HB11-1014, a child care tax credit bill, and HB11-1300, a conservation easement tax credit bill, hit Senate Appropriations today.  HB11-1300 sailed through to the Senate floor; HB11-1014 is tacking back to Senate Finance. 

HB-1014, sponsored by Sen. Evie Hudak (D-Arvada) and Sen. Ellen Roberts (R-Durango), is a value statement bill. HB11-1300, sponsored by Sen. Kevin Grantham (R-S.CO) and Sen. Jeanne Nickelson(D-C.Mtns) is a clean up the big mess bill. 

Both tax credits started up in the free money years of 1999, and now, despite the "value statement" of HB11-1014, the tax credits are treated very differently.  The Child
Care Contribution Income Tax Credit allows individuals and businesses to donate up to $100,000/year to child care supporters such as United Way and the YMCA, but only when the state's General Funds appropriations annual increase exceeds 6 percent.  The state would have had to collect $226 million more to meet the trigger in 2010. HB-1014 removes the trigger in 2014, which will create an estimated $26.6 million hole in the state's budget that year.

Sen. Pat Steadman, D-Denver, a member of the Joint Budget Committee, offered an amendment to offset the hole by taking back money from the state vendor fee in 2014.  Sen. Ted Harvey, R-Highlands Ranch, accused Steadman of "attacking the budget" and breaking the deals between Democrats and Republicans.  Steadman countered that HB11-1014, introduced on the first day of the session, should have been part of the budget discussions all along, and the bill shouldn't have been left hanging until the very end of the session. 

Meanwhile, the committee took up discussion of HB11-1300.  This bill provides a fast track dispute resolution process for conservation easement donors whose easements are contested by the state.  Over 600 easements are in play, at $156 million in principal, and up to $68.9 million in interest and penalties to be paid to the state's Department of Revenue (DOR).

DOR has found some easements overvalued up to 10,000 percent.  To fix this mess, HB-1300 will allow donors and tax credit users to receive expedited litigation by setting up a special court with three judges and a total of 16 other staff to resolve the cases.  To pay the roughly $3.4 million a year price tag on the bill, DOR will lower the $26 million cap on conservation easements claimed in tax years 2011 and 2012 by $4 million in each year. The state will then give the money back in 2013 by raising the cap $8 million to $34 million.

Based on these two bills, the state will not provide any tax credit for child care donations until at least 2014, and then only if the state can fill the budget hole.  But the state is going to pay roughly $6 million to litigate the alleged fraud on conservation easements and keep that tax credit going, taking off any cap after 2013.

The Senate's value statement is this:  the state won't support child care with tax credits until 2014, at the earliest, and never to the level of conservation easements; the state will provide lots of extra help to easement donors with bad appraisals, and in 2014, those easement tax credits will be back to the races.  Child care tax credits came in at $11 million+ in 2009, the first year the state tracked the number; tax credits for conservation easements came in at over $100 million in 2007 and at $62 million in 2008. PEN 5/10/11

This post was published on May 10, 2011. Permalink »