By

Dan Pilcher

CACI Senior Vice President

& Chief Operating Officer

Phone: 303.866-9600

E-Mail: dpilcher@COchamber.com

Friday, March 30, 2007

Legislative Session Reaches Two-Thirds Mark

Today marks the 80th day of the 120-day session of the Colorado General Assembly.  Six weeks are remaining of the 2007 session.

From CACI’s viewpoint, the session has been a mixed bag so far for the statewide business community.  Working closely with lawmakers of both parties, CACI has lobbied bills that would affect Colorado’s business climate in such important areas as labor, health care, taxes, workers’ compensation and the environment.

Some “bad-for-business” bills have died, and some good ones have been signed into law by Governor Bill Ritter.  The Governor’s veto in early February of HB-1072, which would have gutted the Colorado Labor Peace Act, pleased CACI and the business community.

Some bills of interest to CACI that are still moving through the legislative process have been amended to remove the major objections of the business community.  Past issues of CACI’s Colorado Capitol Report, which can be found on the CACI Web site, have chronicled the progress and fate of these bills.

State Budget Contains Increases for Transportation, Higher Education

On Monday, the $17.8 billion state budget, SB-239, known as the “Long Bill,” was introduced in the Senate.  The budget contains a spending increase of $1.25 billion.

The budget consists of mainly of federal funds, the General Fund (which mostly comes from state sales and income taxes) and cash funds (which are funded as “fees” by individuals and companies for specific services).  The state General Fund would be $7.1 billion, or 40 percent of the total budget.

CACI will lobby to protect increases in transportation funding and higher-education funding from cuts to fund other programs.

In terms of General Fund monies, $20 million of Referendum C money would be transferred to transportation.

The General Fund portion of higher-education funding would increase $52.2 million, or 7.5 percent, to $746.3 million.  Total higher-education funding would be $2.5 billion.

CACI and other business organizations supported Referendum C and D in 2005 because they saw the pressing need to increase funding for higher education and transportation to strengthen the state’s economic competitiveness in the wake of program cuts following the 2001 recession.  The slump in state revenues led to about $1 billion in budget cuts.  Referendum C allows for a five-year timeout from the revenue restrictions of TABOR.

State law only allows General Fund appropriations to increase by 6 percent over the prior year’s appropriations.  Thus, the General Fund would increase by $401 million over that for the prior year.

For news coverage of the budget:

http://www.rockymountainnews.com/drmn/government/article/0,2777,

DRMN_23906_5445003,00.html

http://www.denverpost.com/legislature/ci_5527137

“Clean-Room” Bill to Clarify Tax Exemption Passes House

This morning, the House gave final approval to HB-1277, which would clarify the existing exemption from the sales and use tax for equipment bought by companies for their manufacturing “clean rooms.”  Leading the charge for the bill is the Economic Development Council of Colorado, whose members include many local economic development corporations.  The bill, which CACI also supports, now goes to the Senate for consideration.

Current statute exempts such machinery directly used in a clean-room manufacturing process as air-filtration systems.  The bill would exempt such “additional infrastructure” needed to create a clean room as “lighting, fixtures, process piping, valves, electrical components, chillers, pumps, ducts, tanks, motors, computers, or any other related apparatus,” according to the fiscal note.

Although the fiscal note projects $3.9 million in lost tax revenue, CACI questions that number.  Earlier in the week, CACI President Chuck Berry sent a letter to the members of the House Appropriations Committee, urging them to pass HB-1277.  Here is the edited text of the letter:

CACI urges your support of HB-1277, concerning a clarification of the exemption from sales and use tax of machinery used in clean-room operations.  The bill is sponsored by Rep. Cheri Jahn.

Colorado has traditionally exempted the machinery, equipment, materials and supplies used in the construction, building, creation and manufacture of products from the Colorado sales and use tax.  This exemption has created an attractive business environment for capital investment and primary job creation by manufacturers.  Despite this sales and use tax exemption, manufacturing equipment is still subject to business personal property tax (BPPT).  The BPPT is paid to state and local governments and school districts.

This bill would not create a new exemption but would simply clarify the application of existing sales and use tax exemption.  The only way for the Department of Revenue to determine when this tax on clean-room equipment is being paid is during an audit.  Colorado companies deserve some certainty about their tax liability before they are audited.

CACI questions the fiscal analysis, given that the Department indicated they do not know whether taxpayers are paying taxes on this clean-room equipment currently and have no way to track that information.  Therefore, speculation about lost revenue to the state is speculative.

CACI respectfully urges your support of this important bill to provide needed up-to-date application of the statute to reflect current clean-room manufacturing environments. 

Legislative-Created Commission Holds Hearing on SB-36, the “Mental Disorders” Bill

Opposed by CACI, SB-36 would mandate that employer-provided health insurance be required to cover “mental disorders” in addition to six biologically-based mental illnesses that are already covered.

Last Friday, March 23rd, the Commission on Mandated Health Insurance Benefits held a hearing on SB-36.  The Commission was created several years ago by the legislature to study bills that would mandate additional benefits on employer-provided health insurance.  The Commission does not issue a recommendation on legislation, but it does issue a report on the topic and the hearing.  Both of these will be placed on the CACI website.

The bill, still pending in the Senate Appropriations Committee, is sponsored by Senator Moe Keller (D-Wheat Ridge), and is advocated by the Mental Health Association of Colorado.  It would not apply to companies with 50 eligible workers or less.

CACI opposes bills that would mandate additional coverage on employer-provided health-care benefits because it drives up the cost of insurance premiums for companies.  CACI members have told CACI HealthCare Council Chair Ralph Pollock that they are learning from their heath plans about the probable impact of SB-36, which could lead to at least double-digit premium increases.

For More Information on Bills . . .

CACI members with questions about legislation that CACI opposes or supports should contact Chuck Berry, CACI President, at 303.866.9601 or e-mail him at:

cberry@COchamber.com

Questions pertaining to the health-care policy bills should be directed to Ralph Pollock, Chair of the CACI HealthCare Council at 303.866.9657 or via e-mail at:

ralph@apaccess.com

CACI’s Legislative Agenda is a complete listing of bills that CACI is lobbying, either in support or opposition.  The Legislative Agenda can be found on the CACI Web site, where it will be updated on a weekly basis:

www.COchamber.com

If you wish to track a particular bill’s legislative process, you can do so by going to the legislature’s Web site:

www.leg.state.co.us