Senate Bill 94, sponsored by Sen. Mary Hodge, D-Brighton, and Rep. Libby Szabo, R-Arvada, clarifies that the state’s sales tax exempts groceries no matter where they’re purchased—and that local governments seeking to tax such products cannot discriminate.

While Colorado’s statutory and home-rule cities may impose taxes on grocery sales—provided they secure local voter approval under constitutional taxing and spending limits—it’s the inconsistency that concerns Hodge. She told  members of the Senate Business, Labor and Technology Committee that a variety of municipalities are charging a local tax on certain food items sold at establishments designated as convenience stores.

‘This is a fairness issue,” said Hodge. “When you buy bread and milk at a convenience store it should be the same as at grocery stores.”

Sen. Ted Harvey, R- Highlands Ranch, said the measure simply codifies the intent of the exemption implemented decades earlier.

“This restores the original intent of legislation passed years ago,” said Harvey. “We shouldn’t be taxing the citizens of Colorado who want to put food on their tables.”

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Democratic Senate President Brandon Shaffer, of Longmont, in a prepared statement said there’s still work to be done to turn the economy around before champagne corks can be popped.

“It’s encouraging to see Colorado’s economy continue to improve, but we need to keep working to create jobs and strengthen the economy,” said Shaffer.

Rep. Larry Liston, R-Colorado Springs, chair of the House Economic and Business Development Committee, agreed that more can be done to complement encouraging indications of economic recovery.

“We are by no means out of the woods. Unemployment is still far too high, and unnecessary regulatory burdens are too heavy for small businesses,” said Liston.

Added Republican Senate Minority Leader Bill Cadman, of Colorado Springs:

“While there is good news in the budget forecast, this new revenue does not solve our structural budget problems or give us the excuse to avert hard decisions for the 2012 session.”

Democratic House Minority Leader Mark Ferrandino, of Denver, said the revenue forecast is “good news” and that he is seizing the moment as an opportunity for lawmakers to persevere with creating jobs

“Along with the recent decline in the state jobless rate, this new sign of a more robust economy is beginning to look like a trend,”  said Ferandino.   “It’s too soon to declare victory over the Great Recession. Now is definitely not the time to ease up on our economic development and job creation efforts.”

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Laws governing tobacco in Colorado fall into three categories: those governing air quality, age restrictions and taxation. Only portions addressing age restrictions apply to the dissolvable products, calling into question whether or not tobacco taxes apply.

The tobacco tax is tracked and collected on traditional tobacco products through distributors in the industry rather than at the point of sale.  The recent introduction of dissolvable products by R.J. Reynolds into Colorado as a test market for their products has so far been free of the tobacco tax.

Sen. Pat Steadman, D-Denver, questioned whether current tobacco definitions would include the dissolvable products and suggested that language citing chewing tobacco could be extended to the new products.

“Those little breath mint things—I tend to chew those. Dissolvable things on your tongue seem chewable, and those toothpicks…that’s chewable,” said Steadman.

JBC Staffer Megan Davisson, presenting the information during a briefing of Department of Health and Environment budgetary issues, said the committee should refer the taxation question to the Department of Revenue for vetting to ensure dissolvable tobacco products are being taxed.

Rep. Jon Becker, R-Fort Morgan, said more needs to be determined before any decisions can be made.

“We’re in a weird situation here, and we need to do some research—and take a much closer look,” said Becker. “There are some questions on whether or not this is a TABOR issue. I would never just let Revenue make a ruling on this.”

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The El Paso County lawmaker says she plans on introducing legislation in January that would halt companies dealing in the worn-out tires from double-dipping into the dollars generated by the fee. Her proposal would bar companies that are not in compliance with state rules from receiving the grant money—money Looper said is not an entitlement but rather granted to them for a service.

“We don’t owe any of these  organizations a dime,” said Looper. “If you play by the rules and do what you say you are going to do, then you can get some of this money.”

The double dipping has occurred, says Looper, because of the nuanced difference in the meaning of “and” and “or.” The use of the word “and” has meant that companies that purport to both shred and recycle the tires—which in some cases has amounted to burying the powder yielded from the shredding process—have been able to collect twice for the same tire.

The fee has been around since the 1990s, but in 2010 Looper got legislation, House Bill 10-1018, passed to ensure the fees would be used exclusively as  grant money for proper disposal and recycling of tires.  The money, until HB 10-1018 passed, had been diverted for other purposes.

Looper says persistence in refining the program will result in a win-win for Colorado.

“This legislation will protect taxpayers who are paying these fees and will ensure the program’s goal of reducing the amount of old tires that are stored in Colorado,” said Looper.

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Rep. Cheri Gerou, R-Evergreen, who is one of six lawmakers sitting on the Joint Budget Committee, said she will oppose Hickenlooper’s stance on the exemption, which was added to the state constitution by voters in 2000. The exemption was honored for just two years before lawmakers suspended the tax break, which Gerou says was the wrong thing to do.

“So far, this has been a broken promise and I’m tired of broken promises,” said Gerou. “Part of the role of government is to respect and take care of the vulnerable, particularly our elders.”

The exemption allows homeowners 65 and over who have lived in the same primary residence for at least 10 years to exempt 50 percent of a home’s market value, up to $200,000, from their property taxes.  A provision in the amendment allows it to be suspended by the legislature when necessary to balance the budget. The legislature has agreed to suspend the exemption in recent years as a last-resort budget-balancing move.

In July, Republican House Speaker Frank McNulty, of Highlands Ranch, declared that “the days of balancing Colorado’s budget on the backs of seniors are over,”  vowing House Republicans would oppose any attempt to suspend the program yet again.

At the time, the Joint Budget Committee’s Rep. Mark Ferandino, D-Denver said he agreed that bringing back the popular tax exemption should be on the table, but he said he would be taking a wait-and-see approach.

“We all want to help seniors, but at the end of the day, we have a responsibility to balance the budget,” said Ferrandino. “We’ll work with the majority (House Republicans), but it’s going to once again take a balanced approach. It’s always about weighing options and protecting the most vulnerable among us.”

Today, Ferrandino applauded Hickenlooper’s overall budget proposal, saying he is ready to roll up his sleeves.

“Gov. Hickenlooper has come forward with a responsible budget proposal that gives our committee a clear path forward,” said Ferrandino. “I’m ready to get to work with the governor’s office and my Democratic and Republican colleagues in the Joint Budget Committee to produce a balanced budget that makes the tough choices and respects the values we cherish as Coloradans.”

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The easements—made possible through legislation  that aimed to preserve undeveloped land—and the resulting tax credits are created when a landowner allows a portion of property, meeting specific criteria, to be set aside for conservation. The state has called into question the value of some conservation easements.

House Bill 11- 1300, sponsored by Rep. Marsha Looper, R-Calhan, allowed disputes over the validity of conservation-easement tax credits to go directly to court rather than forcing landowners to await a ruling by the Colorado Department of Revenue. The measure set an expedited deadline for administrative cases to be resolved.

The majority of those whose credits are in dispute—455 cases out of 551—opted to be heard by a judge. Thirty-two chose to have their cases expedited with an outcome subject to a 2014 deadline rather than 2016.

Democratic state Rep. Wes McKinley, of Walsh, who has been a vocal advocate of those caught up in administrative red tape over the credits, said the numbers are reflective of the problem.

‘They wanted the state to stop harassing them,” said McKinley. “Now, at least, these folks have a direction they can go. I think the department is amazed at the number of cases utilizing this opportunity and realized that they needed to start listening to what these people were saying.”

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The controversy swirls around Proposition 103, asking for an increase in both income and sales taxes over a five-year period. The estimated $3 billion raised through the increase will be applied toward education funding—pre-school programs through higher ed.  If passed, Proposition 103 would round up the state income tax’s flat rate from 4.63 percent to 5 percent and the  state sales tax from 2.9 percent to 3 percent.

The latest jab thrown in the dust-up comes from newly installed Republican Senate Minority Leader, Bill Cadman, of Colorado Springs, who derided a study by the pro-Proposition 103 Bell Policy Center for finding that private-sector job stagnation incurred by the tax increase would be offset by job growth in the public sector.

“Eliminating private sector jobs to create government jobs makes no sense,” said Cadman. “People across Colorado have already suffered massive job losses over the last year. How many private-sector jobs are the supporters of Proposition 103 willing to sacrifice in order to pass their $2.9 billion tax increase?”

The Bell Policy Center issued its report in response to a study by  Barry W. Poulson, a Senior Fellow in Fiscal Policy at the anti-Proposition 103 Independence Institute in Golden and John D. Merrifield, Professor of Economics at the University of Texas, finding that 11,000 jobs will be lost if the measure passes. (The Colorado News Agency is an independent media project of the Independence Institute.)

“Economic analyses of the effects of state taxes and spending on economic growth show that while tax increases are likely to slow job growth, increases in state spending tend to increase job growth. At a minimum, it is likely that they would cancel each other out, with the decline in job growth due to increased taxes being offset by the increase in job growth created through increased education spending,” says the Bell Policy report.

Meanwhile, the Colorado branch of the National Federation of Independent Businesses, with a membership of around 7,500 businesses, fired off a statement last week disavowing words attributed to Sen. Rollie Heath, D-Boulder, architect and voice of Proposition 103, saying businesses supported the measure. Tony Gagliardi, president of the small-business coalition, said he wanted to set the record straight.

“At a time when Colorado is still trying to recover from the most injurious financial recession in our history and with an unemployment rate that still is above the national average, why does Senator Heath think this a great time to raise taxes on hard-working people and those who are the true job creators?” said Gagliardi.  ”Has he taken one too many swigs of his own campaign Kool-Aid?  Let me be absolutely clear. NFIB-Colorado opposes this tax increase.”

Yet, Great Education Colorado, a statewide advocacy group for education, in a recent letter to state officials asking for their support said the path to economic recovery must include increased funding for education.

“If you want to support Colorado families during these tough economic times, then you must support public education.  If you want to rebuild our economy, then you must support public education,” reads the letter.

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Since the economic downturn in 2008, the state has been looking for ways to cut existing budgets while also looking for ways to boost revenue. The General Assembly passed Senate Bill 184, sponsored by Rep. Mark Ferrandino, D-Denver, offering people and corporations who have unpaid state taxes a chance to catch up without facing the possibility of financial penalties or criminal prosecution.

The program kicked off Oct. 1, and as of Oct. 14, the amnesty had collected 667 returns for a total of $365,000, according to Mark Couch, spokesman for the Department of Revenue.

It may look like a slow start, but you can never underestimate the power of procrastination, especially when it comes to paying taxes.

“Because amnesty is offered rarely, the Department doesn’t have a specific way to measure the pace of returns. It is safe to say that applicants often wait until near the end of the amnesty period,” said Couch.

The last tax amnesty offered by the state occurred in 2003 and netted just over $23-million. The largest category contributing was corporations.

To accommodate the surge of returns and the many questions that come along with a program that is anything but business-as-usual, the DOR has hired six temporary workers to handle phone calls. The department also hired a public relations firm, Webb PR, which launched a barrage of radio ads, to advertise the amnesty.

When the bill was introduced earlier in the year, sponsors were hoping the amnesty could collect anywhere from $10 million to $12 million.

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That trend now has the department  mulling how to wean Colorado off of a tax on gasoline altogether and steer the state instead toward a tax based on miles driven.

Department spokeswoman Stacey Stegman says talks right now are strictly preliminary and are geared toward possible legislation to create   the framework of a revenue-collection system—the blanks would be filled in later—and putting together a legislative task force to study the concept.

“We keep tabs on this issue and watch what other states are doing, but there is no plan at the moment—it’s just something to explore and consider,” said Stegman. ”

The advent of alternative-fuel vehicles like electric cars is just the latest development adding impetus to the department’s concerns; more efficient gasoline-burning cars have been the cause of a years-long, steady drop in gas-tax revenue.

Boulder’s Democratic Rep. Claire Levy, who drives a hybrid gas-electric car, says she is keen on the concept.  Times are ripe for the conversation to begin, says Levy. Pointing to a three-year downward trend in revenue collected at the pump, Levy contends that the department won’t be able to keep up with road maintenance.

“It’s definitely time to start looking at alternative ways to pay for our roads,” said Levy. “We can’t keep going with business as usual.”

House Transportation Committee Chair Glenn Vaad, R-Mead, also says the time may be ripe to look at alternative ways, based on miles traveled rather than gallons purchased, to fund roads—but taxpayers would need to warm up to the idea.

“It would take an evolutionary period,” said Vaad. “But in the meantime  these vehicles are not paying their fair share.”

Fair share is important, say both Vaad and Levy, since all vehicles contribute to the wear and tear of roadways regardless of what makes them run.  Vaad says traditional pay-at-the-pump revenue collection has evolved into inequalities.

Levy notes that owners of electric cars and hybrids, who generally pay more for their vehicles in exchange for zero-to-greatly-reduced gas costs and consumption,  need to realize the effect that paradigm shifts in gas consumption have had on the state’s ability to fund transportation needs.

“They must understand that their vehicles cause wear and tear on the roads too,” said Levy. “Gas consumption doesn’t mirror road usage anymore.”

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State law exempts the materials used in transportation projects from state-imposed sales and use taxes, but cities and counties are free to assess their own sales taxes and sometimes do.  The tax can add up when applied to building materials like asphalt for paving a new roadway.

The department maintains that the added cost decreases money available for yet other needed projects, exacerbating already meager transportation funds.

Department spokeswoman Stacey Stegman said the department, which discussed the idea at an August meeting, is interested in pursuing the issue legislatively.

“Adding a tax onto public projects when public funds are scarce just doesn’t make any sense,” said Stegman. “When a government agency is working in an area making improvements, local governments are charging us for the privilege.”

Republican Rep. Glenn Vaad, of Mead, says he would be happy to consider sponsoring a bill exempting CDOT from local taxes.  Taxpayer dollars shouldn’t be used to pay more taxes, says Vaad.

“It’s counter-intuitive to be using tax revenues to pay additional taxes,” said Vaad. “People in Colorado are suffering, the state is lacking funds, and further taxation is not part of the solution.”

However, Sen. Jeanne Nicholson, D-Black Hawk, vice chair of the Senate Local Government and Energy Committee, says if such legislation were introduced, it likely would encounter considerable push-back from local governments.

“Exempting CDOT from these taxes could create significant problems for some communities, and they wouldn’t like it one bit,” said Nicholson. “Some places could absorb the tax exemption, and it wouldn’t be significant, but poorer areas wouldn’t be able to absorb it at all.”

Yet, Sen. Lois Tochtrop, D-Thornton, who sits on the Senate Transportation Committee, notes that  the state is facing even tougher challenges than some local governments, and the idea may be worth considering.

“The state is hurting, everybody’s hurting, but the cities aren’t hurting as much as the state,” said Tochtrop. “The bottom line is that people need jobs, and if the money saved by CDOT in taxes produces more jobs, then it’s an idea worth looking at.”

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