Colorado Springs Gazette editorial 

We’re underwhelmed by the economic development agenda Gov. Bill Ritter rolled out to much fanfare Tuesday. These proposals have about as much chance of heating up Colorado’s business climate as Ritter’s windmill farms have of cooling the planet.

A few of the ideas might do some good at the margins. The rest seem like a warmed-over hash of half-measures and corporate welfare “incentives” that are more symbolic than substantive. The glowing reviews they received from some business leaders betray laughably low expectations on their part.

Let’s go over the proposals in more detail.

We like Ritter’s proposal to simplify the hopelessly convoluted way many businesses pay corporate income taxes in Colorado, by shifting to taxing sales, rather than capital investment, payrolls, etc. The current scheme makes it “unattractive for a business that sells items nationally to locate an employeeheavy office” in Colorado, The Gazette noted. This might help change that.

It’s unlikely this will reduce the tax burden on these companies, given Ritter’s insistence that these changes be made in a “revenue-neutral” fashion (lest the state miss out on revenues it feels entitled to). But if nothing else, they’ll need fewer accountants to help keep them on the right side of the tax man.

Less significant is Ritter’s proposal to raise the exemption on business personal property taxes from $2,500 to $7,000. A bolder and better step would be complete elimination of this onerous, anti-business tax. But alas, that would also cost the state revenues. Raising the threshold will benefit many smaller businesses, which is nice. But the five-year phase-in — “In 2008 and 2009 the threshold would be $4,000; in 2010 and 2011 it would be $5,500; and in 2012 and 2013 it would rise to $7,000,” according to the governor’s office — means it will have little immediate impact. We think bigger businesses should also get a break.

Even more meaningless is Ritter’s proposal to do away with the “fly-away tax,” a charge the state slaps on aircraft made here but shipped elsewhere. No such taxes have been collected for years, The Gazette notes, but the governor, in what amounts to a leap of faith, believes doing away with the tax will make Colorado a magnet for aircraft manufacturers.

Ritter’s reluctance to actually reduce corporate taxes, except at the margins, in keeping with his “revenue-neutral” proviso, prevents him from acting boldly on the economic development front. It shows he isn’t willing to make short-term sacrifices in state revenues in order to spur long-term economic growth and job creation, which would more than pay for such cuts over time.

His tax changes “are expected to cost the state only about $1 million combined,” reports The Gazette, yet Ritter insists businesses will be helped “exponentially.” We don’t believe the private sector will be energized by tax changes this insignificant. Hasn’t the governor ever heard the saying, nothing ventured, nothing gained?

The rest of Ritter’s plan involves paying out incentives of various sorts, including $3.5 million annually from a newly created Bioscience and Life Science Fund and $7 million from the Clean Energy Fund. He says he also wants to get the most out of the $19 million the state spends annually on tourism promotion. In some quarters, this is called corporate welfare.

“This is the most significant, comprehensive business package Colorado has seen in more than a decade,” Ritter bragged. And that may be true. But that’s more an indictment of a decade of neglect than an endorsement of Ritter’s plan, which isn’t significant enough, in our opinion.

Some legislators accuse Ritter of stealing their ideas. But if true, it’s an act of petty larceny, since none of these proposals are original enough to win copyright protection. And none, unfortunately, will have more than a marginal impact on the state’s business climate. That makes Ritter guilty, if he’s guilty of anything, of false advertising.