading Nod to HB-1141, the Business Personal Property Tax Bill Supported by CACI
On Wednesday, the House approved on Second Reading HB-1141, which is intended to relieve the pressure of the business personal property tax (BPPT) on Colorado’s business community:
HB-1141, sponsored by Representative Christ Holbert (R-Parker) awaits final action by the House with Third Reading on Monday.
HB-1141 would exempt new equipment bought in 2012 or 2013 from the business personal property tax (BPPT) for the life of the equipment. Equipment purchased in 2014 or later, however, would be subject to the tax.
Another BPPT proposal is HB-1263, sponsored by Representative Kevin Priola (R-Henderson), which would exempt firms with less than $14,000 in business personal property from the BPPT. A portion of utility property also would be exempted. The bill awaits action by the House Appropriations Committee.
Statehouse reporter Lynn Bartels of The Denver Post covered the Second Reading debate and vote on HB-1141 as did Ed Sealover, statehouse reporter of The Denver Business Journal.
CACI-Initiated Bill on Sales-and-Use Tax Refund Claims Heads to House Floor
This morning, the House Appropriations Committee unanimously endorsed HB-1265, which sends the proposal to the House Floor for Second Reading. The House sponsor is Representative Amy Stephens (R-Monument), the House Majority Leader, and Senator Michael Johnston (D-Denver).
CACI members made their concerns known to the Colorado Department of Revenue (DOR) in recent months that taxpayers should continue to be allowed three years to file a sales-tax refund claim. This issue was raised based on inconsistencies being applied by the DOR in determining the length of time to be given for refund claims.
CACI Tax Council members stated that the 60-day rule in statute is simply an additional measure for taxpayers to use for faster processing of refund-claim decisions. This provision was never been intended to be used to supersede the three-year statute of limitations defined in Section 39-26-703(2)(e). The bill does the following: · Clarifies that a taxpayer who has established that they have overpaid the tax is allowed three years to request a refund; · Allows, but does not compel vendors to file claims for refunds on behalf of their customers within three years after the due date of a return; · Penalizes anyone that willfully submits false information regarding a refund.
CACI-Backed Unemployment Insurance Bill Sent to House Floor
Also this morning, the House Appropriations Committee unanimously endorsed HB-1288, which sends the proposal to the House Floor for Second Reading. The bill addresses the insolvency of the state’s Unemployment Insurance Trust Fund (UITF). The Fund now owes about $530 million to the Federal Government.
The bill’s prime co-sponsors in the House are Representative Larry Liston (R-Colorado Springs) and Representative Dan Pabon (D-Denver). Representative Liston chairs the House Economic and Business Development Committee.
The primary goals of HB-1288 are two-fold:
1. Repay the Federal loan before federally mandated penalties against Colorado federal UI rates (FUTA) begin and rebuild a necessary fund balance before the next economic down-turn without harming employers’ ability to recover from the recent recession and increase jobs.
2. Construct a new UITF rate chart that reflects and grows with the size of the Colorado economy to provide adequate Fund reserves, that has less volatility and is simpler to administer, and reflects sound pooled-insurance principles for shared risk and non-charged benefits.
“CACI Annual Golf Tournament Presented by Apokalyyis, Inc.,” Set for Friday, May 27th at The BroAdmoor
Only seven weeks remain until CACI holds the “CACI Annual Golf Tournament Presented by Apokalyyis, Inc.” at The BroAdmoor in Colorado Springs. The Tournament begins at 1 p.m. on the West Course. Here are the Tournament sponsors:
Presenting Tournament Sponsor
Silver Corporate Hole Sponsors
For more information, contact Tricia Smith, CACI Vice President of Events and Political Fundraising, at 303.866.9629 or by e-mail.
U.S. Chamber of Commerce Labor Expert to Address CACI’s Labor and Employment Council
Glenn Spencer, Executive Director of the Workforce Freedom Initiative of the U.S. Chamber of Commerce, will speak about national organized labor issues at the regular CACI’s Labor and Employment Council luncheon meeting on Wednesday, April 27th. The Council will meet from 12 Noon to 1:30 p.m. CACI members who are not members of the Council are welcome to attend. Please contact Misty Lucero to RSVP.
The Institute is the U.S. Chamber’s grassroots mobilization and advocacy campaign to counter organized labor’s effort to have Congress pass the Employee Free Choice Act, more commonly known in the business community as “card check, as well as other union priorities. The Initiative is a multi-million dollar effort to preserve democracy in the workplace, restrain abusive union pension fund activism and block the anti-competitive agenda advocated by many labor unions.
Prior to joining the U.S. Chamber in 2007, Spencer had worked for Citizens for a Sound Economy and the National Republican Senatorial Committee.
Giving Credit where Credit is Due . . .
Last week’s Capitol Report contained two photographs taken for CACI by Larry Laszlo, a professional photographer who has been shooting photos for CACI for several years. Here is Larry’s contact information: CoMedia, 1200 East 17th Avenue, Denver, CO 80218; phone 303.832.2299; fax 303.832.3737; e-mail; and Website.
We would like to welcome the following new members:
Upcoming CACI Council Meetings
Council meetings will be held at the CACI Office beginning at 12 Noon. For all meetings, please contact Misty Lucero, CACI Office Manager, to RSVP.
Governmental Affairs Council, Tuesday, April 12. Luncheon sponsor is Heidi Wagner Morgan, Manager, State Government Affairs, Black Hill Corporation.
Energy and Environment Council, Thursday, April 14. Luncheon sponsor is Scott Hutchings, Government Affairs and Municipal Relations, Waste Management. Guest Speaker will be TJ Deora, Director of the Governor’s Energy Office (GEO). He will discuss GEOs priorities and policies, and respond to council questions.
Governmental Affairs Council, Tuesday, April 26. Luncheon sponsor is Kara Miller, Lobbyist, Gold Dome Access.
Labor and Employment Council, Wednesday, April 27. Luncheon sponsor is Larry Marquess, Shareholder, Littler.
HealthCare Council, Thursday, April 28. Luncheon sponsor is Amy Mueller, Director of Government Relations, Kaiser Permanente.
Secretary of State Alerts Colorado Business Community to Mail SolicitationOn Monday, Scott Gessler, Secretary of State, issued a press release to warn businesses against a mail solicitation that tries to persuade them to pay a $225 fee to file periodic reports with his office.CACI received two of the official-looking solicitations from Corporate Controllers Unit, 600 17th Street, Suite 2800 South, Denver CO 80202.
Most businesses file such reports on-line with the Gessler’s office for an annual fee of $10.
Gessler encouraged businesses with questions to call his office at 303.894.2200 or e-mail him.
Tell Colorado State Government How Red Tape Hampers Your Business Operation
The Colorado Office of Economic Development and International Trade is seeking input from businesses about how state government red tape hampers operations.
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