‘De-Brucing’ of tax surplus could benefit Colorado businesses

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, or NCLA, 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.”

Tax reform for businesses also will 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 Steve Johnson R-Loveland, and the NCLA.

Enterprise-zone terminations will affect some Front Range 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. The change will be grandfathered in, however, 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 businesses related bills:

* 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 Corporation.

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.

* Unemployment and worker’s Compensation: Pam Bar Williams, R-Greeley, is working on changes to unemployment and worker’s compensation laws. One of her bills clarifies when someone can apply for unemployment.

“It addresses the situation of when someone is on a leave of absence, then decides to quit their job and go on unemployment,” she said. “It specifies that the employer won’t be charged for benefits if the employee quits for compelling personal reasons not attributable to employment.”

Williams is a member of the Business Affairs and Labor Committee.

Williams also expects to sponsor legislation that will require that insurance companies inform employers when they have settled a case. The problem comes up, she said, when “premiums go up because insurance companies have settled cases for $80,000 without notification.”

A third bill that would be under Williams’ sponsorship concerns the number of technicians pharmacists are allowed to supervise.

“The control is currently in the employer’s hands, but we are going to recommend no more than two,” Williams said.

* Small subdivision exemption: Bill Kaufman, R-South Larimer County, hopes to pass a bill that will make life easier for subdivisions of 20 units or less.

The bill would exempt them from the Colorado Common Interest Ownership Act that currently applies to all subdivisions. Kaufman said the act contains numerous cross references and is difficult to understand.

“Some of the best lawyers in Denver don’t agree what parts of it mean,” he said.

For the second year, he’s also sponsoring a bill concerning hospital conversion of non-profit to for-profit institutions, to better define the process, including deadlines and schedules, by which the Attorney General can review the conversion.

The bill also addresses non-profit to non-profit consolidations. The draft title is Transactions Involving Licensed Hospitals. A similar bill presented last year failed.