Proposition 103 will ask 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 opposition group, led by former Douglas County Republican state Rep. Victor Mitchell, held a Capitol news conference at which it distributed a  study by Oregon economist Eric Fruits showing that 119,000 jobs will be lost and some $218 million in potentially taxable income driven out of Colorado if the tax passes.

Mitchell said the timing of the tax increase is especially bad.

“This could not happen at a less opportune time,” began Mitchell. “This would be a crushing blow to our economy.”

Republican House Majority Leader Amy Stephens, of Monument, who stood behind Mitchell at the press event along with other GOP lawmakers, echoed the study’s assessment of the tax increase’s impact on the jobs.

“The question is—in this economy—is this the right time to ask for an increase in taxes?” said Stephens. “Everything we do affects businesses, and in this economic climate, it’s all adding up for them.”

Mitchell asserted that the revenue raised by the proposal would produce little if any improvement in the education kids would be receiving.

“K-12 is not lacking in funding, it’s lacking in structural reforms,” said Mitchell.

Proposition 103 is projected to generate around $536 million annually. However, where those dollars are applied will be up to the legislature and the governor and can be used across the educational spectrum, Mitchell said.

Mitchell said opposing the tax increase is not a vote against education but rather a question of value for taxpayers’ dollars.

“I’m a product of public schools. I understand the value in funding education,” said Mitchell. “ I’m all for fully funding K-12 education, but we’ve got to get the structural issues addressed before we can know what fully funded means.”

Waiting in the wings at Thursday’s news conference to offer a rebuttal was Sen. Rollie Heath, D-Boulder, who was instrumental in getting the tax question on the ballot and is serving as the proposal’s leading voice.

Heath maintained that the job losses cited were gleaned from numbers that suggested a slight decrease in projected job growth should the measure pass—a 12.9 percent gain in job growth versus 14.3 percent.

“The numbers they came up with are really quite questionable—it’s fuzzy, fuzzy math. We would never put out a report like that,” said Heath. “We don’t know the assumptions they made.”

Heath also suggested that parents are already paying more for education in out-of-pocket expenses through a steady increase in school fees, although Heath conceded that the tax increase would not likely trigger a downward trend in those fees.

“Parents are paying for everything,” said Heath. “They’re paying a lot more than this tax increase in fees right now.”

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The 3-3 split, during today’s Executive Committee of the General Assembly, fell along party lines with support for TABOR among Republicans and opposition to TABOR coming from the committee’s Democrats. Democrats hold a majority in the Senate while Republicans control the House, so the parties are equally represented on the committee.

Critics of TABOR, approved by voters nearly two decades ago, recently filed suit against the policy, contending it is unconstitutional. It is often cited as a primary cause of budgetary woes by some even as it is revered by others who view TABOR as a necessary limit on government spending. Under TABOR, voters must approve any increase in taxes.

Senate President Brandon Shaffer, D-Longmont, said today’s vote was little more than political posturing reminiscent of Washington.

“This is precisely the type of political grandstanding Coloradans despise,” said Shaffer. “We need to focus on Colorado solutions, not Washington-style gridlock and partisanship.”

McNulty, who called for the vote in light of the pending lawsuit that has brought the debate to a boiling point, says that what Coloradans really want is embodied in TABOR.

“I’m disappointed that Democrats in the General Assembly would not support Coloradans’ right to vote on all tax increases,” said McNulty.  “The Taxpayer’s Bill of Rights passed because Coloradans wanted to keep their government in check.”

Republican House Majority Leader Amy Stephens, of Monument, also said the vote is indicative of party differences and gave her side of the aisle a pat on the back for their fiscal constraint.

“For years, Democrats in the General Assembly worked to push through tax increase after tax increase, to pay for their big government agenda,” said Stephens. “That time has come to an end thanks to House Republicans.”

Yet, Democratic Senate Majority Leader John Morse, of Colorado Springs, who also happens to be a plaintiff in the lawsuit challenging TABOR, said what Coloradans really want is jobs and for the parties to set aside their differences.

“The people of Colorado want us to focus on creating jobs and getting people back to work, not fight over petty ideological differences,” said Morse. “They want real solutions that involve cooperation and collaboration.”

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But the leaders should look back periodically to make sure that at least a majority of their sheep are with them. Otherwise they’ll find themselves flockless.

Or even facing a primary.

In recent years health care and energy have been areas where the leaders and the led parted company.

House Bill 1365 of 2010 required the conversion or closing of some coal plants so that Xcel could profit from the building of new natural gas-powered generators.  It was supported by then Senate Minority Leader Josh Penry, but most of his GOP colleagues voted against it on grounds that lawmakers shouldn’t be picking economic winners and losers. Penry didn’t run for re-election that year.

This year, House Majority Leader Amy Stephens, R-Monument, helped Democrats establish a state health care exchange mandated by ObamaCare.  States must establish such state exchanges by 2014 or the federal government will do it for them.

Senate Bill 200 did pass the House, where Stephens was prime sponsor, but only 13 of the 33 House Republicans voted for it.  It became law because 31 of the 32 Democrats supported it as well.

Republicans said that while there’s nothing wrong with free exchanges that enable small businesses and individuals to join together to get less expensive health care coverage, rules laid down by Washington would make a mockery of the idea.

Stephens’ sponsorship brought loud and long protests by libertarians, Tea Partiers and others on the right in her own El Paso County.  They have even threatened to challenge her in a primary. One of her strongest critics was Sarah Anderson, the 22-year-old who had been elected secretary of the county GOP.

Anderson’s comments prompted a closed meeting of party officials in which she was warned that while it was all right to oppose legislation, party officers aren’t supposed to attack fellow Republicans, especially legislators.

Perhaps not, but what if the legislator has gone off on her own, against the wishes of most of her colleagues, not just a small minority?

House Speaker Frank McNulty, R-Highlands Ranch, was one of the few who had backed Stephens’ bill. He did his best to paper over the split this week by appointing Rep. Bob Gardner, who had voted against the measure, to the new health benefit exchange committee.  His other two appointees, Reps. Ken Summers of Lakewood and Jim Kerr of Littleton, had voted for the bill.

There may be “some merit” in exchanges, Gardner said, but the federal government will be trying to dictate the terms.  That was spelled out last week, he noted, when the Health and Human Services Department issued 244 pages of rules making it very clear that Washington will be telling the states how to run the exchanges.

“I believe I was asked to serve because I have a lot of experience dealing with federal regulatory structures” in his private law practice, he said. “I voted against the bill but I’m not wholly opposed to the idea of health benefit exchanges.”

Gardner has “exceptional ability … to bring diverse interests together,” said McNulty.

Stephens herself had doubts about the bill, at one point entertaining the notion of an amendment that would have required Gov. John Hickenlooper to seek a waiver from the federal government allowing Colorado to opt out of Obamacare.  Under pressure from business, which generally sides with political compromise, she didn’t proceed with the amendment. Meanwhile, Colorado Attorney General John Suthers is still involved in the multi-state challenge to the constitutionality of Obamacare, which appears headed to the Supreme Court.

Stephens and McNulty are traditional Republicans going along with a plan they don’t entirely like in hopes of being able to salvage something from it.  Libertarians and the Tea Party, on the other hand, believe compromise is both unprincipled and politically disastrous.  The same split is going on in the U.S. House as the Republican newcomers try to figure out a way to force spending cuts before agreeing to a hike in the debt ceiling, even though the Senate and the president are against them.

It’s possible but not likely Stephens, McNulty or other Republicans who stray from the Tea Party line will face primary challenges as they run for their last House terms.  Criticizing is easier than mounting a campaign.  But even if re-elected, they could lose their leadership posts if they don’t go the way of their caucus.

Veteran Colorado political columnist Peter Blake now writes Thursdays for the Colorado News Agency. Contact him at pblake0705@comcast.net You may re-publish his work at no charge and without further permission; please give full credit to Peter Blake and www.ColoradoNewsAgency.com

Senate Bill 200, sponsored by Senate President Pro Tem Betty Boyd D-Lakewood, and House Majority Leader Amy Stephens, R-Monument, creates a framework for health-benefit exchanges, to be formed as prescribed by the federal Health Care Reform Act.

Some vocal constituents of Stephens had charged that the measure plays into the hands of the federal health-care reform, which conservative and Republican critics have dubbed Obamacare. Some aspects of the federal laws are being challenged in the courts.

Yet, Stephens said it is crucial that, given the likelihood of the exchanges coming to fruition, they should reflect Colorado values.

“SB 200 gives Colorado the ability to focus on what is important to Colorado in the design and implementation of health-benefit exchanges,” said Stephens. “I applaud the business community, the health community and the consumer community for supporting this important legislation. Now the work of designing an exchange that works for Colorado begins.”

Among those attending the bill signing at St. Anthony’s Hospital in Lakewood were business groups and consumer advocates that supported the measure’s passage.  Hickenlooper said the support was well placed.

“This legislation moves Colorado forward with one voice,” said Hickenlooper. “The health exchange will allow individuals and small businesses to choose among easy-to-compare affordable health-care options. It will give Coloradans more control, quality choices and better protections when buying insurance.”

Sen. Nancy Spence, R-Centennial, who was not in attendance at Wednesday’s signing, said she did not support SB 200 because the larger context of  health-care reform is not yet a settled question.  The exchanges, said Spence, are a good idea but the time is not quite right.

“Our No. 1 priority right now is to do away with Obamacare, or look for ways to opt-out , and then design these exchanges in a way that is beneficial for Colorado,” said Spence.

Still, Boyd said she has been impressed with the overall cooperation of those involved in crafting the legislation.

“I have never seen such a broad-based coalition of support for a piece of health care legislation,” said Boyd. “I appreciate how business groups, consumer advocates, insurers and healthcare providers came together to support this uniquely Colorado solution to help individuals and small businesses purchase health coverage.”

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House Bill 1318, sponsored by Republican House Majority Leader Amy Stephens, of Monument, and Rep. Sue Schafer, D-Wheat Ridge, scraps  House Bill 10-1193, which sought to collect “use taxes” from online customers in Colorado, in part, by compelling online retailers to report their sales and the identity of customers to the state.

Following the enactment of HB 10-1193, the Direct Marketing Association filed a lawsuit in June against the Department of Revenue  in Colorado Federal District Court challenging the constitutionality of the measure and related Department of Revenue regulations. Earlier this year, the court granted a preliminary injunction against the enforcement of the reporting requirements contained in last year’s legislation—bringing the controversial policy to a halt.

HB1318, on a fast track as the end of the 2011 session looms next week, was passed by the House Economic and Business Development Committee, the Appropriations Committee and the full House, on a preliminary voice vote—all on Wednesday.

Along with the repeal, HB 1318 would require online retailers to notify consumers that they may owe taxes on their purchases and that it is incumbent on the consumer to remit the taxes to the state.

Shaffer said the new approach for the remittance of online purchases is not just needed, but it also serves as a reminder to Coloradans that under current law all purchases are subject to the use tax—even when they are not collected at the point of sale.

“I think this is a very reasonable approach…a good way to clarify what we do require under the law,” said Schafer.

Stephens said the proposed measure offers streamlining for consumers and retailers.

“This is far more productive and this provides us with a lot more clarity,” said Stephens.

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The proposal, House Bill 1293, would repeal  a measure passed last year that created a new tax on software used by businesses.  The software tax was part of a package of mostly Democratic-led bills that were dubbed “the dirty dozen” by Republicans because of the way they eliminated tax credits and exemptions previously granted to businesses.

The unusual ease with which the bill will move through both is chambers is due to a deal struck between both parties during intensive negotiations over next year’s budget. The measure has bipartisan sponsorship, with Stephens, Rep. Carole Murray, R-Castle Rock, and Sens. Cheri Jahn, D-Wheat Ridge and Linda Newell, D-Englewood.

Democratic Senate Majority Leader John Morse, of Colorado Springs, says HB 1293 is not ideal but a necessary evil.

“I hate having to do this but it’s part of the deal,” said Morse. “This is another $24 million or so that will come out of schools next year.”

Opponents of the tax say it has added administrative costs for employers across the state and ultimately has assessed an extra cost for companies that employ people in Colorado, according to a news release sent out by House Republicans.

Stephens says the tax has had a chilling effect on business endeavors.

“Colorado proudly touts its leadership in entrepreneurship and innovation, but it is quickly becoming known as a leader in the wrong space—taxation,” said Stephens.  “Colorado should be leading in innovation and solutions to encourage new business, not aggressive and confusing tax laws that shutter the doors for new business.”

Morse counters that businesses may end up feeling the pinch.

“Businesses will end up suffering because of an uneducated workforce,” Morse said. “During times of economic crisis, we simply don’t have the luxury of funding credits and exemptions.”

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“It got a life of its own and people blew it out of proportion,” said Boyd.

The measure, Senate Bill 200, creates a framework for health-benefit exchanges, to be formed as prescribed by the federal Health Care Reform Act.

Much of the outcry over the introduction of the measure came from constituents of its Republican House sponsor, Majority Leader Amy Stephens, of Monument.  Stephens stands by her sponsorship, saying the exchanges are not only a Republican-inspired concept but that they also should be designed by Coloradans.

“If you look at how the Post Office is running, I’m not sure we want the exchanges left up to the federal government,” said Stephens. “The exchanges are a free-market idea that, absent some of the provisions of the federal law, are a good idea.”

Boyd said that despite the firestorm that accompanied SB 200’s introduction, the measure has so far enjoyed considerable bipartisan cooperation.

“We have had incredible agreement and support for this bill,” said Boyd. “Not every provision is loved by everybody, but it was put together in a bipartisan way.”

Stephens concurs with Boyd and said that she is confident that with Coloradans at the helm, the federally required arrangement will ultimately reflect Colorado values.

“We have good health care minds here in Colorado,” said Stephens.

Stephens adds that the  exchanges are something that the business community, which is often the portal through which people get their health insurance, embraces and has been asking for.

“I did it for small businesses who have been asking for a way to provide coverage for their employees,” said Stephens. “Business pays for health insurance and wanted oversight, and they got it with the crafting of this bill.”

Prominent groups representing the business community issued a  prepared statement today addressing the Senate Health and Human Services Committee and the House Health and Environment Committee, expressing satisfaction with the measure.

“The business coalition worked with sponsors to create a bill that provides great access to affordable care while promoting a competitive marketplace that protects private industry jobs, and provides employers with additional affordable choices when considering health benefits for employers,” said the Colorado Association of Commerce and Industry, the Denver Metro Chamber of Commerce, the Colorado Competitive Council, Colorado Concern and the National Federation of Independent Business.

Also supportive of the exchanges is Sen. Irene Aguilar, D- Denver, a physician. Aguilar has a bill of her own, Senate Bill 168, that would create a Colorado health care cooperative, essentially creating a single Colorado health care group that self-administers.  Aguilar says her goal is to see all Coloradans insured.

“The exchanges have the potential to help make things easier for insurance reform,” said Aguilar. “Someone needs to pay for people who get sick, and we need to ask ourselves how we can do that. The exchange gives the small-group markets the same power as large group-markets, making it more affordable.”

Sen. Greg Brophy, R-Wray, says he understands the rhetoric swirling around the measure.

“I can sum it up in four words,” said Brophy. “Good policy, toxic politics.”

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The legislation that passed in 2010 lifted the long-standing sales-tax exemption on Internet purchases in which the retailer is outside Colorado. While retailers cannot be forced to collect sales tax on behalf of a state in which they do not have a physical presence, the Colorado law seeks to compel retailers of a certain size to provide the Department of Revenue with a yearly report on the total amount of an individual’s purchases on which sales tax was not collected.

A recent federal court ruling in Washington said collecting a customer’s purchase information, and delivering that information to a government agency, violates a customer’s privacy rights. The court ruling even prompted the Denver Post, during a busy election season, to use a portion of its editorial pages to argue for repeal of the tax, saying, “…until Congress finds a national solution to the problem, we worry Colorado’s attempt likely will lead to lengthy court battles and headaches for taxpayers.”  While Amazon.com filed the suit against North Carolina, the Direct Marketing Association (DMA) has filed suit against Colorado’s Department of Revenue.

Even before the GOP took control of the Colorado house in Tuesday’s General Election, Rep. Amy Stephens, R-Monument, announced plans to introduce legislation to repeal the exemption. She offered an olive branch to Gov.-elect John Hickenlooper, however.

“There’s a chance to reach a compromise,” Stephens said. “Like us, we believe the new governor cares about jobs. We will work with the governor and his staff to reach a compromise.  I don’t think anyone thinks we’ve gained anything from this Amazon tax.”

Jerry Cerasale of the Direct Marketing Association, said the court win by Amazon didn’t guarantee a win by the DMA against the Colorado Department of Revenue.

“The North Carolina lawsuit has helped us, but there are a lot of differences (between the two cases), and you never know how a court is going to go,” Cerasale said.  The DMA has also filed an injunction hoping to stop Colorado from implementing the first parts of the tax until the full lawsuit is heard.  Cerasale said he’s hopeful the ruling on the injunction will come before the end of January.

Sen. Rollie Heath, D-Boulder, Senate sponsor of last spring’s legislation imposing the Amazon tax, emphasized he was not speaking on behalf of his caucus, but said the North Carolina court ruling may actually help Colorado keep the tax in place.

“North Carolina goes into, ‘Did you buy books, did you buy CD’s, whatever you bought.’  All we ask, in this case, for Amazon to provide (to the state) is that Rollie Heath’s family purchased $500 from Amazon last year.”

When the 2010 General Assembly originally passed the legislation, Amazon.com created a public relations storm when the company reacted by closing all “associate” accounts in Colorado. Associate accounts allow individuals to partner with Amazon.com and profit from sales that the individual creates in tandem with the retailing giant.

The arguments for and against Amendment 62, dubbed the “personhood amendment,” were reviewed by the 18-member Legislative Council Committee, chaired by Senate President Brandon Shaffer, D-Longmont, and vice-chaired by Speaker of the House Terrance Carroll, D-Denver, after public testimony and input from staffers. The proposal, placed on the ballot by a citizens group after it gathered sufficient signatures, seeks to expand the constitutional definition of “person” as a human being to include “from the beginning of biological development.” The draft may be amended by the legislative committee if a two-thirds majority agrees.

At issue was the use of the term “human life” versus “human being.”  The term that will appear on the ballot and in the constitution should the amendment be approved by voters, is “human being.”  The use of the term “human life” was chosen by council staff in articulating the arguments supporting the measure.  Proponents of the measure told the panel that the terms are not interchangeable in this instance. Opponents said they prefer the term “human life” be left in.

Minority Republicans on the committee were vocal about their concern that the proponents’ arguments may have been compromised in the publication, but the GOP members were unsuccessful in amending the language, with the vote counts falling primarily along party and ideological lines.

Rep. Amy Stephens, R-Monument, challenged the committee to consider amending the draft language to preserve the integrity of the proponents’ argument in favor of the amendment.

“If the ballot, the thing they got signatures for, and people signed onto, says ‘being,’ then the language should reflect ‘being,’ ” said Stephens. She said currently the constitution says, “the term ‘person’ shall apply to every human being.”

House Minority Leader Mike May, R-Parker, concurred.

“These are the proponents and they brought forth the proposed amendment, and then we change their words in the arguments ‘for.’  Why not include their exact words as opposed to somebody else’s words?” asked May.

Legislative staff said that the term human life was used because they borrowed analysis language from a similar initiative in 2008 and because they felt that using the term human life is more inclusive.  It was also stated that as they prepared the drafts, they didn’t know the weight that proponents gave to the term since it was not brought up earlier by the proponents.

Before voting the modified language down, Sen. Betty Boyd, D-Lakewood, offered her take on the issue.

“I think that the legislative council staff did a fair job of representing arguments.  I didn’t see the same kind of urgency to change the language,” Boyd.

In other business the committee looked at the eight other measures on this November’s ballot and made only minor changes. Those proposals are:

1. Amendment P – Regulation of Games of Chance

2. Amendment Q – Temporary Location for the State Seat of Government

3. Amendment R – Exempt Possessory Interests in Real Property

4. Initiative 92 – Criteria for Release to Pretrial Services Programs

5. Proposition 101 – Income, Vehicle, and Telecommunication Taxes and Fees

6. Amendment 60 – Property Taxes

7. Amendment 61 – Limits on State and Local Government Borrowing

8. Amendment 62 – Application of the Term Person

9. Amendment 63 – Health Care Choice

House Bill 1160 expands current law to allow small-group and individual health-care markets to offer wellness incentive programs in exchange for a discount on insurance premiums that larger group markets, self-funded and government plans are already allowed to offer. Under the measure, an additional discount could also be allowed for individuals who actually participate in a wellness program.

Yet, Kelli Fritts, Colorado associate director for the American Association of Retired Persons, contended the bill is not about wellness programs but rather is another way for insurance companies to play gatekeeper. Fritts said the measure will exacerbate a market that needs more healthy people to join to stave off rising premiums.

“This bill is a way to segment the health insurance market—to cherry pick and lemon drop,” said Fritts.  “The goal that AARP is seeking is to bring everyone into the pool and this bill doesn’t bring everyone into the pool.”

House Sponsors of the bill, Rep. Joe Rice, D-Littleton, and Rep. Amy Stephens, R-Monument, say the proposal simply provides an incentive that creates a win-win for both the insured and the insurance company.

“We know that participation in an exercise program will reduce risk and reduce cost–which is where the self-interest of the insurance company comes in,” said Rice. “In order to induce people to (participate),  they are willing to give the discount.”

Wellness programs can include things such as smoking-cessation classes, gym memberships or nutrition programs that are voluntary for the insured, but the financial incentive, said Rice, is key.

“When you say, ‘Here’s an incentive,’ some people will participate that don’t now.  It’s good for their own health, but it kind of becomes a part of the office culture or in your own mind when participating in these programs,” said Rice

The market that the AARP is concerned about is the 50-to-65 year-olds who are too young for Medicare but old enough to have pre-existing conditions or emerging health needs.  The bottom line, said Fritts, is that financial incentives based on health outcomes should not be tied to premiums.

“We support community ratings where everyone is paying the same rate regardless of health status and claims history.  If the industry is given the ability to underwrite–or set the criteria—based on wellness programs the losers will be older people,” said Fritts.

The bill is scheduled for debate by the full House as early as Tuesday.