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26 business groups implore Colorado lawmakers to hit brakes on bills

 

26 business groups implore Colorado lawmakers to hit brakes on bills that could bring 'eye-popping costs' to employers 

 

 

 

By Ed Sealover  – Senior Reporter, Denver Business Journal

59 minutes ago

Feeling they’ve been targeted repeatedly in a fast-moving legislative session, more than two dozen business groups issued a plea to Colorado legislative leaders Wednesday to slow efforts to cut tax exemptions and increase regulations and to work together with them on solutions.

The exhortation by 26 groups, made in a Zoom news conference, came after Democrats on the House Finance Committee moved forward a bill Monday night to eliminate some $400 million in tax breaks in order to raise $1 billion for education over the next four years — a seeming breaking point for statewide business groups. And it came as the Common Sense Institute, formerly known as the Common Sense Policy Roundtable, pegged at $4.16 billion the cumulative cost to business of two tax-policy bills, a pair of proposed tax-and-fee ballot initiatives and the coming increase in fees to employers to replenish the soon-to-be-insolvent Unemployment Insurance Trust Fund.

All of this comes, business leaders noted, at a time when more than 500,000 Coloradans have lost jobs in the past three months due to coronavirus restrictions but when employers are being asked as well to rehire staffs and reopen the economy. And the increased financial burdens, added onto decreased consumer activity, could push more business owners to close for good, which in turn would stagnate the economic recovery statewide.

“This amounts to a short-term gain made on the backs of one section of society — business — with long-term consequences to recovering from this crisis,” said Don Childears, CEO of the Colorado Bankers Association.

Democratic leaders did not immediately respond to the plea, as they were busy in marathon debates in the House and Senate in an effort to wrap up an already-Covid-shortened legislative session by the end of this week. But recent exchanges in hearings over some of the most business-opposed bills reveal that a number of legislators have felt employers have not been pulling their weight in funding public services like education over a decade of prosperity that they say has benefitted private coffers more than state or local government budgets.

 

For example, after Patrick Boyle, a Colorado Competitive Council lobbyist, insisted during a hearing Tuesday for the tax-break-nixing House Bill 1420 that a recession is not a time to raise the tax burden on employers, Rep. Marc Snyder, D-Manitou Springs, asked when would be the time. When Boyle responded such a move would be preferable during a boom, Snyder laughed.

“It seems like your opposition to any type of tax-exemption eliminations was just as steadfast prior to the Covid crisis as it is now,” Snyder said.

Still, business leaders say that not only could the consequences of a number of proposals be detrimental to hiring, but that they are surprised at the magnitude of what they consider business-burdening bills that have been introduced since the Legislature reconvened May 26 following a 2-1/2-month break. And while HB 1420 — which eliminates a 20% federal pass-through deduction for LLCs and sole proprietorships on state tax calculations and suspends an 85-year sales-tax exemption on energy used in manufacturing, among other things — is the top concern, many other bills bother them.

Loren Furman, senior vice president for the Colorado Chamber of Commerce pointed to measures that would continue a tax on health-insurance carriers that was set to expire and would presume that employees who contract coronavirus did so at work and are eligible for workers’ compensation benefitsTony Gagliardi, state National Federation of Independent Business director, pointed as well to a plan to increase whistleblower protections for employees complaining about workplace safety — including allowance for them to sue their companies — and a Secure Savings Plan bill that would lead to creation of a state-run retirement-savings system for all workers who don’t have access to one through their jobs.

All of this comes in addition to increases in unemployment-insurance fees of between $42 and $850 per worker that employers will have to pay next year to replenish the UITF, which is expected to run out of money in July or August and require the state to borrow from the federal government to keep it afloat. While business groups aren’t complaining about needing to pay into that fund, they say those expenses should be kept in mind when considering some of these other cost-raising propositions that they face.

Colorado Concern President/CEO Mike Kopp offered several specific requests to legislative leaders during the Zoom call. He asked them to engage with business leaders on potential mutually acceptable solutions, make some of the proposed changes temporary, slow down rather than rushing bills through the process this week and honor the commitments they made in conversations during the coronavirus-caused interim that the focus of the session would be on bills that were “fast, free and friendly.”

“The input of businesses has been made incidental at best at the Capitol or even pilloried at worst,” Kopp said, noting that the pleading groups represent companies employing tens of thousands of workers and stretch from Grand Junction to Colorado Springs. “It is pretty rational to think that the Legislature could take more time … If need be, they could even bring themselves back together in a special session.”

For many of the sponsors of the bills in question, this is not an issue of attacking business so much as finding a way to plug a $3.3 billion hole in the budget that was cut by coronavirus and of protecting front-line workers.

Rep. Matt Gray, a Broomfield Democrat who disputed that he blindsided businesses with HB 1420, said that private employers need to share the pain of cuts that publicly funded functions like school systems are experiencing. Sen. Brittany Pettersen, said the whistleblower-protection bill is not about generating lawsuits against employers but is about making sure that nurses in particular can speak up about workplace-safety fears without having jobs threatened.

But the literal cost of the proposed changes upon business will be heavy, the CSI report issued on Wednesday said. HB 1420 is expected to raise $408 million during the 2021-22 fiscal year, the health-insurance tax continuation will generate $140.9 million and refilling the cost of increased unemployment-insurance fees on business will be about $307 million, it noted.

It then added in roughly $2 billion a year that proponents are hoping to raise through progressive income-tax rate initiative that could make the ballot in November, and $1.3 billion that would be required to fund a paid-family-leave mandate another group is looking to put on the ballot. Those could result in “serious or immediate consequences,” it predicted.

Some legislators argue that the escalating cost of these measures is the result of previous inaction. Sen. Chris Hansen, D-Denver, began suggesting months before coronavirus hit that the UITF reserve was not prepared for a recession and that the state should raise the per-worker taxable base on which fee rates for employers are based. As Republicans have looked to shift state money from the federal CARES Act to the fund, Hansen has fought it, saying that emergency money shouldn’t be put to a situation most people could see coming.

Colorado Farm Bureau vice president Shawn Martini said, however, that every cost that is being thrown onto business can be the backbreaker that prevents an expansion or that causes a business to go under. These are “eye-popping costs” that employers both small and large will be facing, and they will prolong the recession, he said.

“Our goal is to put people back to work. And I think our hope is that the Legislature would share that goal,” added Kelly Brough, president/CEO of the Denver Metro Chamber of Commerce. “But quite the contrary, that’s not been our experience with the Legislature. In a different economy, I might say we were just disappointed by some of these bills. Instead, we are quite concerned … that we have a policy environment that is slowing our recovery.”

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