Colorado could slash tax breaks to balance budget
The Associated Press
Aspen, CO Colorado
DENVER – Colorado lawmakers are taking aim at tax breaks to balance the state budget after a state Supreme Court ruling that says doing away with the cuts and credits may not require voter approval.
The Joint House and Senate Finance Committees met Thursday to find ways to cover a $1.3 billion shortfall in state revenue over the next year.
Gov. Bill Ritter has already told lawmakers he wants to eliminate 13 tax breaks and credits to balance next year’s budget. Some lawmakers say there are 87 other tax breaks that can be considered.
Under a plan Ritter submitted to state lawmakers, some business-specific tax breaks would be eliminated or suspended, including a sales tax exemption on agricultural compounds and bull semen, which would be worth $1.5 million a year. Ritter also proposed limiting conservation easement credits for three years, raising $13 million annually, and eliminating a sales tax exemption on candy and soda, a proposal that drew ridicule.
“Something has to give, and it might have to be tax credits,” said Sen. Chris Romer, D-Denver.
Legislative legal advisers told lawmakers that when the state Supreme Court recently ruled changes to tax rules don’t necessarily require voter approval, it opened the door for lawmakers to eliminate or change some of the state’s 100 tax breaks without going to voters under the state’s tough tax and spending limits.
According to the Colorado Department of Revenue, taxpayers in 2009 are claiming $262 million in tax breaks, down from $315 million the year before, because of the declining economy.
Other individual tax credits on the list include investment tax credits; enhanced rural enterprise zones; and tax credits for job training programs, research and development, and rehabilitation of vacant buildings.
The state also offers corporate credits and rebates, including rewards for employers that offer child care, provide education benefits and redevelop contaminated land.
University of Colorado professor Jeffrey Zax told lawmakers there is no evidence that enterprise zones and other tax breaks provide more jobs. He said when the tax breaks run out, the jobs go away.
Romer said lawmakers are faced with a tough choice – eliminating tax breaks or cutting state services – and he warned it won’t be easy. He said it’s time for taxpayers to tell lawmakers what they want and whether they’re willing to give up some of their own tax breaks, including property tax breaks.
“We are, without big changes, never going to get back to having a capital budget. Maybe we need to go back to the voters, whose property taxes are ridiculously effective right now, and ask them the value proposition: Would you like to have roads, higher ed and other programs? The theory has been that we have to build to all these big crises and ask voters once every 10 years for a tax increase. Maybe we need to ask more often, the way the voters in Denver have done, to invest in us,” Romer said.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.