By Debi Brazzale, COLORADO NEWS AGENCY
After a brief hiatus, the elimination of tax credits has once again stirred up controversy at the capitol.
During House debate Monday, it was a bit of déjà vu with Republicans pushing back against a Democratic measure seeking more revenue for a cash-starved state.
House Bill 1200, sponsored by Rep. Dickie Hullinghorst, D-Longmont, is part of Governor Bill Ritter’s 2010-11 budget-balancing package, eliminating certain tax credits and tax exemptions. The credit addressed in HB1200 is currently offered through the Colorado Enterprise Zone Program, specifically the Investment Tax Credit (ITC). The credit equals 3 percent of a qualified investment. HB1200 places a cap on the credit in 2011, and defers the credit in subsequent years. Estimates suggest passage of HB1200 would generate around $11.8 million in FY2010-11 and $24.6 million in FY2011-12.
Hullinghorst told House members that the passage of HB1200 is necessary to balance the budget—the budget already approved by lawmakers and sent to the Governor earlier this month, known as the “Long Bill.”
“If we don’t find that $11.million we need to find another spot to balance that. If we don’t pass this, it’ll be difficult for the governor to sign the long bill,” said Hullinghorst.
GOP members questioned Hullinghorst on the necessity of eliminating a portion of the ITC credit to balance a budget that has already been submitted to the governor. Hullinghorst said that the budget is not based on actual spending and revenue, but rather on anticipated future spending and revenue, and that the $36.4 million will ensure that the budget is balanced.
“We balance the long bill based on projections,” replied Hullinghorst. ”The long bill is a dynamic document.”
Republican Rep. Brian Del Grosso of Loveland pointed out to Hullinghorst that there is also a dynamic at play in business that he believes would be harmed if the measure were to become law.
“Based on a hypothetical, we’re going to ask businesses once again to pony up–almost 12 million dollars–increas[ing] the cost of doing business, and cost jobs,” said Del Grosso.
Democratic Joint Budget Committee Chairman Jack Pommer of Boulder, who oversaw this year’s budget process, said that the nexus between the tax exemptions and jobs just isn’t there and supports the measure as the prudent thing to do to ensure a balanced budget.
“The idea that this is going to throw anybody out of work is just plain goofy,” said Pommer, “There’s been this tendency to make this false equation between these special tax breaks and jobs, and there’s no connection between them whatsoever.”
Pommer believes that the extra $36.4 million (over two fiscal years) will help provide a “margin of error” in the budget if projections are wrong considering that the governor’s projections are slightly underbalanced, and the legislatures projections are slightly over balanced.
Yet Rep. Cory Gardner, a Republican of Yuma, believes that tinkering with the ITC will do more harm than good for Colorado’s overall economic health, regardless of how well the budget is balanced, saying elimination of the ITC could be the straw that breaks the camel’s back.
“Taxes have been increased on businesses by over $100 million this year. Enterprise zones do create jobs,” said Gardner. “If this bill passes we’re simply pushing a boulder down a mountain that’s already falling.”
The bill passed a voice-vote Monday, and is now on the calendar for a full roll-call vote on Tuesday.