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News & Press: Colorado Technology Industry

House Approves Colorado Budget - and Repeal of HB1192 - now Moves to Senate

Thursday, April 14, 2011   (0 Comments)
Posted by: Su Hawk
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(CSIA Note:  We are very pleased that the repeal of HB1192 (last year's new taxes on software) is still included in the budget deal, agreed to by both Speaker of the House McNulty and Senate President Shaffer.  This will allow the move forward for HB1293, which will  provide more clarity about software taxes in Colorado, and will alleviate much of the confusion created by last year's HB1192.  
There is still a great deal of work to be done, so please join us in encouraging Senators to approve the budget deal and HB1293 next week so we can get clarity back about the taxes on software use in Colorado.)

House approves Colorado budget; business tax breaks intact
Denver Business Journal - by Ed Sealover
Date: Thursday, April 14, 2011, 2:34pm MDT

Colorado’s budget vaulted its final major hurdle Thursday with the reinstatement of two tax exemptions and partial reinstatement of the vendor fee intact — despite claims by House Democrats that the plan sacrifices long-term economic development for short-term gain.

The House approved Senate Bill 209, the so-called "Long Bill” for the fiscal year beginning on July 1, by a 50-14 vote after three days of contentious debate. Fourteen Democrats opposed the roughly $18 billion budget, while 17 Democrats joined with all 33 Republicans in backing it.

Under the budget, K-12 education will see $250 million in cuts from the current fiscal year, while higher education will lose $36 million next year. The plan also includes restoration of tax breaks on non-packaged software and agricultural products that were eliminated during budget balancing last year, and it restores two-thirds of the 3.3 percent vendor fee businesses are allowed to keep for calculating and remitting sales taxes.

The reinstatement of the three tax breaks was a Republican sticking point in negotiations, with legislative leaders arguing that it was important to give a shot in the arm to companies who lost revenue because of legislative actions of recent years.

"The only activity that will increase revenue to K-12 education is job creation,” said Rep. Carole Murray, R-Castle Rock. "Businesses expand, they pay all the taxes, these taxes come to government ... The only way to get those taxes is through job creation.”

But Democrats such as Rep. Matt Jones, D-Boulder, characterized the budget as one that "puts corporations over kids.” They argued that by cutting funding to current students, it hurts the education levels of future workers and makes Colorado a less attractive place for businesses considering relocation.

Rep. Cherilyn Peniston, D-Westminster, spoke of how a school in her district, Jefferson Academy, is asking parents to contribute money to help make up for the $400,000 it will lose from budget cuts this year. Rep. Su Ryden, D-Aurora, said businesses benefitting from the tax breaks should be the ones who close the schools’ gaps.

"I really want to challenge every business out there that’s represented to really look into your heart and your soul and really say that you need that vendor fee,” Ryden said. "I want to ask you to voluntarily donate that back to schools.”

The budget bill and the bill restoring the vendor fee now head back to the Senate, which must vote whether to accept small changes that the House made to them. The bills reinstating the agricultural and software tax breaks must go through Senate committees and the full Senate still, but sponsors are confident that they have the votes to pass them.

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