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Bill would repeal temporary tax lift on agricultural inputs PDF Print E-mail
Written by Marianne Goodland, Legislative reporter   

The bill that would repeal the 2.9 percent state sales and use tax on agricultural compounds, bull semen and pesticides has cleared the House and this week will start the process in the Senate.

House Bill 11-1005 would repeal 2010 legislation that temporarily lifted a tax exemption on agricultural inputs.

The House passed HB 1005 on a 47-18 vote on April 11; it was heard on Tuesday, April 19 in the Senate Finance Committee, where it was carried by Sen. Greg Brophy, R-Wray.

Prior to two weeks ago, HB 1005 was doomed to fail once it got to the Senate, but thanks to the efforts of eastern Colorado lawmakers and a budget deal brokered with the Senate and Gov. John Hickenlooper, the bill instead is likely to go all the way.

In the House, HB 1005 was originally sponsored by and was the top legislative priority for Rep. Jerry Sonnenberg, R-Sterling. Last week, Sonnenberg told the House during second reading debate that the bill is now part of the budget agreement hammered out in the previous week between the Legislature and the governor.

One of the biggest problems for HB 1005 was in how it would be paid for. The bill’s fiscal analysis said the state would get about $3.7 million in sales tax revenue in both 2011-12 and 2012-13. Democrats in the House Finance and Appropriations committees objected to the bill because they feared the dollars would come out of the state’s general fund, and that could have meant an additional $3.7 million cut to K-12 schools.

But part of the budget agreement, negotiated by the Joint Budget Committee that includes Rep. Jon Becker, R-Fort Morgan, included finding a way to pay for HB 1005. Sonnenberg told the House on April 11 the money would come out of the operational account of the severance tax trust fund, not from cuts to K-12 education. Becker, now one of the bill’s primary sponsors, added that the funds will come through savings from various programs, and he later said none of the money will come out of water projects, one of his major priorities.

Several Democrats spoke in favor of HB 1005 during that House debate. Rep. Roger Wilson, D-Glenwood Springs, said that repealing the tax will make a difference on the margins for agriculture and is critical to the health of farms and ranches. “This may make all the difference for our agricultural community,” Wilson said, pointing out rising costs of fuel with no end in sight.

“What we’re doing with this bill is setting priorities,” said Rep. Randy Fischer, D-Fort Collins, who noted that the operational account pays for the low energy assistance program, state parks and other programs that prior legislatures have decided are priorities, too. But Fischer said he believed the passage of HB 1005 will “help continue to make agriculture one of our top industries.”

Rep. Dickey Lee Hullinghorst, D-Boulder, complimented the sponsors for finding a way to pay for HB 1005. “That’s how we should be doing this,” she said. But Hullinghorst had no intention of voting for the bill. “I believe everyone needs to take a cut in these hard times,” she said, pointing out that the agricultural industry is doing fairly well right now.

“We could spend our money for better priorities.” That was a view shared by several other Democrats, including Rep. Matt Jones, D-Louisville, who said that when it came down to a choice between a tax break and putting money in schools, his priority is education.

Sonnenberg reminded Democrats that the money for HB 1005 will come from severance tax funds, not cuts to K-12. He also pointed out that the tax put in place last year meant agriculture was the only industry in the state taxed on its inputs, which he called “unreasonable.”

Becker said last Thursday, April 14 that the key to passage of HB 1005 was the work done by Sonnenberg and Brophy. They had the bill “ready to go and were already pushing it through the system,” and that kept the issue in everyone’s minds.

“They should be commended for what they did,” Becker said. And because of the work they had done to get HB 1005 to the House floor, Becker said he was able to put the bill into the budget process as something that would help rural Colorado, as well as find the money to pay for it.

Using the operational account of the severance tax fund, Becker said, won’t hurt anyone nor take money away from anything, especially water projects. “I thought it was a great way to make sure both sides were happy and to protect rural Colorado,” he said.

While HB 1005 is part of the budget agreement, that doesn’t mean that its passage through the Senate will be easy. During several debates in the past week over the budget, Senate Democrats attacked the repeal, with some saying that cows should just reproduce naturally for a year or two until the economy recovers.

On April 14, the House completed its work on the 2011-12 budget, passing the Long Appropriations Bill (Senate Bill 209) and a package of accompanying budget-balancing bills. The budget package now returns to the JBC, which will resolve differences between the versions passed in the House and Senate.

The debate over the budget package in the Senate was relatively mild, lasting just a few hours on April 8; the Long Bill passed on April 11 on a 30-5 vote, with three Republicans and two Democrats opposed.

In the House, it was another matter. In an April 13 debate that lasted until 11:30 p.m., Democrats attempted but failed to pass dozens of amendments that sought to reduce the $250 million cut to K-12 education contained in the budget. The Long Bill passed 50-14 last Thursday, garnering votes from all of the Republicans and 17 of the Democrats’ 32 members (with one absent).

Becker said last week that being on JBC is the “largest learning experience I’ve ever had in my entire life. It’s given me an ‘eyes wide open’ type of view of what state government does, where we spend our money and how we spend our money, where the mandates are that we can’t get around, and how little money we can actually maneuver (within the) budget to take care of our obligations.” Becker said he thought every freshman legislator ought to sit through the JBC process in the first year to become better informed of how the budget works and what they can and can’t do with bills.

Becker said he wouldn’t trade his JBC experience “for the world. It was an honor to be on, and I hope I proved that I can do it. I believe I did, and I hope people are proud of the budget we put out,” he said.

Becker also lauded his eastern Colorado colleagues for their support and mentorship. “I can’t speak highly enough about Rep. Sonnenberg and Sen. Brophy.” Becker said he observes them on a daily basis, how they mentor people and are always advocating for rural Colorado. Sonnenberg has been a “sounding board” when Becker needed someone for bouncing ideas off, and he said Brophy has spoken on his behalf at district events that Becker couldn’t attend. “I can’t thank him enough for helping eastern Colorado understand what the JBC does,” Becker said.

Brophy was one of 12 Senate Republicans to vote in favor of the Long Bill on April 11, and like many Republicans this year in both the House and Senate, it was the very first time he had ever voted in favor of the state budget bill.

This will be a busy week for the Wray senator; in addition to getting HB 1005 out of Senate Finance, Brophy also will sponsor HB 1024, which would allow teens at 14 years of age to get the learner’s permit and at 14 years and 6 months the license, as long as a parent or other guardian signs an affidavit of liability and the teen lives or works on a farm. HB 1024 passed the House, 50-12, on April 8; it comes up on April 22 in the Senate Transportation Committee.

In other news at the Capitol:

The General Assembly has named a portion of State Highway 71 in Lincoln County in honor of Sergeant Eric Autobee, an officer at the Limon Correctional Facility who was killed in the line of duty in 2002.

The 23-year old Autobee was killed by a prison inmate who was already serving a life sentence for murder. In 2003, the inmate, Edward Montour Jr., was sentenced to death for Autobee’s murder. The Colorado Supreme Court later overturned the sentence and sent it back to Douglas County for a new sentencing trial.

The section of Highway 71 to be known as “Sergeant Eric Autobee Memorial Highway” runs five miles from the south city limit of Limon south to the prison.

Senate Joint Resolution 11-026 was sponsored in the Senate by Sens. Greg Brophy, R-Wray, and Angela Giron, D-Pueblo; in the House the resolution was carried by Reps. Jon Becker, R-Fort Morgan, and House Minority Leader Sal Pace, D-Pueblo.

Autobee’s family and several employees from the Limon facility were on hand last week for the resolution’s presentation; it passed both chambers unanimously.

And Brophy’s effort to put Colorado on daylight-saving time year-round failed to gain light from the Senate Appropriations Committee, which killed his SB 22 on Friday, April 15.