GOV. RITTER AND BUSINESS LEADERS ANNOUNCE
STATEWIDE ECONOMIC-DEVELOPMENT PACKAGE
AURORA — Gov. Bill Ritter, Economic Development Director Don Elliman and Colorado business leaders today announced a comprehensive economic-development package for a more competitive Colorado in the 21 Century. Key components of the package will be introduced during the upcoming legislative session.
“As Governor, I am committed to leading a state government that partners with businesses, listens to their concerns and comes up with ideas to help our businesses get ahead in this increasingly competitive global marketplace,” Gov. Ritter said during an announcement ceremony at the Anschutz Medical Campus at Fitzsimons. “The package we’re announcing today will help businesses large and small, in rural Colorado and urban Colorado, capitalize on new economic opportunities. It cuts taxes, and it simplifies, streamlines and reduces red tape.”
Major elements of the package include:
1. Simplify corporate income taxes by eliminating the complicated multiple factors that businesses must use to calculate their taxes and establishing a simple single-sales factor, as well as streamlining other aspects of corporate income taxes in a revenue-neutral fashion.
2. Cut taxes for 30,400 businesses by raising the Business Personal Property Tax exemption threshold from today’s $2,500 level to $7,000.
3. Establish a $3.5 million a year Bioscience and Life Science Fund. The fund will be administered by the Office of Economic Development to promote the growth and sustainability of the bioscience industry, provide Colorado research institutions with funding to commercialize viable technologies, and provide incentives to help attract new businesses and retain and expand existing companies.
4. Eliminate the so-called “fly-away” sales tax. Colorado is one of only a few states that charges a “fly-away” sales tax on planes manufactured in Colorado even if they are housed in another state. Eliminating the fly-away tax would match current practices in other states.
5. Make it easier for businesses – especially rural small businesses – to qualify for job-creation incentives by modifying Colorado‘s Performance-Based Incentives Fund. This will help small, rural businesses grow.
6. Dedicate $3.5 million from the new Clean Energy Fund specifically for economic-development opportunities.
7. Analyze spending of Colorado‘s tourism-promotion dollars, and work with industry partners to devise new strategies to better invest and leverage state funds.
“This package will make Colorado businesses more competitive not just in the intermountain area but nationally as well,” said Joe Blake, president and CEO of the Denver Metro Chamber of Commerce. “The efficiency and common sense that this package brings is great news for large and small businesses. Thank you, Governor. This is a strong step forward for Colorado‘s economy.”
“I’m committed to making Colorado businesses the most competitive in the country,” Gov. Ritter said. “This is the most significant, comprehensive business package Colorado has seen in more than a decade. These proposals will give businesses more tools to succeed – from a reduced tax burden to less red tape. This package is good for our economy, good for our small businesses and good for our communities.”
Also participating in today’s announcement were University of Colorado President Hank Brown, University ofColorado at Denver and Health Sciences Center Chancellor M. Roy Wilson, Denver Metro Chamber Chairman John Ikard and David Perez, president and CEO of Gambro BCT in Lakewood.
Additional Details About Gov. Ritter’s 2008 Legislative Business Proposals
1) Simplify Corporate Income Tax (Rep. Jahn/Sen. Shaffer)
Under current law, a company that does business in more than one state must determine how much income is subject to corporate income tax in each state. This is done by distributing a company’s federal taxable income based on three or fewer criteria: sales, property and payroll. Each state determines which factors are considered, as well as the relative weight of each factor. In Colorado, companies may choose one of two apportionment formulas to calculate its Colorado corporate income tax liability:
・ Two-Factor Method: Equally weighted sales factor (50 percent) and property factor (50 percent).
・ Three-Factor Method: Equally weighted sales factor (33⅓ percent), property factor (33⅓ percent) and payroll factor (33⅓ percent).
Simplify the corporate income tax structure by eliminating the multiple-factor apportionment formula and establishing a simple, single-sales factor, as well as streamlining other aspects of corporate income taxes. These revenue-neutral steps would act as an economic development incentive for the state and would decrease the current accounting burden that falls on multi-state corporations that do business in Colorado.
2) Business Personal Property Tax Exemption & Simplification
(Rep. Rice/Sen. Williams)
Today, the average business in Colorado pays four times more property tax for real estate (29 percent assessment ratio, with declining rates as property depreciates) than a similarly priced home. Taxable personal property generally consists of any equipment that is used in an income-generating enterprise, including machinery, furniture and computers.
Increase the exemption threshold for the business personal property tax, from today’s $2,500 exemption level to $7,000 over five years. In 2008 and 2009 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. Beginning in property tax year 2014, the amount of the exemption would increase biennially based on the consumer price index for the Denver-Boulder-Greeley area. This would exempt an additional 30,400 businesses from the tax.
Seek new methods to streamline and simplify the filing process for businesses.
3) Establish a $3.5 Million Annual Bioscience and Life Science Fund
(Rep. Reisberg/Sen. Bacon)
Bioscience is one of Colorado‘s most promising economic sectors. With projects like Fitzsimons and its bioscience park, Colorado is poised to become a major player on the nation bioscience stage. Using available resources, the state can help leverage the talent at our research institutions and assist our entrepreneurial-minded companies grow.
Establish a $3.5 million annual Bioscience and Life Science Fund to promote the growth and sustainability of the industry, provide Colorado research institutions with funding to commercialize viable technologies; and provide business-growth incentives.
4) Eliminate the “Fly-Away” Sales Tax (Rep. Buescher/Senate sponsor TBA)
Colorado is one of only a few states that charges a “fly-away” sales tax on planes manufactured in Colorado but not housed here. Other states only charge a sales tax on planes bought and kept in the state. No other surrounding state applies its sales and use tax in this manner. Other states impose sales taxes on aircraft domiciled in their jurisdiction, but not domiciled in other states or countries.
Colorado‘s “fly-away” tax acts as a disincentive and impediment to grow this particularly attractive sector of the economy. It is particularly onerous on the makers of small private aircraft, as it will ultimately increase the price of manufactured aircrafts.
Repeal or modify the state sales and use tax of manufactured aircrafts that are not domiciled in Colorado. Currently, many other states only charge sales and use tax on aircrafts that are domiciled within their jurisdiction – a practice that Colorado should follow.
5) Rural Small-Business Growth Plan (Rep. Hodge/Senate sponsor TBA)
In 2006, the General Assembly passed HB06-1017, creating the Performance-Based Incentives Fund (PIF). The PIF program was designed to provide incentives to businesses that create new high-paying jobs throughout the state. In order to qualify for this incentive program, the legislation used a scale that took into account geography (urban vs. rural), number of new jobs created (10 for an urban area; five for a rural area), a specific timeline (one month), and the amount paid above the average county wage. All jobs must be kept for one full year.
For example, for a company to qualify for an incentive of $1,000 per new job, the company must hire 10 or more employees in one full month (five in a rural area), pay at least 110% of the county wage and keep those jobs for one full year. Since the passage of HB06-1017, local economic development agencies and local businesses have expressed concerns that businesses will be unable to meet the one-month requirement, especially rural businesses that may not hire five new employees in one full year, let alone one month.
Expand the timeline for job creation from one month to six months, allowing more companies to qualify for the program. This change would benefit rural companies across Colorado that may struggle to meet the strict job requirements set fourth by this legislation. The change would also be helpful to many start-up companies in their infancy.
6) Utilize Portion of Clean Energy Fund for Economic Development
In 2007, the legislature passed and Gov. Ritter signed into law Senate Bill 246, establishing a $7 million Clean Energy Fund. For the fund to be most effective, a portion of those dollars should be used for economic-development purposes.
Dedicate $3.5 million specifically for economic-development purposes. Up to $1 million will be made available to companies seeking funding assistance in the form of state grants; consideration will be given to providing support to a renewable energy incubator; and funds will be used to attract and retain renewable energy businesses.
7) Promote New Tourism Strategies
In 2006, the legislature passed and Gov. Owens signed House Bill 1201, which allocated $19 million for tourism promotion in Colorado. Over the past year, the Colorado Tourism Office has begun investing those funds to increase tourism visits to the state. Promotional campaigns have targeted new key areas such as Boston,Minneapolis, New York, Phoenix, San Diego, San Francisco, and Washington, D.C., with a component also aimed at keeping Coloradans in Colorado.
Visits to promotional websites, calls to 1-800 numbers, visits to the nine official Colorado Welcome Centers and requests for the Official State Vacation Guide are all up this year over last year thanks to these efforts. Second-quarter lodging sales are up almost 17 percent over last year.
The Colorado Tourism Office is developing a strategic plan and analyzing how it can better leverage funds and partner with tourism industry members to maximize the impact of state promotional dollars and further promoteColorado as a premiere travel destination.