Lawmakers were asked today to choose between Colorado’s business community and its public schools as the Senate took up a package of legislation that seeks to raise sorely needed revenue for the state through a significant change in tax policy aimed at business.

“This body has pitted business against education,” said state National Federation of Independent Businesses Director Tony Gagliardi, contending all Colorado will suffer if business is saddled with a heavier tax burden.

The Senate sponsor of the bills eliminating various tax exemptions and credits, Sen. Rollie Heath, D-Boulder, began today’s hearing in the Senate Finance Committee with an exhortation to the panel to consider what is at stake and to focus on things that matter most.

“The conversation is, ‘Is this a fair and equitable way to balance jobs and the needs of children?’ ” Heath said.  “It’s about the kids … those kids who are only in fifth grade once.”

Faced with a $1.3 billion budget shortfall next year amid revenue projections that indicate a much slower-than-anticipated recovery, Gov. Bill Ritter has proposed a slate of business-related tax credits and exemptions to eliminate either temporarily or permanently. Ritter’s plan would bring state coffers another $131.8 million.

The package of 13 tax-policy bills, which began its course in the House last week, has been put on the fast track at the urging of the governor and embraced by Democratic leadership, but not without intense resistance by GOP lawmakers and the business community itself. They argue that jobs will be lost in an already-stressed economy.

Public education advocates, including the Colorado Association of School Executives, The Colorado Association of School Boards and The Colorado Education Association, came to support the measures, which they say would provide desperately needed funding for an education system that is already suffering a $140 million loss in this year’s budget.

Yet, Sen. Keith King, R-Colorado Springs, who runs a charter school in his community, said siphoning money away from business offers little guarantee that the funds actually will aid public schools given the state’s record on the subject. He cited the General Assembly’s decision to freeze the statewide property-tax mill levy in 2007, bringing in some $8 million a year that was supposed to assist public schools but, he said, never made it into the State Education Fund.

“How can this source of funding fund K-12 education when the property tax increase didn’t?” asked King, who added that an increase in personal income via jobs saved creates more money for the State Education Fund.

Proponents of the measures said they were trying to balance the relative merits of lower taxes for business with the revenue needs of education.

“The irony of this is that we are living in the seventh-wealthiest state,” Heath said. “Lets understand, we have already cut this budget by 25 percent.”

Republicans on the panel said if businesses are hit with lost revenue, they may not be able to weather the current recession without having to let employees go. That, they said, would drain the state revenue pool even further, rendering the issue of jobs for teachers moot.

“We have a fundamental disconnect on how to revive an economy,” said King.  “Do we protect government jobs against private sector jobs?”

A one point an exchange between a business owner who testified against the measures and Sen. Michael Johnston, D-Denver, provided a moment of comic relief at the hearing, drawing laughter from both the panel and the audience.

“I don’t want to balance this budget on the backs of your kids, said Johnston implying that schools would receive less funding without a sacrifice from business.

“My kids are homeschooled,” the witness deadpanned.

Gagliardi said businesses already are doing their part on behalf of schools.

“Business has paid more than its share—look at Gallagher,” he said, referring to a state constitutional provision keeping residential property taxes low at the expense of business property.

Yet, Sen. Evie Hudak, D-Arvada, suggested the business community was overstating the impact of losing the tax exemptions and credits .

“A few cents more?  Who’s going to even notice—the sky is not falling–the added revenue could cover the cost of 450 teachers,” said Hudak.

Debate over the bills continues Thursday.