A 2020 legislative session that lawmakers called “painful,” “unusual and unique” and “frustrating” ended June 15 with some major accomplishments but with the passage of other bills that placed new restrictions and financial impositions on businesses.
The legislature opened Jan. 8 and suspended its session March 14 because of the COVID-19 pandemic. They reconvened May 26, with many legislators participating virtually.
The first part of the session proceeded as usual, but the last three weeks were a whirlwind during which “the mantra we were getting from leadership was ‘fast, friendly and free’” in terms of bills to be heard, said Rep. Marc Snyder, D-Dist. 18.
So pressed for time were the lawmakers that, in some cases, “there was no reaching out to other representatives” and little opportunity for input from people who would be affected by proposed bills, Snyder said.
Normally, bills would go through committees, where members would hear testimony from trade organizations, chambers of commerce, lobbyists and other stakeholders.
During the last three weeks of the session, “we were actively encouraging people not to come to the Capitol, to please submit any testimony they had on a bill in writing, and it’ll be read into the record,” Snyder said. “And that made it very difficult for the lobbyists and the stakeholders, because they’re used to speaking to you in person, attending these meetings, and none of that was happening this year.”
Snyder said nearly all of the House committees were disbanded except for the Finance committee, which had to hear bills like SB20-217 — the landmark police accountability and integrity act — which in a normal session would have gone to the Judiciary committee.
“It became quite the lack of process,” said Snyder, who serves on the Finance committee. “All these bills that would normally have taken a whole session of stakeholders and working their way through and amendments and everything, were just literally being introduced across the desk in the morning, heard in Finance that afternoon, and then on second reading the next day.”
As lawmakers retreated to their homes during the six-week closure, they watched with dismay as the bottom dropped out of the state budget forecast.
When they returned, they were faced with drastically cutting funds to balance the budget.
“It was very painful watching a lot of the things that we have put in place in the last few years all being dismantled and defunded,” Snyder said.
Many bills legislators had hoped to pass had to be dropped. At the end, of some 560 bills introduced, only about 330 were passed.
In his 10 years as a legislator, “that was unusual and unique,” said Sen. Pete Lee, D-Dist. 11.
One product of the rushed final session and legislators’ efforts to balance the budget was HB20-1420.
“The so-called Tax Fairness Act was introduced the last week of the session and was one of those that really got ramrodded through,” said Rachel Beck, Colorado Springs Chamber & EDC vice president of legislative affairs.
This bill made adjustments to business tax deductions to provide revenue to the State Education Fund.
Two provisions concerning the amount businesses can deduct for net operating losses and excess business losses overrode provisions of the CARES Act, Beck said.
“There are an awful lot of businesses right now that have sustained losses that could have used those tax deductions to help with cash flow,” she said.
The CARES Act also increased the cap for business interest deductions, and HB20-1420 “removed that relief and increased Colorado income tax liability,” she said. “So businesses who took on more debt to make it through lockdowns and to revamp operations will now be at a disadvantage because their interest expense deduction is capped.”
The bill also proposed decoupling the state from the federal 199A deduction, a provision of the 2017 Tax Cut and Jobs Act that provides a deduction of up to 20 percent of qualified domestic business income for businesses such as sole proprietorships, partnerships and S corporations, and capping the deduction.
“During negotiations the cap was increased, so it’s not as bad as it could have been,” Beck said.
Representatives from the Chamber & EDC joined 26 other business groups around the state to fight two provisions that would have particularly affected businesses in the Pikes Peak region, Beck said.
The original version of the bill would have removed a tax credit for corporations that have located their home offices in Colorado, including USAA and Progressive Insurance in Colorado Springs.
That would have cost USAA alone $9 million to $10 million, Beck said.
Another provision would have eliminated the current tax exemption for energy used in manufacturing and industrial activities.
“Advanced manufacturing is one of the Chamber & EDC’s priority industries to build in Colorado Springs,” Beck said.
The business groups’ “full-court press” was successful in getting those provisions removed from the final bill, she said.
Snyder, who was working with business stakeholders on other bills concerning the operating loss and energy exemptions, said his experience with HB20-1420 was “really frustrating. I was horrified, to be honest, that there were nine different tax expenditures that the bill sought to eliminate — and I mean, just cut like with a scalpel — and no phase-in or phase-out period.”
Snyder said he got no notice that HB 1420 was going to be introduced, and that one of the primary sponsors told him the Chamber & EDC and other business organizations had not been invited to Zoom calls about the bill.
“I said, ‘That’s just wrong, and it’s not the way we do business,’” Snyder said. “What I saw here, really, was some of the more progressive members of the House, they saw an opportunity … to try and advance their very progressive agenda.”
Gov. Jared Polis expressed opposition to the original bill, and it was substantially modified in the Senate, Snyder said.
“I would say they got about a third of what they wanted in the original bill,” he said.
COSTS TO BUSINESSES
The Chamber & EDC also worked to revise SB20-205, which mandates that employers give paid sick leave to employees for COVID-19-related illnesses and, beginning Jan. 1, 2021, allows employees to accrue paid sick leave at one hour for every 30 hours worked, up to a maximum of 48 hours.
The chamber’s opposition led to an amendment that exempts federal contractors, who already are subject to similar federal requirements, as well as some other changes to the final bill.
“So again, it was not as bad as it could have been,” Beck said.
“A lot of the provisions in that bill were the same ones that we’ve seen in recent sessions as part of creating a paid family medical leave program,” she said. “That felt a little disingenuous, since this was introduced just a few weeks after the sponsors said they were not going to pursue creating such a program because they could not get consensus.”
The chamber opposed SB20-207, which requires that the Colorado Department of Labor and Employment’s Unemployment Insurance Benefits Office consider why an employee has refused to accept employment — for reasons such as a work environment that doesn’t comply with federal safety regulations, responsibility for caring for a child whose school is closed or a concern about susceptibility to illness.
“One of the problems with this bill is that it created new costs to the Unemployment Insurance Fund, which is already really taxed right now,” Beck said.
SB20-215 created a new state enterprise that would impose a health insurance affordability fee on health insurers and hospitals to reduce consumer costs for individual health coverage.
“Our hospital and health care members were really concerned about that one,” Beck said. The bill passed June 22, but amendments reduced the cost impact on businesses, she said.
Overall though, Snyder, Lee and Rep. Tony Exum, D-Dist. 17, agreed that a lot of positive work was done during the 2020 session.
“In the end, we were able to get quite a bit accomplished in a short period of time for the people of Colorado,” Exum said at a virtual town hall June 24.
Exum pointed to SB20-217, the Enhance Law Enforcement Integrity Act, passed with bipartisan support and signed by Polis on June 19.
“Out of the hundred legislators, 86 voted in favor of it,” Exum said. “So I think it has sent a message not only to the citizens of Colorado but also to the country that we’re willing to step forward in a bipartisan fashion.”
The act mandates body cameras, public policing reports, reining in use of deadly force by officers when someone is fleeing from them, preventing the rehiring of officers who have been disciplined or fired, holding individual officers liable for their actions, requiring officers to intervene if an officer sees another using excessive force, and restricting the use of chemical agents and propellants.
Exum said he hoped law enforcement agencies throughout the state would start to implement the act as soon as possible.
The legislators passed a number of business-friendly measures, including HB20-1413, which establishes a small business recovery loan program, and SB20-222, which creates a grant program for small businesses.
Snyder said the loan program was created to fill in the gaps left by federal funding, which he said was going primarily to larger businesses.
The new loan program will be for businesses with 25 or fewer employees.
The fund is a public-private partnership between the state, which will raise $50 million for the loan fund, and the banking industry, which will provide $200 million.
Interest rates will be 3 percent or less, and payments may be delayed for up to a year so businesses can get back on their feet.
“I think this will be a real game changer,” Snyder said. “As things like unemployment insurance and the Paycheck Protection Program are starting to wind down, that’s when this loan becomes really crucial.”
SB20-222 establishes a COVID-19 grant program funded by $20 million from the state’s CARES Act allocation. Polis signed both bills June 23.
Lee co-sponsored HB20-1326, which eases the transfer of occupational credentials and licenses for military spouses.
“That arose out of a phone call that the local legislators had with the Chamber & EDC,” Lee said. “They said an important part of our goal of bringing Space Command to Colorado Springs is to provide assurances that when military folks are transferred to Colorado Springs, their spouses, who may have licenses in other states, will have an expedited path to licensure in Colorado.
“It was a collaborative effort, and it shows how we can come together as a legislative delegation for a common purpose,” he said.
Lee also cited HB20-1116, which extended the Procurement Technical Assistance Program that helps local businesses navigate the federal contracting process.
“We committed to $200 million to keep that going for the next six years,” he said.
SB20-213, which extends the ability of restaurants, taverns, brew pubs and other vendors to offer takeout and delivery of alcoholic beverages, was a measure requested by Jeff Greene, Mayor John Suthers’ chief of staff, Lee said.
Two bills passed this session were designed to help employers find the workers they need.
SB20-81 connects students with apprenticeship programs around the state, and HB20-1002 provides college credit for work experience, enabling students to finish school and join the workforce sooner, Lee said.
HB20-1421 allows local authorities to reduce, waive or suspend delinquent interest on property tax payments.
“Part of the impetus for this bill was that a lot of businesses are far behind [on property tax payments] because their revenues were just clobbered,” Lee said.
Summing up the legislators’ efforts, Snyder said, “I do think, in the end, we had a very successful session. … A lot of good legislation never got its day in the House chamber, but at least we have a running start on next session with a lot of good ideas that we’ll be hoping to bring back.”