Soda levy, other tax exemption bills pass
The Senate Wednesday gave final approval to nine bills that are projected to raise about $148 million in revenue for the battered state treasury.
The measures are backed by education groups because they believe cuts to state support of K-12 education will be deeper without the additional revenue. Even with the additional money, schools are facing cuts of at least $350 million in 2010-11.
Debate over the tax package has been partisan, ideological and very prolonged in committee rooms and on the floors of the House and Senate. The Senate took most of Wednesday for final passage, which is swift and routine for most bills. Democrats have argued that the bills, which repeal various tax exemptions, are a modest imposition on business to help maintain state services.
Minority Republicans believe that raising taxes is the wrong thing to do in tough economic times and also is unconstitutional. (Democrats are relying on a 2009 Colorado Supreme Court decision about the Taxpayer’s Bill of Rights as the legal justification for changing the tax policies without voter approval.)
Some bills require House-Senate agreement on amendments, but the package basically is on its way to the desk of Gov. Bill Ritter, who proposed the package in the first place.
The governor and Democratic leaders have been pushing for enactment of the package by March 1 so that some revenue would be available for the current 2009-10 budget year as well as in 2010-11. (State budget years end June 30 and being on July 1.)
Republicans have warned that some of taxes are unenforceable and that the bills could be challenged in court.
In addition to soda and candy, the measures, House Bills 10-1189 through 1196 and 1199, change tax exemptions for direct mail advertising materials, energy used in industry, software, some online sales, food containers and pesticides, plus tax credits for alternative fuel vehicles and operating losses.
Speaking of tough issues
There’s another big bill that legislative leaders are trying to push through by March 1. That’s Senate Bill 10-001, the complex proposal to make the Public Employees’ Retirement Association solvent over the next 30 years. All teachers and many other education employees are covered by PERA.
The bill is wickedly complex, but its major element is reducing benefits for retirees, who now receive annual 3.5 percent benefit increases. (That provision often is called a “cost of living” benefit, but it isn’t tied to inflation or any other external indicator.) The bill would cut that benefit to 0 percent for one year and then basically set it as 2 percent thereafter. PERA says cutting that benefit is the major financial piece needed to set the system on the path to solvency.
The measure has the backing of the Democratic leadership, key Republicans and a coalition of employee groups. But, large numbers of individual retirees have complained loudly.
The bill has passed the Senate, and the House Finance Committee took its first cut at the measure Wednesday. The panel took testimony well into the evening (after having started at 1:30 p.m.), and then passed the bill to the House Appropriations Committee.
What’s important about March 1? That’s when the 2010 3.5 percent retiree increase is supposed to kick in. If the bill is passed and signed before that date, PERA will save big money to put in the bank, and retirees will be getting less money.
Higher ed panel having a hard time
Colorado’s colleges and universities usually get the worst of budget cuts, given that they don’t have the constitutional or other protections that shield other programs – sometimes – from cuts.
Higher education funding for this year and next is being patched together with federal stimulus funds, but the system faces cuts of more than $100 million in 2011-12.
Financial issues are one of the things being studied as part of the just-started higher education strategic planning effort (get details here).
The “sustainability” subcommittee assigned to consider finances also is supposed to come up with short-term ideas to help the higher ed system in 2011-12, ideas that can perhaps be proposed to the 2010 legislature.
Legislative leaders are holding up consideration of a proposal, Senate Bill 10-003, to see if the subcommittee comes up with anything. That bill would give colleges and universities greater flexibility in financial practices, student aid, construction and other areas. There’s also talk of legislation that would allow colleges to attain “authority” status and almost totally free them from state control. (The best example of an authority is University Hospital, which is a state entity but self-governing, and it receives no tax funding.)
The subcommittee held its second meeting Wednesday, but member were no closer to any specific proposals than they were a week ago.
“So where are we?” asked Rico Munn, director of the Department of Higher Education, as the sustainability group neared the end of its two-hour meeting.
“I don’t think we’re anywhere,” said Dick Monfort, a co-chair of the overall strategic plan effort and a member of the subcommittee.
The panel agreed to meet again Feb. 22 and discuss whether there are elements of the authority model that could be used to give colleges some short-term financial relief.
Use the Education Bill Tracker for links to bill texts and status information.