GOP unveils plan to roll back tax, invest in 'real job growth'

Legislative Republicans are drawing a bullseye on a tax long criticized as a damper on job creation and business development in Colorado.

The GOP lawmakers, who serve on a special legislative panel troubleshooting the economy, announced today they will propose a multi-year phase-out of the perennially problematic business personal-property tax. They say that tack represents the kind of meaningful investment in jobs that the bipartisan Committee on Job Creation and Economic Growth should be looking at.

Sens. Mark Scheffel--a newly elected expert on tax law from Parker--and Shawn Mitchell, of Broomfield, are joining Republican Reps. Kevin Priola, of Henderson, and Kent Lambert, of Colorado Springs, in sponsoring the breakthrough proposal when the legislature convenes in January.

The lawmakers also say they hope to tap a novel source to pay for the first step of the tax rollback: redirecting $5 million from Gov. Bill Ritter's poorly received economic stimulus package. They say their proposed use for the money represents a far better investment in the state's economy.

"This is about taking a stand for real job growth--not just throwing money at the wall," Scheffel said. 

“We all have agreed for a long time that the business personal-property tax is a big stumbling block to economic growth and job creation," he said. "Yet, no one in either party was able to get the ball rolling. The current economic  climate changes all of that. It provides us the incentive to do away with this onerous burden once and for all. These trying times encourage us to be bold."

The tax, which is set by the state but assessed by local governments on business equipment ranging from oil-drilling rigs to desks and chairs, long has been criticized by economists and business owners as a disincentive to businesses seeking to expand operations or to open shop in Colorado.

Mitchell said both parties bear some of the blame for failing to act on the issue in the past.

"Oddly enough, this is one of those issues on which both sides of the aisle agree, yet neither side has tried to do much about it," Mitchell said. He said that beyond a modest effort last year--House Bill 1225, which adjusted the exemption level for the tax--both parties have been timid about tackling the much-maligned tax for fear they could not replace the lost revenue.

Yet, Scheffel, Mitchell and Priola say the state no longer can afford to put off the issue.

"We have to begin to wean government from this tax," Scheffel said. "We have to start the process, or we never will get there. This thing is a job killer."

Priola, a small-business man, agreed the need for reform is pressing.

"This legislation is vital for job creation in Colorado," Priola said. "The business personal property tax is a huge hindrance to economic growth in our state and this law is a step in the right direction to stimulating our weakened economy."

The lawmakers say they recognize the issue is complicated and that many details still have to be resolved. Under consideration is making an adjustment to the statutory definition of "personal property" to reduce the impact of phasing out the tax on some smaller counties that rely on it for much of their local revenue. The lawmakers also say they have not decided how many years the phase-out will take or how big the first year's reduction in the tax's bite will be on businesses.

Scheffel and his colleagues acknowledge that the tax's total take--more than $730 million in revenue to various local government's last year--make it a challenge to eliminate, and the state government would be responsible for reimbursing school districts for their share of the lost revenue.

"We are starting small--only a downpayment of about $5 million--and that should give the state's policy makers time to deal with some of this plan's bigger-picture impacts," Scheffel said. "However, we must move forward. Our economy is in dire need of this kind of help. This is the way to start creating jobs again."

Mitchell pointed out that the current economic slump also precludes the state from being able to pitch in more to offset the effect of the tax cut on school districts, but he said tapping the governor's own budget for economic stimulus makes sense as a good first step.

"You can't fault the governor for making an attempt at an economic stimulus, but he is going about it the wrong way," Mitchell said. "Even his own party opposes it."

When Ritter presented his $19.2 billion draft budget to the legislature's Joint Budget Committee last month, his stimulus proposal got a frosty reception even from some of his fellow Democrats on the budget-writing panel.

As reported in the Rocky Mountain News, Sen. Abel Tapia, D-Pueblo, questioned the governor's plan to divert money for what Tapia said sounded like "a bailout-type of situation."