Colorado legislators tackle series of tax-reform issues

Tax issues critical to commerce should loom large for state lawmakers this session.
Among the bills to be presented to the Legislature is one sponsored by House majority leader Norma Anderson, R-Lakewood, who is expected to propose that tax surplus be "de-Bruced."
Anderson˜s bill would address Amendment 1 (or TABOR) requiring that tax surpluses generated by growth and revenue be given back to the voters. For the first time since the amendment passed in 1992, state revenue exceeded permitted growth limits. Over the next five years, excess revenue of more than $1 billion is predicted.
Anderson˜s bill would allow the state revenue surplus to be used by the government to pay for transportation or K-12 education programs. Another option would be decreasing the state income-tax rate for a limited time.
Sandra Hagen Potter, issues manager for the Northern Colorado Legislative Alliance, the lobbying arm of the Fort Collins, Greeley and Loveland chambers of commerce, believes that if Anderson˜s bill is successful, it will lighten the tax burden for businesses.
"Businesses wouldn˜t see a tax increase to pay for needs critical to commerce like transportation," she said "By taking these dollars, we don˜t have to raise taxes."
Potter said that the tax surplus was probably one of the reasons for the November defeat of a state ballot issue asking voters to raise taxes for transportation. If the tax surplus is refunded to voters, Potter said, the NCLA "wants to make sure corporations be included in the refund. Business tax, after all, make up 27 percent of the state˜s general fund." Businesses are currently excluded from the refund.
Tax reform for businesses will also be grabbing headlines in the upcoming year, Potter said. Once again, the NCLA is working to introduce legislation concerning personal-property tax. At issue is the inequity between the taxes individuals and businesses pay for products. While an individual pays sales tax once for the computer they buy, a business is taxed every year on the same property. For the last two years Gov. Roy Romer has vetoed legislation passed that would have exempted businesses of part of the tax and suggested that the revenue lost to schools will be backfilled by the state.
"We˜re at it again with a different approach," Potter said. "All future purchases of equipment would be exempted from taxes beginning in 1999. This won˜t affect current revenues, but purchases that may not have otherwise been made. Through depreciation (of property) the tax will one day be phased out."
Called the Future Personal Property Tax Exemption, the bill is sponsored by Rep. Steve Johnson R-Loveland.
Enterprise-zone terminations will affect some Northern Colorado businesses. The state Economic Development Commission has approved the repeal of designated enterprise zones. The enterprise zones provided tax breaks for the businesses that set up shop in these economically depressed areas.
Large portions of Weld County will lose the designation, and Windsor˜s Eastman Kodak Co. plant will be most notably affected. However, the change will be grandfathered in, allowing companies such as Kodak to receive tax credits until 2002.
The Commission plans to submit a report to the Legislature on the terminations. Potter said lawmakers may or may not create a bill as a result of the report.
Other business related bills:
n Industrial banks — A bill sponsored by Bill Bacon, D-Larimer County, and supported by the Colorado Department of Regulatory Agencies, could mean dramatic growth in industrial banks in Colorado.
Utah recently modernized its industrial-loan charter and has seen total assets increase from $400 million in 1987 to $2.5 billion in 1995. The Colorado Division of Banking has been contacted by several groups that are interested in acquiring or organizing an industrial bank in Colorado. However, the Industrial Bank Act contains obsolete material, including references to the now-defunct Industrial Bank Guaranty Corp.
Industrial banks differ from commercial banks in that they are exempt from the Bank Holding Company Act. They can be owned by commercial firms whose business isn˜t principally banking.
For example, while Ford Motor Co. can˜t own a commercial bank, it can own an industrial bank because of the exemption. The BHCA exemption has sparked renewed interest in the industrial bank charter, Bacon said.
Bacon said that the bill repeals portions of the industrial bank act, such as taking out references to the Industrial Bank Guarantee Corp. and other provisions to maintain parity among national bank, state commercial bank and industrial bank owners.
The number of industrial banks in Colorado was dramatically reduced by financial difficulties experienced by industrial banks in the 1980s, resulting in the insolvency of the Industrial Bank Guarantee Corp. FDIC insurance is now required.