Bill would require justification for business tax breaks

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Businesses in Colorado would have to justify tax breaks they receive from the state under legislation introduced in the state House.

House Bill 1350, sponsored by Rep. Sal Pace, D-Pueblo, requires any business that receives more than $25,000 in tax breaks — mostly for job-creation or relocation — to justify their use of the money. If they don’t, they won’t get the credit in the future.

For businesses, it’s the latest salvo in a running battle with state government this session. They lost the first skirmish when the legislature passed a series of 13 tax increases for a variety of items ranging from software to candy.

“It (the anti-business tone) is just so brazen this year,” said Stephannie Finley, president of the government affairs division at the Greater Colorado Springs Chamber of Commerce.

The chamber is aggressively opposed to the bill, she said.

Dave Hollenbach, owner of DSoft Products in Colorado Springs, said he understands the intent of lawmakers is to provide accountability.

“But these go way, way too far,” he said. “These fees, bureaucracy and processes will remove the actual incentive and benefits they were originally designed to create.”

Pace’s bill also would mandate that businesses pay 2 percent of the incentive received as a “filing fee,” to pay the costs of administering the paperwork related to the new requirements.

Though it won’t amount to much, the new fee would help narrow the state’s budget gaps.

“If the intent is to raise taxes, then simply reduce the amount of the economic incentive,” Hollenbach said. “Don’t artificially create a new bureaucracy within the state government to manage these.”

“We, as small business, just don’t have the resources to keep adding more and more processes, reports and fees to satisfy this insatiable hunger for more bureaucracy,” he said. “This is an insane waste of funds and resources.”

Finley said the state already tracks efficiency and use of state dollars through its Office of Economic Development. The bill, she said, is too far-reaching.

“We have a problem with the tone and the tenor of the bill,” she said. “And the information that they’re tracking. What are they going to do with it? What’s next?”

The bill requires businesses that receive tax incentives to report salary and positions of employees, as well as any health benefits given to employees. Those requirements are especially alarming to the chamber, she said.

“Are they going to decide the CEO gets paid too much?” she asked. “Or will they mandate that every business that gets tax incentives also have health benefits?”

Businesses seeking to relocate have 50 different options, she said. And some states, like neighboring New Mexico, are willing to do whatever it takes to attract business.

“But businesses are going to look at this bill, and they are going to say, ‘It’s not worth it,” she said. “What the legislature doesn’t understand is that by harming business, they are harming opportunity — opportunity to improve community, education, the things they are trying to protect.”