Business tax bills head to governor

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DENVER (AP) – A package of bills taxing everything from candy and soda to online sales provides only one-tenth of what Colorado lawmakers need to close a $1.5 billion shortfall this year and next, but Republicans and Democrats say the impact will be widely felt in this year’s elections.

Republican gubernatorial candidate Scott McInnis has already made an issue of it, saying he has better ideas for balancing the state budget, while others in the party say it could give the GOP the edge they need to win back control of the House, Senate and governor’s office next year.

Denver Mayor John Hickenlooper, a Democrat running for governor, has refused to take a position on the proposals.

Democrats also are at risk of losing their 37-27 margin over Republicans in the House, with one Democrat already defecting over tax policies this year, and their 21-14 margin in the Senate could be on the line.

The issue is already spilling over into other initiatives.

Democrats in the Senate want to give a tax break to businesses that rehire anyone they laid off last year, but Republicans so far have dismissed it as a political ploy to make up for the damage done by the tax hikes.

Sen. Chris Romer (D-Denver) said Democrats are willing to work with GOP lawmakers on expanding the job credit if they’re willing to start by proposing what “corporate tax breaks” they’d eliminate.

On Tuesday, lawmakers working to fill a $1.5 billion budget shortfall during two years approved charging a 2.9 percent state sales tax on things including candy and soda, downloaded software and pesticides. Another bill seeks to get online, out-of-state retailers like Amazon to start collecting state sales tax or tell their customers how much tax they owe the state.

They also propose suspending or limiting some income tax credits.

Democratic Gov. Bill Ritter proposed closing what some Democrats believe are tax loopholes and called on business leaders to share the state’s budget pain.

Republicans called elimination of the tax credits job killers that could extend Colorado’s recession and lead to more job losses.

“This is going to be a huge issue in November. It’s a major dividing point between Republicans and Democrats. Taxing the people who can get us out of this mess is just backwards,” said House Minority Leader Mike May, a Republican from Parker, after most of Tuesday’s votes passed on party lines.

May said his party offered alternatives, warning Democrats two years ago to set money aside to cover a looming recession, and Democrats chose instead to spend to state limits.

Democrats expressed frustration, saying Republicans did not propose any meaningful alternatives to balancing the budget and chose instead to throw rocks at Democrats.

“Everything we don’t do to balance the budget means more cuts for schools. It’s simple math. The voters will have to determine if these tax loopholes should be closed. People want us to make decisions,” said House Majority Leader Paul Weissmann, D-Louisville.

Rep. Buffie McFadyen, a Democrat from Pueblo West, said the fuel tax would hurt a Pueblo steel mill in her community, but defended her votes, saying lawmakers have already cut $120 million from public schools and made three cuts to Medicaid.

“This is a very tough vote for me,” she told her colleagues.

John Straayer, a political science professor at Colorado State University, said Democrats will have an uphill battle to convince voters in November that they did the best they could do under difficult circumstances and that Republicans failed to offer reasonable alternatives.

Straayer said Republicans are also cashing in on national frustration with the Obama administration, proposed tax hikes and the struggling national economy.

“The Democrats have to be aggressive and defend what they did. The public has a short memory,” Straayer said.