House Finance [Mar 23, 2026]

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Representative Joseph. Thank you, Mr. Chair. Thank you, members of the committee. It's a pleasure to present House Bill 1206 before the committee today with Representative Gonzalez. HB 1206 is about giving our housing authorities the tools they need to meet the scale of Colorado's housing crisis. Right now, we're facing a shortfall of over 100,000 homes with the greatest impact falling on low-income renters. Nearly half of renters in our states are cost-burdened, spending more than 30% of their income just to keep a roof over their heads. At the same time, the very entities we rely on to build and preserve deeply affordable housing or housing authorities simply don't have the flexible, stable funding they need to respond. This bill takes a practical, locally driven approach to solving that problem. It allows housing authorities with voter approval to establish limited funding sources such as small scale taxes or modest property taxes. We also have amendments. We are speaking to the bill as drafted, but we also have amendments. I just wanted to note these are not mandates. They are tools that are communities that communities can choose to adopt based on their own needs. And importantly, the revenues stay local and goes directly toward developing and preserving affordable housing.

Committee, any questions for the bill's sponsors? Seeing none, thank you so much for your presentation. We will go into the witness testimony phase. Everyone signed up in a support position because it's awesome. Can I get Gary Quintana, Stephen Trujillo, Julie Bruin, and Peter LeFari? Excellent. We're going to start, sir. If you can unmute yourself or hit the little button and introduce yourself. Floor is yours for two minutes, then hold for questions.

We are at time. I'm sure we'll have more. All right.

Thank you very much. Next, sir. You have two minutes.

No.

to introduce myself. My name is Gary Quintana. I am the lead inspector of the Housing Authority of the City of Pueblo and a member of Coronaro I come before you to ask for House Bill 26 to pass from this committee to move forward By allowing the housing authorities to be able to collect revenue within the respective jurisdictions, it will help drive a fundamental mission that we have in order to supply affordable housing to our community members and citizens for which we serve. As an inspector, I work with tenants, landlords, and even our own housing authority. And I can tell you that it can be a mighty struggle for tenants to find housing due to limited availability in the communities. This bill will help bridge the gap by allowing housing and developers to build units. I urge you to look at this through the eyes of our tenants, benefiting for having a roof over their heads and not worrying about where they sleep tonight or tomorrow. Please help us in our mission. Thank you.

Yes, good afternoon, Vice Chair and members of the committee. My name is Julie Bruin, and I am the CEO of Housing Catalyst, which is the housing authority for Fort Collins, Larimer County, and Wellington. We manage northern Colorado's largest portfolio of affordable housing, serving thousands of families, seniors, and veterans. I am here to ask you in strong support of House Bill 1206. 1206 is essentially a cleanup bill designed to create statutory parity by allowing traditional housing authorities to seek the same voter-controlled local funding mechanisms that are already available to regional multi-jurisdictional housing authorities. City and county housing authorities like ours lack access to these tools despite performing the same essential functions. While municipalities must cover a vast range of general government services, housing authorities offer a singular clarity of purpose and unmatched technical experience. We are the most sophisticated affordable housing developers in our communities. We understand better than anyone how to structure these deals and how much revenue is required to bring these critical projects to fruition. Between 2018 and 2024, Housing Catalyst generated $510 million in total economic output for our region, and we feel we are a very strong, strong participant and expert in this matter. We have the expertise and the trust of our community. We simply need a consistent statutory framework to scale our impact. I urge you to support House Bill 26-1206. Thank you.

Thank you, Madam Vice Chair and members of the committee. It's an honor to be here this afternoon. My name is Stephen Trujillo. I serve as the Executive Director of the Housing Authority of the City of Pueblo, but I am here today in my capacity as President of our Colorado Chapter of the National Association of Housing Redevelopment Officials. Our organization represents housing authorities across the state of Colorado. With over 40 years in this space, we represent organizations from Grand Junction to Sterling, Estes Park to Conejos, and everywhere in between. Our organizations collectively here in Colorado represent more than 55,000 units of affordable housing. And so we come to you today to ask your support of 1206. As has been stated by my colleagues, Colorado continues to face a severe and growing housing shortage. And we as housing authorities want to ensure that we do all that we can as fast as we can to act on that in partnership with the many organizations and the many supporters that we have Our associations are at the front lines of this crisis responsible for developing preserving and certainly managing these units at scale However, as has been stated by my colleagues, we have an opportunity to restore some parity across housing authorities, and House Bill 1206 does just that. It allows those traditional housing authorities to access voter-approved tools, as was mentioned, and more importantly, all funding is locally controlled and requires that voter approval. The revenue is also then dedicated to helping ensure that housing is the key focus of that. This bill gives housing authorities the tools to act locally, enables us to develop new affordable housing, preserve existing units, and certainly leverage additional state, federal, and private funding to support residents and connect them with the most needed services in our communities. Specifically, Colorado NARO has stepped to the plate to ensure that we also fund the fiscal note associated with this particular bill, taking action to provide a letter representing our commitment to ensure that this crosses the finish line and can serve our members and housing authorities across the state. So I ask you to continue your support of House Bill 1206. It is certainly powerful to help empower our communities, and together we will continue to build a housing environment that is safe, affordable, and one in which all Coloradans can thrive. Thank you.

Thank you. Thank you for your time and good afternoon, chair and members of the committee. My name is Lizette Mill. I am the board chair of Housing Catalyst. As Julie Bruin, our CEO, noted, we are the housing authority for Fort Collins, Wellington and Larimer County. And you've heard from our CEO and other testimony how House Bill 26-1206 will create parity across all types of housing authorities. I'd like to share how this legislation will advance Housing Catalyst's mission to build strong communities in northern Colorado. Our state's housing crisis deeply affects the northern Coloradans who can afford it least. Our latest regional housing assessment shows that our region needs over 6,000 additional units for renters earning half or less than our area median income. Existing tools like tax credits and grant funding, while essential, are not enough to build the number of deeply affordable homes our region needs. We need more tools in our toolbox. As board chair, I can tell you our agency leaves no stone unturned bringing together the capital for our affordable housing developments. This bill will provide one more much-needed tool in that search for capital funding, the opportunity for new revenue. Crucially, this bill, as has been stated, maintains local accountability. This legislation provides access to predictable, locally determined funding sources that can underpin our agency's long-term strategic planning, allowing us to scale our pipelines to meet the true magnitude of our community's needs. I urge you to support HB 261206. Thank you.

We have one more panel. Representative Stewart. Thank you, Madam Chair. I think this question is for anyone who could answer it, but do we know how many of the multi-jurisdictional housing authorities have actually taken advantage of this taxing authority in Colorado?

Yes, thank you. Representative Stewart, thank you for that question. Yes, I know specifically in the high country that there has been the Use of this. There have been multiple attempts. Some have failed as they socialize them with voters. But there has been, I believe, in the, oh gosh, it's not Yampa Valley. It's near Silverthorne. There is a voter-approved short-term lodging tax that has helped fund a number of units. And we could also share a complete list of that with the committee at a later date if you so desire.

Thank you. I'll throw it out for anybody. I'm having a hard time figuring out why we need a local when we have regional or multi-jurisdictional. Are we going to get rid of, and I haven't seen it in the bill, that would be something I'd be looking for as opposed to layering on. But why do we need both this local ability to, when you say when it's new revenue, that's just new tax extractions from the citizens. Why do we need it to happen at the local level as well as the, why do we need it single jurisdictional and multi-jurisdictional? Why do we need that double layer?

Thank you. Representative Graff, thank you for the question. The simple answer to that is the traditional housing authorities of which we represent have the largest balance sheets in the state. As my colleague Julie Bruin shared, we have the most experience developing, purchasing land, entitling land, developing land in and out of economic cycles. We have – many of us are credit rated by Standard & Poor. Two of us up here are, so we're able to utilize that funding source. while we are encouraged and we cheer on the five or so regional housing authorities that are existing currently in the state they simply do not have the balance sheet capacity to be able to meet the needs of coloradans as stated by my colleague previously or sponsor joseph and so what we're asking for is for this to be granted as well to traditional housing authorities who are the active developers across the state should they win the favor and precious tax proceeds of their constituents through tax measures referred to the ballot and approved by the local government of record. Ms. Bruin, you want to add to that? I do. Thank you. Representative DeGraff, I would

Any further questions for these panelists? All right. Thank you very much for your time. We're going to call up the next panel. We have Elizabeth Haskell and Jason Hopfer, who's just stepped out. But I'll ask him to come back. Oh, there he is. Mr. Hopper, why don't you join us at the dais? Ms. Haskell, why don't you tell us who you are, and you'll have two minutes.

To your question, Representative DeGraff,

questions. They could join together and create that funding. So that's for that. So we're

That's true. Thank you. And the question part. Mr. Hopper.

I am happy to say that I've been working with Representative Joseph, and I want to thank her very much.

Again, I want to thank Representative Joseph for working with us.

Ms. Haskell. Thank you. So how I guess the URA community is looking at this and some of their attorneys is that they feel that this new model can make financing harder, not easier for urban renewal authority projects. Lenders rely on a particularly clean lien structure. Adding this new superior priority lien introduces uncertainty that could actually slow down or kill construction finance for urban renewal projects. And it doesn't fit how Colorado works. This concept comes from another state. Colorado urban renewal projects often span multiple parcels owned by different people This bill doesn address who gets to issue and enforce these liens in that situation It also could disrupt deals that are already in progress Urban renewal authorities with existing financing agreements didn't plan for this new lien framework, which could create complications that were never anticipated. So we just have a lot of concerns about this, and they haven't been settled yet. So I wanted to make sure you all knew that.

So Mr. Hoffer, I didn't guess I fully encompass what you were saying. So this amendment L7, can you describe what specifically it's addressing and why that gets you to a support position? Mr. Hoffer. Mr. Chair, Representative Marshall, the current bill envisions up to five mills being raised by the Public Housing Authority on Property Taxes. We've seen, especially after with the expiration of some of the property tax mitigation measures this body has passed over the last couple of years, property taxes are continuing to go up across the board in many parts of Colorado. Adding an additional five mills, which in some places could be a substantial increase, has been a concern to my client from the beginning of this bill

and working through this bill, L007 would strike the lines referencing the mill levy. I think there's probably some cleanup that would still need to be done around the bill, but that would be a good start in ensuring that we're not seeing additional mills being added on property tax. From our perspective, it's very difficult to see how you make housing more affordable by making it more expensive for everyone else.

Thank you, Mr. Chair and Mr. Hopper. I understand the concerns of property taxes going up and making housing unaffordable for our homeowners. Does the fact that it needs to be voter approved help alleviate those concerns? Mr. Hoffer. I think it complicates the issue even more depending on where you are. There are certain communities that struggle to raise any mills whatsoever. The community I happen to live in with Representative Marshall, for example, While we may seek on a K-12 side, for example, to raise mills, we have a very difficult time doing it, while some other communities have an easy time doing it. So I think it actually drives more disparities than not.

Well, if those communities have an easier time raising it, is it not the individuals who are paying the tax agreeing to be taxed? So I guess I'm not understanding the concern in that situation. from our perspective representative we would like to ensure that housing prices remain stable and rather than trying to increase housing prices for particular programs so we've been consistent in being concerned about mill levy increases across the board we are supportive of other ways in which we could help fund affordable housing so for example in this case the sales tax issues that are in this bill we'd be supportive of understood okay and then i to be honest have not read the bill in light of the amendment since I just got it.

I did point out to the drafter that there were some additional strikes that needed to be made that would need to be cleaned up, and I think that Representative Joseph can address those

because I think you're then removing any cap, and that might be worse than what you're intending. Understood.

Thank you very much, Vice Chair and members of the committee. Thank you for the opportunity to present testimony to you today and for your consideration of House Bill 26-1206. My name is Cam Starnes. I'm a partner at TAF, Statinus, and Hollister. I'm testifying in support of this bill to allow for increased flexibility in how urban renewal authorities and developers are able to cooperatively structure tactic or financing bonds to facilitate housing and other projects. Specifically, Section 4 of the bill makes a focused and technical change to Colorado law that would treat taxpayer guarantees with the same lien priority as property taxes. A taxpayer guarantee is a contract between a developer of a project and a bond issuer, such as an urban renewal authority, under which the developer agrees to make up any shortfall in the tax revenues pledged to repay the bonds. For instance, if the assessment of a completed project is lower than the projections used to size the bonds, the project developer must make a direct payment to the bond trustee to make up the shortfall. Treating taxpayer guarantees with property tax lien priority makes bonds secured by such taxpayer guarantees more attractive to prospective bond purchasers without any additional risk to the public entity issuing the bonds or to other taxpayers. If adopted, this bill would create a new bond structure which would exist alongside other currently used structures, such as the issuance of tax-exempt bonds by metro districts. Because taxpayer guarantee supported bonds are generally issued as taxable and secured only against the project real estate, this new structure may prove useful where the flexibility of taxable bond proceeds are needed to fund project costs or where it is desirable to avoid potential millage rate impacts to other taxpayers within a metro district. Importantly, this bill does not compel the use of taxpayer guarantees and this alternative structure would only be used if and when the bond fund issuer, developer, and project lender mutually agree that it is advantageous to the shared goal of facilitating multifamily housing and other transformative redevelopment projects. Thank you for your time and consideration.

Representative Gonzales. Move all of them except for five.

So I believe we have five amendments. So first one is L001. So I move L001 of House Bill 1206. Second.

Thank you, Mr. Chair. This amendment adds a clear notice requirement before a housing authority can levy a property tax. It requires the authority to notify the county assessors and the Board of County Commissioners by July 1st of the year of the tax year imposed, including detailed information such as the legal description and boundaries of the tax area. This ensures coordination with local government and provide transparency so counties can properly administer and anticipate the taxes. And we did get this amendment from the assessors.

Representative Marshall. Thank you, Mr. Chair.

So L-001.

Any other comments on L-001? Okay, is there any objection to L-001? Seeing none, L-001 is passed. Before you go into the next amendment, you mentioned that there are five. Only three have been passed out to the committee. So if you have, we have L1, L002, and L007. So if you have two other amendments. Two of the amendments were over a page, and they were sent via people's inboxes and delivered at their desk a couple of days ago, I believe on Friday. Oh. Yes. Okay. It was. All right.

Thank you.

Second by Madam Vice Chair.

Committee, any comments on L002? Any objection to L002? Seeing none, L002 is adopted. Bill sponsors. Next amendment.

Motion by Representative Gonzalez, second by Madam Vice Chair.

Thank you. Committee, any questions on L-004? Any objection to L-004? Seeing none, L-004 is passed. Representative

Second by Madam Vice Chair. Representative Gonzalez.

Maybe I'm, thank you, Mr. Chair. Maybe I'm unfamiliar, but just curious, why are cigarettes

We can bring up the drafter. We've been joined by the drafter. Thank you. Thank you. That amendment was made to align with multi-jurisdictional housing authorities. That's how the language is in the multi-jurisdictional housing authority section of statute, which is 29-something, 204.5. So the language was just meant to align exactly with that so that it could be administered the same way. Follow-up, Representative Camacho.

Any further questions on L00? I'm sorry. What? Oh, okay. Sorry. No. Okay. Any further comments on L006? Any objection to L006? Seeing none, L006 has passed. Representative Gizal.

Representative Zokai Thank you Mr. Chair So I thought the intent was to Maybe reduce the number of mills It sounds like the intent is to completely remove Property tax from this bill

Thank you, Mr. Chair. I think I will still just voice concerns that as drafted what this would do is keep the property tax in your bill and just remove any cap on the mills And so I just going to say I don feel comfortable with this as drafted and would support it if we see it as corrected maybe on seconds But as it is drafted currently

Any further comments on L007?

Representative Joseph. Thank you, Mr. Chair. So in L007, we are striking line 22 to 24, which refers to the property tax, and then page 9, line 23 to 24, strikes the property tax ad valor on property tax. So it's just a, we just need to remove 21 to 22, which would take care of both the mill levy and property tax, referencing the bill, and the drafter can also attest to that. And that would take care of both property tax and mill levy.

Madam Drafter.

Any further comments or questions on L007? Any objection to L7? There's been an objection. Ms. Culver, please call the roll. Please poll the committee. Representatives Brooks.

Macho.

DeGraff.

Garcia.

Gonzalez.

Excused.

Yes.

Yes.

No.

No. Mr. Chair. Yes for today. On the floor. That fails. Five yeses five noes one excused any further amendments from the bill sponsors committee any further amendments Seeing none the amendment phase is closed Wrap up bill sponsors

Representative Joseph. Thank you, Mr. Chair. Thank you, members of the committee. I asked for a yes vote on 1206 today. And I am working on this. I want to first thank all the proponents of the bill, Colorado Naro, for their support of the bill, the PHAs that we've been working with since, I believe, since September, August, September, on this particular piece of policy. and also thanks to all those who testified today, the issue is that we need more affordable housing. We need more housing in Colorado, period. We know that I do believe housing is a human rights and we need to build our affordable housing stocks. And this bill is just one more tool in our toolbox. It's not the tool, but it's one tool. It's a very modest tool in our toolbox. And because of that, I ask you all for a yes vote on this particular bill. Thank you.

Representative Gonzalez. Thank you, Mr. Chair. I move House Bill 1206 as amended to the Committee on Finance with a favorable recommendation.

To appropriations with a favorable recommendation, sorry.

Representatives Brooks.

Camacho.

DeGraff.

Garcia.

Gonzales.

Artsook.

Stewart. Yes.

Mr. Chair. Yes, that passes

Good to see you as well.

Well, excellent.

This bill was brought to us by the Nonprofits Association to solve an issue that has been happening with legacy gifts. So When a donor leaves a gift to a nonprofit, in certain instances, it has created a conundrum in the banking system and with some financial institutions that require unusual movements in most people's view about how to move that money. And this is something that has already been designated, so it's not going necessarily through probate, et cetera, et cetera, et cetera. So let's say, for instance, there was a cash account that was listed with an institution, and that was payable upon death, if you will, to say, for instance, a nonprofit like the American Red Cross or something like that, picking one at random. What has happened in certain instances in Colorado is because of our laws, those financial institutions can require that an individual representing that organization come and open an account with them in order to do those transfers, which creates a number of problems. So we'll let the nonprofits that are here today share their issues with that particularly, but this was our endeavor to correct that issue. I think all of us were surprised when we took this on that not only the number of financial institutions that would take interest in the legislation, obviously, but also everything from creditors to collection agencies, et cetera, to make sure that there was no way in this legislation that we could circumvent existing rules and to make sure that the timelines were consistent with how other benefits are payable in these types of events. Not only that, we wanted to set some timelines so that a nonprofit that did receive funds under certain instances of these transactions would basically have a timeline that they need to hang on to those funds should there ever be some additional probate that is unforeseen, say, for instance, a family member or something that challenged this later, that these types of events then would also fall in line with what is consistent with statute today. Most of the changes happen on the Senate side, so we have the re-engrossed version over here. There will be no amendments that I expect on our side. We had a lot of stakeholders engaged with this process, and we worked with all of them until, as far as I know, everyone is in a support position. So that's what the bill does. I welcome any questions from the committee.

Representative DeGray.

Just always curious, like why can't these terms that would slow things down, why can't they be cleared up contractually or in the signing and the creation of the gift? Why does it require law?

Thank you, Mr. Chair.

Mainly the law directs how the contract would have to go in the banking. You know, we have both the SEC, FINRA, and we also have state regulations and how banking transactions go. And that is what is often pointed to with how they address these particular items. And I think that it was widely agreed that we couldn't deal with this specifically as a contract item and that we needed legislation in order to clear it up. Any follow-up, Representative Graff?

Thank you, Mr. Chair, Madam Vice Chair, members of the committee, for the opportunity to be here today in support of SB 118. My name is John Krause. I'm the Executive Director of Gift Planning at the University of Denver. I'm also here as a member of the National Association of Charitable Gift Planners and a member of the Cardinal Plan Giving Roundtable, where I served on the board for seven years. Something that we often tell our donors is that naming a charity as a beneficiary on one of their financial accounts is one of the easiest and most tax-efficient ways to make an impact after they're gone. This is because it often only takes minutes to update the beneficiaries on one's accounts, And when the donor passes, these assets pass 100% tax-free to charity and bypass the probate process, meaning that theoretically they should be distributed much more quickly than other types of estate assets. What the donors don't know is how burdensome the process can be on the back end for nonprofits because of burdensome policies on behalf of certain financial institutions. I do have some stories that I wanted to share, but I will leave that to my nonprofit colleagues in the interest of time today. Suffice it to say, we have many stories of how this has impacted both our donors and the University of Denver. But the stories you're going to hear from my colleagues are not unique. There are similar stories from charities across the country. Many of us in the Planned Giving community have been working for years to enact change at the national level through the RIFT Project, which stands for Release Institutional Funds Today. The RIFT Project has worked directly with several financial institutions and has been successful in getting many of them to change their contracts, their policies, and practices to be more charity and donor friendly. Unfortunately, there are still some companies who are well aware of our challenges as well as potential solutions yet have been unwilling to change their practices. In the absence of these actions at the federal level or by the companies themselves, this bill is necessary to protect Colorado charities. The nonprofit sector is under significant strain and philanthropic dollars are needed more than ever. This legislation helps ensure our donors' wishes are carried out and that Colorado charities can receive much-needed funds. Thank you for your support.

Hello, Mr. Chair, Madam Vice Chair on the committee. My name is Jamie Mauger, and I'm here on behalf of the University of Colorado system in support of Senate Bill 118. I serve as Executive Director of the Office of Gift Planning as well as the Executive Board for the Colorado Plan Giving Roundtable. My team supports donors as they include CU in their estate plans and helps administer these gifts afterward in partnership with the CU Foundation. Many planned gifts come through retirement accounts, often via IRA beneficiary designations, because these are straightforward and can be tax-efficient for donors and their heirs. Today, transferring retirement account gifts from financial institutions to charitable beneficiaries is inconsistent and often unnecessarily burdensome. In some cases, CU Foundation executive leaders and sometimes board members are asked to open accounts at the holding institution and provide sensitive personal information simply so they can receive a charitable gift The beneficiary is the nonprofit entity not an individual The lack of clear timelines can also cause major delays Earlier this year, it took more than six months for the CU Foundation to receive a $200,000 IRA distribution from a bank despite repeated follow-ups with the administrators and the institution. Until CU's portion was paid, the remainder of the estate could not be distributed, delaying the entire process. Donors name nonprofits because they want their gifts working quickly. Unnecessary delays keep funds from supporting scholarships, research, and other priorities. Senate Bill 118 would establish a clear process and timeline for institutions to transfer legacy gifts to charitable beneficiaries. It would allow nonprofits to receive funds by direct payment or transfer of their choice without requiring nonprofit officers to open accounts or share personal information. This bill makes charitable transfers faster, more consistent, and more secure, honoring donor intent and reducing administrative hurdles for nonprofit leaders. For the University of Colorado and many other nonprofits, Legacy Gifts can immediately support students' research and programs. And for that, I ask that you please vote yes on Senate Bill 118. Thank you.

Thank you, Mr. Chair, Madam Vice Chair, and the committee for allowing me to give testimony today. My name is Teresa Garcia. I work as a plan giving officer at Colorado Public Radio and sit on the board of the Colorado plan giving roundtable. Each year, CPR receives on average 25 new legacy gifts, likely because of beneficial tax reasons, which John has already gone into, and more donor education. An increasing number of these gifts are realized via beneficiary designations. At the end, I'm going to tell a story that illustrates how things could work and how things more often work. At the end of November 2024, one of our donors passed away. We renamed the beneficiary on two of her accounts with different custodians. The total of both accounts was over $2 million. With custodian A, there was no expectation or requirement to open a new account. We simply filled out an entity acceptance form, sent in some corroborating documentation, and received that payment at the beginning of February 2025. For custodian B, we had to open a new business account, fill multiple forms, and then spend months following up for the initial payment, which we didn't receive until May 15, 2025. And then even though we originally asked for the entirety of the account to be sent, a small amount remained under management for the next eight months until we could coordinate internally to zero out and close the account. Unfortunately, because of one unresolved outstanding stock position, we have been unable to fully close the account and still have an unnecessary, empty account with this custodian because of their process. Many smaller nonprofits aren't fortunate to have a full-time plan giving person or someone whose job it is to administer these kinds of gifts. The staff hours this particular gift required were enormous, and it's fortunate, though never guaranteed, to have a gift so large. We have another beneficiary designation gift for $8,000 that has required multiple hours of executive staff time, confusing forms, and a medallion signature guarantee to open an account with a different custodian in order to receive these funds. If we didn't have to do this, our team would be able to dedicate our time to activities supporting the mission of the organization, better aligning with the attention of the donor and their philanthropic goals in the first place. Thank you.

Good afternoon, Mr. Chairman and members of the committee. My name is Jack Murphy, and I serve as the Government Affairs Director for the Colorado Nonprofit Association. I appreciate the opportunity to speak in support of Senate Bill 118. Senate Bill 118 establishes clear and consistent practices concerning the transfer of legacy gifts between nonprofits and donors financial institutions While our members are incredibly grateful for their community trust and generosity we consistently heard them express concerns and describe significant issues in receiving the gifts given by their donors upon their passing Our members tell us that their experience working with various financial partners has been time-consuming, excessively burdensome, and in some cases, compromising to their staff's sensitive personal information. It has become a standard practice for financial institutions to require nonprofits to open new accounts with their company as a means of executing the gift transfer. This amounts to an inconvenience for those who receive infrequent legacy gifts and an enormous administrative burden for organizations where legacy gifts are a significant part of their fundraising structure. Because of this practice, nonprofits are essentially required to become new customers of financial companies just to receive these donations. This is just one of the issues. Our members also report that they must wait for excessive and unpredictable amounts of time to receive the gift. While some financial companies are able to process these exchanges in a matter of weeks, others take several months to a year. This is disruptive to the nonprofit who experience different timelines with different companies, but it's also disruptive to the donor's final wishes in putting their donated dollars to work in their community. Our members also express their frustration with the requirement to share their staff's sensitive personal information to carry out these transfers. The provisions in Senate Bill 118, establishing consistent transfer timelines, standardizing the information needed to execute the transfer and prohibiting the requirement to open new customer accounts all solve this problem in a consistent and compliant manner. We've engaged banks and credit unions, creditors, estate and probate attorneys, and of course legacy-giving professionals to understand the landscape and inform our work. We've incorporated our partners' suggested feedback to mitigate potential compliance issues and have designed a solution that meets all parties' needs. Thank you. I urge your support on Senate Bill 118, and I'm happy to answer any questions.

You're a seasoned pro.

Thank you, Mr. Chair, members of the committee. I apologize for the rough voice, but seasonal allergies are not my friend right now. I'm Allison Morgan with the Colorado Bankers Association. Colorado bankers strongly support Senate Bill 118. As you've heard already, the bill went through a very strong and robust stakeholder process. Appreciate the work that the nonprofit association engaged in, as well as the bill sponsors to help bring everyone to the table, listen to concerns, and bring to you the bill that we have today. It's a good bill. It outlines with clarity a very clear process so that all financial institutions are working with consistency to get the donation to the nonprofit in a reasonable and timely manner. It addresses the concerns of the credit bar and creditors for those concerns if there ends up being a question within the estate later on. And we feel like we've... gone through this process and been able to bring to you a bill that from start to finish can really cross all those T's and dot the I's and do what we need to do, which is get the donation to the nonprofit in an expeditious but careful manner.

Ms. Maha.

I also apologize for my voice. I think I've been talking too much. Good afternoon, Chair Woodrow, members of the committee. Thank you for the opportunity to speak in support of Senate Bill 118. My name is Naomi Yamaha, and I work for the Denver Foundation as our Director of Policy. We are a community foundation that has been working for 100 years now in collaboration with community members and our donors to address current and future challenges. As a funder of nonprofits of all sizes and a steward of donors' charitable gifts, we hear of and at times ourselves experiencing challenges when accepting various types of gifts. You've heard examples of all those challenges, so I won't repeat them. I will share my organization. We're really fortunate. I have a robust finance team, a director of planned giving, and they have the ability and most specifically the capacity to deal with the challenges that come up when accepting these types of gifts. We know that every nonprofit has those similar staff capacities, and we feel that the additional administrative burden that they have been going through at a time where their workloads are increasing, we think it's a disservice to them because they're having to direct time from mission-critical work in order to do these necessary steps as the process allows. you know, we feel this bill is an opportunity to establish a baseline process for transferring legacy gifts between financial institutions and charitable beneficiaries. And we think this bill really does a good job of threading the needle of, you know, responsible policymaking, but also meeting the challenges that nonprofits are facing. We also think that uniformity can bring a sense of relief and consistency for nonprofit organizations at a time where they're meeting a lot of uncertainty and having to take on more and more gifts and more and more challenges in their work. And we think this bill could actually lead to more nonprofits, maybe smaller nonprofit organizations, in trying to pursue these types of gifts, knowing that there is a consistent process that they would have to go through. I want to thank the proponents, as well as the many stakeholders that did a lot of work to get the bill to this point. We think it, again, does a really good job of meeting the needs, but also creating a process that's workable, especially at a time where there's increased cybersecurity risks. And so with that, I respectfully ask for you to vote yes on this

floor yours for two minutes. Good afternoon, Mr. Chair, Madam Vice Chair in the committee. My name is Ashley Leder, and I am testifying in support of Senate Bill 118. I serve on the board of the Colorado Planned Giving Roundtable, and I am the director of Philanthropy for the Cat Care Society. I am here today representing small to medium-sized nonprofits across Colorado. At Cat Care Society, 66% of our $3.4 million annual revenue comes directly from estate gifts, making timely access to these funds essential to our operations. However, financial institutions often require our nonprofit staff or board members to provide sensitive personal information, such as social security numbers or even undergo personal credit checks to open accounts in order to receive funds that legally are already belonging to our organization not the individual I think these requirements stem from what seems to be a misinterpretation of regulations like Know Your Customer which are intended for opening new accounts for individuals not for one-time distributions to verify charitable beneficiaries. Nonprofits do not want to become customers, yet are often forced to do just so to receive these gifts. Some financial institutions are already using reasonable risk-based verification methods to transfer funds to our charity, such as confirming our 501c3 status, our EIN, without requiring personal information or opening accounts. This demonstrates that there is a better way. Even when we comply fully and promptly, as you've heard, the process is slow and burdensome. In one case, it took over a full calendar year and hundreds of staff hours to receive a 70,000 distribution, funds that represent a meaningful portion of our small budget. In other cases, we've been required to keep unnecessary accounts open for upwards of three or more years, creating ongoing administrative strain for a staff of one. That's me. This bill creates a clear and efficient process for transferring funds to charitable beneficiaries, and it ensures timely access to critical resources all while honoring donor intent, which is the most important consideration. Please support 118. Thank you for your time.

Representative DeGrasse. Thank you. I'll throw this out to anybody, but we just went through some of this on more of the personal side and some of the, like, okay, you need a medallion, you don't need a medallion, you need this, you need that, You need, you know, there's, it seems like there's a lot of hoops to jump through to transfer funds that were, seemed really more about making you at some point give up and then just leave the money with whatever organization it was. But all that aside, I'm curious if some of this would be better to deal with more broadly on how those assets are transferred down. So instead of just nonprofits, so that airs also don't have to go through all of the hoop jumping to get to some of these funds that is currently the process now. Are some of these things that would benefit family members as well, or is this all nonprofit-specific?

Thank you, Mr. Chair.

So the bill still works within the existing probate structure, but it simply sets up a consistency for all financial institutions to follow. But it still works within the framework of the probate system.

Thank you, Mr. Chairman, members of the committee. I'm Jessica Zaidan, the Jewish Family Service of Colorado, and I'm here to support Senate Bill 118 JSS was founded more than 153 years ago We have more than 30 programs and services including food insecurity housing stability mental health counseling aging care employment support and more Last year, we provided over 167,000 services to 26,000 Coloradans across all of our programs. We are the safety net for those who have nowhere else to turn. I'm here today to support strong, to voice my support for this legislation. This plan giving allows us to plan for the future, expand services, and honors donor wishes to make lasting impacts. However, the current system creates unnecessary barriers that delay these gifts, sometimes up to two years later, and burden our small finance and development staff with administrative complications. Let me share with you what this looks like in practice to what happened to JFS last year while trying to process a $25,000 legacy gift. The donor named JFS as their beneficiary of their IRA held with Charles Schwab. When the donor passed, Schwab contacted us about six months later to process the donation. To start this process, we had to open up an account with Schwab and were sent a 30-page paper document asking for incredible financial and personal information from not only JFS, but from our CEO, her spouse, our board chair, our CFO, and our board secretary. names, social security numbers, addresses, birthdays, employment histories, all this information needed in a paper document with four authorized signatures. After much back and forth with JFS and Schwab, the funds were eventually transferred to my CEO's personal Schwab account. They never even set up a singular JFS account. They co-mingled the donor's funds with her personal funds of Charles Schwab. Effectively, five frantic calls later, a notarized document sent to Schwab, the funds were eventually released to JFS over a month later. And by virtue of us setting up a new account and the timing of the transaction, we still have a Schwab account with 36 cents that needs to be closed. Obviously, that's not higher on our priority list. As you can see, in practicality, this law is needed for nonprofits, both big and small in Colorado. I urge you to support this bill and ensure the effective use of donor dollars without these administrative burdens. Thank you.

No amendments.

Thank you very much, committee. Again, as has been stated, this bill has gone through far more conversations than I think any of us anticipated when we began. And to answer your earlier question, Reptograph, what we did here was make it as easy for a charitable organization to get things as a family. We didn't really open up or delve into matters beyond that. I think that Colorado has a fairly straightforward system in probate for most of those things, but this also leaves in place many safeguards for making sure that if for some reason something did change or a family member, for instance, had some legitimate claim to these finances, et cetera, later through a court process that those funds would still be protected within the same time frames, et cetera. So we do think that this is a very straightforward way to make sure that this is consistent across the board and I request an aye vote Thank you for your consideration Committee members any closing comments All right seeing none a proper motion Routes 118 to the Cal

I move Senate Bill 118 to the committee to hold the favorable recommendations.

Yes.

Yes.

I'll be a no for today.

Yes.

Yes.

Excused.

Yes.

Yes.

Yes.

Yes.

And thank you, Finance Committee, for your attention today. Appreciate it.

No, I expect nothing less. Thank you very much for your attention. Thank you for listening to constituents who have reached out to you regarding various provisions of this bill. This is a very complicated bill, and for that I have to thank my amazing co-prime sponsor who has done the majority of the lifting here. The House Bill 26-1289 updates a range of tax expenditures. by expanding some, limiting others, and eliminating certain provisions. And these are based on the recommendations of the Office of the State Auditor and Program Administrators. It removes rarely used tax expenditures, which the Office of the State Auditor has identified as infrequently utilized. Other provisions implement auditors' recommendations related to fuel tax deductions. Under Colorado law, licensed fuel distributors can deduct 2% of their total fuel to account for losses during transport, unloading, and collection costs. However, research indicates that actual losses are closer to 1%, so the bill reduces the allowable deduction to 1%. 1289 also makes important changes to certain economic development, tax incentives to be more targeted and efficient. The Federal Opportunity Zone Program offers favorable tax treatment to investments made in designated opportunity zones, areas of economic distress designated by state authorities. Since the state aligns with federal taxable income, taxpayers can remove those gains from their state taxable income even if their investments occurred outside of Colorado. It does not make sense to provide favorable state tax treatment for investments that are not benefiting the state. The bill will require gains on Opportunity Zone investments to be added back to income to be subject to tax unless the investment was from within the state of Colorado. None of this affects the much larger federal tax benefits that Opportunity Zone investors can access, and this ensures that we are not subsidizing gains from investments made in other states and strengthens Colorado's Opportunity Zone program. So just briefly, the intention of the bill is really to be revenue neutral, and while that's not really where the fiscal note is, we're bringing a number of amendments to ensure that that is where we end up. So as I mentioned, the bill is long. It makes important changes to a range of tax expenditures, and we'd love your support. And then I will turn it over to my wonderful co-prime sponsor.

Thank you. Thank you, Mr. Chair, members of the committee. I can only imagine the headaches you all went through in reading the bill and then seeing L001 and going through and doing all your little edits. But I think it demonstrates and it shows how important it is for us as a state to continue to evaluate what our tax policy is every single year to make sure that we are responsibly utilizing the tax dollars that Coloradans have trusted us with I am actually going to unfortunately take several minutes to talk through each section of this bill, because I want to make sure that we all fully understand what is in each section of the bill, and those who are listening are understanding what is in each section of the bill. And then I do want to also just mention right off the bat for probably one of the most excited group that might be here today to defend their tax credit, we will be amending out the tax cut for gold coins, gold bullion, and silver. Yay! So you all can go home now. Hoping for an applause, but...

Thank you, Madam Chair.

So starting with Sections 2 and 18, this is the rail safety use and tax expansion. In this section, the bill clarifies that this major safety expanse for passenger rail construction is covered by the rail sales and use tax exemptions and including local sales use and taxes. This bill clarifies the exemption also applies to the use tax, which is generally levied in parallel with the sales tax and therefore keeps the treatment of these expenditures consistent under both taxes. The Opportunity Zone decoupling you heard a little bit about. The Federal Opportunity Zone program offers favorable tax treatment to investments made in designated Opportunity Zones, areas of economic distress designated by state authorities. Since the state aligns with the federal taxable income, taxpayers can remove those gains from their state taxable income, even if their investments occurred outside of Colorado. It does not make sense to provide favorable state tax treatment for investments that are not benefiting the state. This bill will require gains on Opportunity Zone investments to be added back to income and be subject to state tax unless the investment is from within Colorado. None of this affects the much larger federal tax benefit that Opportunity Zone investors can access. This should also incentivize investors to invest in Colorado. This is where we want to help build and strengthen Colorado's economies through investment in Colorado Opportunity Zones, building off the great work OEDIT has done in making us one of the top OZ states in the country. sections 432 and 33 through 39 is a property tax run and heat rebate the intention of these sections was to fully convert the rebate into a tax credit the rebate currently only has a four percent uptake we were expecting a much greater uptake to support seniors and the elderly with this credit however just so you all know this is also an amendment that we will be bringing to strike this provision out of the bill. The reason why we are forced to do this is because currently as it stands with this provision in the bill, it challenges the formula for EITC and FATC, and so we need to do some more work between these formulas so that if we come back next year, we can actually do a cleaner full conversion on this section. Section 5 We are repealing the 80-20 rule Waters edge election Currently multinational corporations can shield Their U.S. income from state taxation By parking some of their property, payroll And other assets and subsidiaries that are mainly Filled with foreign Income If at least 80 of the subsidiary Is filled with foreign income which states typically don tax unless it clearly U income that was improperly shifted abroad Then all of the U.S. income, up to 20%, escapes U.S. taxation. This provision would ensure that corporations cannot use this loophole to decrease their Colorado taxes. Most states have closed this loophole by requiring all income from domestically incorporated subsidiaries to be considered U.S. income, which is then apportioned down to the state taxable income. The language also aligns our corporate tax code with that of many other states by making it default for C-corporations to report all of their worldwide income in their state tax return, as well as including that income in their apportionment factor, which determines how much of that income is sourced to Colorado. C Corps who don't want this can elect to continue to file on a Water's Edge basis and only include their U.S. sourced income. Section 6, businesses, this is 280C and 951A deductions. This is where businesses are eligible for a federal tax credit when they hire employees from certain groups, for example, members of tribes, active duty service members, ex-felons, veterans, SNAP, and SSI recipients, and employees in the empowerment zones. The Federal Revenue Code, 280C, says that taxpayers cannot deduct expenses that they use to qualify for this credit from federal taxable income. The IRC-280C deduction in Colorado allows businesses that cannot deduct wage and salary expenses for federal tax purposes due to IRC-280C to deduct these wages and salary expenses from the state taxable income. The Office of State Auditor has very little data about this deduction, and it is rarely used, and it has fallen out of sync with federal law. This bill repeals the 280C deduction and the 951A deduction in order to stop double taxation benefits for corporations at the federal and state levels. Section 7 is the Innovative Motor Vehicle Credit. This bill increases the credit for 2027 and 2028. It increases the price cap for eligible vehicles from $35,000 to $40,000 and removes the automatic reduction tied to revenue forecasts. Section 8 is a pine beetle and wildfire mitigation credit. This provision provides another tool for the state to combat the spread of the Ponderosa pine beetle. The wildfire mitigation credit provided an incentive for homeowners to take action to prevent fire risks. This provision expands eligibility to actions to mitigate the spread of the pine beetle as well. Section 9 is Community Food Access Credit. Colorado Community Food Access Credit provides a 75% refundable income tax credit to small food retailers and family farms for purchasing equipment that increases access to healthy, affordable food in low-income, underserved areas. This bill would expand eligibility, ease administration, and increase overall uptake while also lowering the cap of the total credit allowed to reflect underutilization. Sections 10 and 16 are the electric-powered lawn equipment tax credit. This bill would make this credit eligible for quarterly prepayments. This is directly in response to what we heard from small business owners last year. The industrial facilities credit, section 11. In this bill, we are expanding the industrial facilities tax credit so nonprofits and other non-tax entities can qualify. The bill also creates a new geothermal energy tax credit capped at $35 million total statewide. The heat pump tax credit. This currently Colorado provides a one income tax credit for an air source heat pump or a income tax credit for a ground source heat pump Colorado residents who install heat pump water heaters can also apply for a income tax credit This credit is tied to revenue growth This bill removes the triggers which would cut the credit in half in future low budget years. Electric bicycle tax credit. The e-bike tax credit launched in April of 2024 and gives Coloradans a point of sale discount on their e-bike purchase at over 160 retail locations statewide, this credit is tied to revenue growth. This bill removes the triggers, which would cut the credits in half in future low-budget years. The Colorado Energy Office believes that that predictability with consumers and business owners who are utilizing these credits is important in supporting the market and for these important emissions reduction technologies. We're not even almost there. So hang tight. Sections 14 and 15 is a sustainable aviation fuel. Colorado Energy Office contracted by the Rocky Mountain Institute last year to create a strategic plan for the sustainable aviation fuel in the state. The final two reports for flight plan can be viewed online. And based on RMI's analysis and industry stakeholding, the top recommendation is to develop a direct subsidy for sustainable aviation fuel via a purchase tax credit. structured as a per-gallon subsidy. This policy would offer monetary incentive for SAF purchased and consumed in Colorado. State-level incentives would also offer higher values for lower emissions SAF, which would incentivize producers and optimize their emissions reductions rather than only aiming to achieve 50% of life cycle carbonization reduction and nothing more. The bill repeals the tax credit to produce SAF and replaces it with a tax credit to purchase and utilize SAF in the state. Then, Section 17. Yay. Yay. It's going away. Will not be in the bills. We're not even talking about it. Says the coin collector over here. That's right. Beetle kill sales tax exemption, which is Section 19. Colorado has a sales and use tax exemption for products made from trees killed or infested by mountain pine or spruce beetles. This small sales tax exemption was set to expire this year, given the resurgence in pine beetle activity. This is not the time to let this credit sunset, as you all know. This provision extends the beetle kill sales tax exemption to 2031. Property for use in spaceflight sales tax exemption. exemption, exempts the sales, storage, and use of qualified property for the use in spaceflight from sales and use tax. According to the Office of State Auditor, this exemption is rarely used, and therefore this bill will repeal this exemption. Having conversations with a member on this committee, I have committed that we will continue to discuss this particular section, Section 20, after we get this bill out of committee. Fuel tax deductions, Section 21 and 22. Colorado law provides a 2% allowance to the total amount of fuel to be deducted by the licensed distributor. The 2% allowance covers any losses in transit and in uploading the fuel cost of the collection. According to the Office of State Auditors, that amount actually is higher than what the true loss is. So we are reducing the allowance from 2% to 1%, and we're repealing the 0.5% allowance for special fuel. This is more in line with the realities of the fuel loss in transit. Vendor fee alignment as found in sections 23, 24, 26, and 27. We are eliminating the vendor fee on cigarettes, cigarette stamps, tobacco, and nicotine products to align this vendor fee with the other vendor fees that have been eliminated. And then in sections 28, 29, 30, and 31, we have Enterprise Zone program changes. The Enterprise Zone program contains a suite of tax expenditures meant to stimulate activity on economically distressed areas. Many of these credits have been evaluated but not updated since their inception. We have proposed updates to streamline administration, improve targeting, and allow communities and entrepreneurs to make better use of these investments. The Enterprise Zone Commercial Vehicle Credit, particularly Section 28, we will be eliminating this credit because it is rarely used. Again, also in Section 28, we will make the existing Enterprise Zone Investment Tax Credit refundable. For example, convertible to cash if the business doesn't have enough tax liability for clean energy investments. And in Section 29, we will ensure the credit for Enterprise Zone Health Insurance credits benefits that are truly incentivizing behavior, not just subsidizing compliance with the law by limiting the credit to businesses with 50 or fewer employees. And then in Section 30, Enterprise Zone Research and Development Credit, this bill limits this to businesses who spend at least $150,000 on R&D each year, limiting it to most impactful R&D spending in enterprise zones. And finally, in Section 31, this bill is clarifying that buildings that are not rented out for at least 135 of the previous 180 days are eligible, and the maximum credit amount is increased from 50 to 200K to keep up with construction and labor costs. In short, this bill is doing a lot, and I know that there are feelings about why are you doing so much in a single bill, and I think that there's multiple reasons for that, And I think particularly for this bill is because what we are doing here is we are not trying to raise revenue by cutting certain tax credits. What we are trying to do is create a net revenue, a net zero revenue bill that allows us to prioritize the credits that are working, prioritize the credits for small business, prioritize the credits for efforts that we have set as a priority as a state, while eliminating the credits that are proven as ineffective and costly to the state. And so by combining all of these in a single bill, we are able then to fit and operate within the regulations that we have through our fiscal policy as a state, and also make sure that our tax expenditures are working for Coloradans.

Oh, Representative Brown.

There's more.

Yes, just wait, there's more. We are going to ask you to adopt four different amendments when we get to the amendment phase. So I wanted to give you a little bit of a taste of what's coming. L001 makes a whole bunch of different changes, and I can sort of go through those with you. But briefly, they make changes, some technical corrections to the Opportunity Zone Program on page one. Also on page one we making changes to the 80 rule the water edge election In pages one and two we are towards the end and all of page two we are changing some of the corporate tax income regarding the Opportunity Zone program. Specifically, we are ensuring that new requirements made to 1289 also apply to corporate income. We'll be changing the innovative truck credit to repeal the revenue trigger for the electric truck credit to align with the electric vehicle innovation motor vehicle credit. Pages three and four, we're making changes to the pine beetle and wildfire mitigation to make the credit refundable instead of a carry forward. In pages four to five, we're making changes to the community food access program, clarifying the cap reduction is a clean $5 million, We're removing it from the advanced payment program due to cost barriers. We're striking the definition of qualified producer, and we're updating the definition of a small family farm. We are also clarifying in the small food retailer definition that we're clarifying the locations need to be five or fewer in Colorado. On pages five through seven, we're changing the geothermal and industrial energy credit. In pages 7 through 9, we are making some changes to the sustainability, sustainable aviation fuel credits that are mostly technical, but also clarifying that the method by which taxpayers will apply and receive the new SAF purchase credit. We're making some technical changes to the electric power lawn equipment tax credit. We're making some changes to the rail safety tax credit, a correction. In this case, we're adding a clarification and adding that the process for the Department of Transportation to affirm the carriers who are allowed the exemption. We're changing some of the beetle kill sales tax exemptions and making some technical changes, doing some technical changes to the cigarette vendor fee. we are changing the enterprise zone program credits. We're making corrections to the original draft of the enterprise zone reforms to align with the sponsor's intent. And then on page 10 and 11, we are making some changes to the commercial vehicle credit, which sunsets some cash funds in alignment with sunseting the commercial vehicle credit. So that's Amendment 1. L2 is removing the gold and metal bullion exemption. L3, which we will also ask, removes the PTC conversion, which repeals the sections of the bill that convert the property tax rent and heat credit and rebate program into a tax credit. And then the final amendment that we will ask for is L015, which is the removal of Lichtenstein as a tax haven. I didn't know that when I was 12, when I learned where Lichtenstein was and what it was, that I would now need it as a state representative. But here I am. This removes Lichtenstein from presumed tax shelters list, which is consistent with what the EU has done, where they removed it from their tax havens lists in 2018. Those are the amendments that are coming. So if you have questions about those, you can, I suppose, also ask us at this time.

okay committee any questions Representative Camacho thank you Mr Chair I tried to listen intently to the entire opening so if I missed it I apologize But I have some concerns about the repeal of Section 20, the use of tax exemption for spaceflight. Spaceflight and space-related industries are increasingly becoming a huge part of Colorado's economy. A lot of my constituents work in that space. I would love for more work to be done there so that credit can continue to be available to people in Colorado. I understand that it may not be used now, but hopefully we can find a way forward, and I would love the sponsor's opinion on that.

Thank you, Mr. Chair. Yes, you missed it. I did say publicly that this is an area that we are going to continue working with you after the bill passes to see what's possible for the continuation or the re-ignition of this tax credit. Thank you, Mr. Chair. I will just also add that the aeronautics industry and the space flight is important in my district as well, and we have a number of businesses, so I'm happy to continue to work on that with you. President Camacho.

I appreciate making the record really clear that we're going to continue to work on that so we don't have to go through a few minutes of testimony to find where that is. So I appreciate it.

I think I got everything, but if you could start over from the beginning, I wasn't paying attention.

This is a lot. It feels like the Baskin-Robbins of Bills, and I think there's exactly 31 different flavors. So I wish we would have this. I counted 31. I get 31 black dots. So it seems like these are all very significant policy discussions. So I'm a little concerned about how we're cramming them all together into into one.

I know that you don't like to pass a lot of bills during the session, and you've said so on the mic, so we were just cramming it all into one bill so that you only had to vote on one bill. No, I'm just joking. This allows me to vote no on 31 bills at one time. I appreciate that efficiency.

Thank you, Mr. Chair. Could I dialogue? I just have four quick areas. It will go quicker, I think. You may. So we could spend maybe 30 minutes on every one of these sections and be here forever, but I'm just going to pick out like four sections to look into. So the electric vehicle credit, it's my understanding the reason we're doing that is to incentivize the purchase of electric vehicles. but do you have any data on how many marginal vehicles these credits will allow or all the money and the rebates going to people who would already buy them?

As far as when you're talking about marginal, so is it somebody who would already buy one or somebody who wouldn't, I will say that I think that's hard data to collect.

And then we'll get a little quicker then. So the TABOR, it looks like most of these credits do not have TABOR triggers or we're removing them. in a fiscal year when we would have no TABOR surplus, which happens, does that not mean those credits will automatically take away from Medicaid and K-12?

Thank you, Representative Marshall, for the question. I think it just depends on how the credit is structured, and certainly if we are under the TABOR cap, it is a different conversation, and you've highlighted that. So I think what we are trying to do is, you know, there are many tax credits that are available in Colorado statute, and we're trying to make sure that these tax credits sort of are effective and are well utilized, and therefore are maximally benefiting Coloradans and reflective of our values. So that is the purpose of the bill, and that doesn't really change the nature of our – it's meant to be revenue neutral in that way. And so then on the whole, the same amount of money would be available regardless of whether this bill would pass or not.

Thank you, Representative Marshall.

Representative Camacho.

Representative Garcia. Representative Camacho.

Representative DeGrois.

I think we'll just have to agree to disagree on that this is a bad idea.

My name is Caroline Nutter, and I'm the policy manager at the Colorado Fiscal Institute, a nonprofit, nonpartisan research organization that advocates for widespread economic prosperity. I am here to testify in support of HB 26-1289. CFI has long supported legislative efforts to evaluate and clean up Colorado's tax code. In 2016, we supported a bill that requires the Office of the State Auditor to conduct evaluations on state tax expenditures to determine if they are meeting their intended purpose and accomplishing their designated goals. And in 2021, we supported HB 1077, which created the Legislative Oversight Committee concerning tax policy, which studies tax policy and is required to develop and propose legislative recommendations that they believe will make our tax code more effective. HB 1289 continues this tradition of regular evaluations and maintenance of our tax code, making adjustments to a variety of tax expenditures based on recommendations of the Office of the State Auditor and administrators of various tax expenditure programs. For example, Colorado just eliminated the state sales tax vendor fee, so eliminating the vendor fee for the sale of cigarettes, tobacco, and nicotine products would ensure consistent treatment across all product sales. Additionally, this bill makes changes to corporate income tax. Currently, multi-state corporations can shield their U.S. income from state taxation by assigning some of their property, payroll, and other assets to subsidiaries that are mainly filled with foreign income. If at least 80% of the subsidiary is filled with foreign income, which states typically do not tax, then all of that U.S. income, that leftover 20%, escapes state taxation. Most states require all income from domestically incorporated subsidiaries to be considered income for that state. Following the multi-state tax commission recommendations, this bill eliminates that rule called the 80-20 rule and brings us in line with the rest of the country. We ask for a yes vote on this bill, and we're happy to answer any questions. Thank you.

I'm Dominique Gomez. Will Torres had to step out. Apologies.

But if I can speak on his behalf.

Thank you. Thank you so much for having us. My name is Dominique Gomes. I'm the Deputy Director of the Colorado Energy Office, and thank you to Reps Garcia and Brown for bringing this important legislation. We're here today in a support position, and this legislation aligns with the mission of the Energy Office, and it would really improve the efficacy and usage of the carbonization tax credits that were established in 23-1272. First, the bill makes some crucial changes to the EV tax credit. Recognizing the changes in the end of the federal EV tax credit, this bill proposes some creative solutions to bolster and make it more effective. It does so by reducing the amount of vehicles that qualify, and with those savings, it doubles the amount of the tax credit for tax years 27 and 28. Additionally it expands the tax credit adder for the lowest cost vehicles to include more vehicles as prices have shifted in the market These changes are a valuable way to continue to support electric vehicle adoption Second the bill addresses aviation decarbonization by seeking to transform the sustainable aviation production credit into a purchase credit. This is a better way from what we've heard from RMI and industry stakeholders to change the SAF tax credit to a per-gallon purchase subsidy, and it's the most impactful short-term policy lever Colorado can deploy to catalyze SAF use and stimulate long-term production. Third, we support the provision to allow existing resources for the industrial tax credit to be utilized for the geothermal tax credit. Demand from that original $35 million allocation has been very high, and broadening the allowable uses of the much larger industrial tax credit will allow the state to continue to support geothermal electricity and thermal energy networks. Finally, the bill allows us to maintain predictability and effectiveness for the heat pump e-bike and EV credits by removing triggers that would cut the credits in half in future budget years. We also support L001 that's in committee today, and we'd be happy to speak to any questions, and I would like to note I have some colleagues online who might be able to get into some more

Hi, everyone. My name is Mickey Davis, and I'm the Community Food Access Program Manager at the Colorado Department of Agriculture. I'm proud to oversee this tax credit program, which has had an immense impact on healthy food accessibility, small food business viability, and connection to Colorado agriculture in the first two years of its existence. This has been enjoyed in both rural and urban underserved areas of the state. These investments have resulted in over two and a half million dollars in increased sales for these food businesses and hundreds of thousands of dollars in increased sales from customers shopping with SNAP. The equipment purchases incentivized by this tax credit have also resulted in an increased variety of healthy food available to buy, lowered prices of healthy foods, reduced spoilage of perishable goods, lengthened store hours, extended growing seasons, and created jobs for Coloradans. We've done a lot of learning in the first few years of administering this program, and we're in support of the proposed changes, which will create administrative efficiencies, ease eligibility requirements to align with the program goals. The proposed changes will also ease the burden on farming applicants and extend this opportunity to distribution businesses, acting as the link between Colorado Ag and retailers. We found that there are farms that are advancing the goals of the Community Food Access Program but are selling into charitable food programs or to schools. These changes will make their equipment eligible for tax credit. And these changes will also help put some guardrails on the program so that no single business can receive all of the available funds for credits. With these improvements, we're confident the Community Food Access Tax Credit Program will continue to build on the momentum it's picked up in its first two years. and more efficiently and effectively help Coloradans in low-income, low-access neighborhoods by supporting small grocery stores, farms, and food hubs.

Sure. Thank you. Chair and members of the committee, I'm Wendy Peters Muschietti, Executive Director at Nourish Colorado testifying in support of the proposed changes to the Community Food Access Program through 1289 Informed by years of working with small farms food aggregators small retailers we work closely with partners and sponsors to develop and pass HB 22-1380 and HB 23-1008 to create the Community Food Access Program as it is now. The intent of HB 23-1008 was clear. increase the capacity of small local retailers to store and sell nutritious food, lower prices for consumers, reduce food insecurity, and keep more economic activity within local communities. Despite this program's strong foundation, implementation has shown that structural and administrative barriers are limiting participation by the very businesses and producers the program have designed to support. 1289 fixes these challenges by making targeted tweaks to better meet the intent of this program to include food hubs that aggregate local products and sell them to schools and retails, to include small stores up to 22,000 square feet, and to include any farmer that is selling to schools or food banks, for example. Two partners of ours illustrate the need and opportunity for this expansion. One is a hydroponic greenhouse in southeast Colorado that grows quality food year-round. They've been selling into multiple area schools across the southeast, but have not been eligible for the tax credit because they have not been selling directly to a small store serving a low-income area. The tax credits could now help them cover the cost of purchasing a boiler or other infrastructure necessary to maintain and expand their hydroponic greenhouse. We're thrilled that farms like this that are already feeding incredible food to area school children may soon be eligible for these impactful tax credits so they can keep on doing so. Another example comes from a Metro Denver Latin American market with whom we've been working to launch one of our SNAP produce bonus programs. They have stores in Denver and Aurora with more planned and their stores exceed 10,000 square feet. They're locally owned cultural centers in their neighborhoods and committed to providing snapshotters with fresh, high quality food. And with the changes in this bill would now be eligible for the tax credit, even with their size and growth. They're a perfect example of the kind of food access site we want to benefit from this tax credit by being able to maintain and improve equipment needed to provide fresh and perishable foods. The proposed updates do not change the core purpose of the tax credit program. Instead, they ensure the program can reach the farmers and retailers that are already expanding access to healthy nutritious food in underserved communities, schools, and food banks. Please vote yes on this important bill, and I'm happy to answer any questions.

Thank you, Mr. Chair. So, Ms. Gomez, I'm sorry to see Director Tours not here, but I just have a continual question for him, which is in accordance with the 2019 legislation that requires climate goals to be cost-effective so that we can, I mean, it requires them to actually exist and be cost-effective so that we can make a cost-benefit analysis, and then here we are looking at the cost-benefit analysis of these tax credits. and so absent the uh the charade of the social cost of carbon if i round up a magnitude and treat it as linear instead of logarithmic 100 of 33 degrees celsius 0.1 divided by 3300 is 0.001 degrees celsius so that's the maximum again rounding up magnitudes and then treating it as linear um what exactly are we going to for the cost what exactly in terms of climate degrees Celsius, does the Colorado Energy Office expect to happen with the uptake of electrical vehicles, and are the pollutants from that, which are displaced to other countries, third world countries, slave labor, et cetera, are those factored into the overall equation? Deputy Director Gomez. Thank you for the question, Reptograph. We are happy to send some cost information that we've sent in the past, cost-benefit analysis on climate policy in general. I don't have a specific temperature impact of these EV tax credits ready to provide to you today, though. Representative DeGraph. Actually, I just wanted to see Brett Marshall try to talk while he's got his mouth full. So, okay, yeah, I do appreciate the fact that you sent absolutely nothing in the past as far as cost-benefit analysis. So let's talk about aviation fuel. You're talking about the cost is over four times the jet fuel, and probably it's the majority cost of aviation. And what kind of uptake are you – I mean, why on earth would anybody spend four times more on fuel for $1.50 credit? And again, what are we going to accomplish by that? Because, again, the very basis of all these is that you have a climate goal, which would be a degree's temperature, and that it be cost-effective. And how do we know that we're getting something cost-effective if you don't even know what temperature? Madam Deputy Director. Thank you for the question, Reptograph. On the SAF tax credit in particular, I would defer to several industry partners that have been particularly interested and gave a lot of input on the current design of the tax credit and really recommended this new design. So there are both airlines as well as airports in the state of Colorado that are eager to take up this tax credit and that we believe would use it. So they do see value in this tax credit. It is certainly a nascent market. SAF fuel is currently more expensive, which is why this tax credit may provide some value. And I just also want to point out that my colleague, Will Maness, who focuses on the industrial sector, might be able to answer more specific questions if you have any. Thank you.

Thank you, Mr. Chair. The Colorado Energy Office, do you have any reason to doubt that the Congressional Research Service with four different objective studies would find 67% to 77% of the UV credits just going to people who would buy it anyway? Because then the follow-up question would be, what does Colorado have as any evidence where we're doubling it from 1,000 to 2,000, which is less than a third of what the feds did, would have a legitimate impact on increasing sales, or it's just money going into high-income taxpayers' pockets? Madam Deputy Director. Thank you for the question, Rep. Marshall. So I certainly have no issue with the CRS findings. I will note that the changes that we see proposed in this bill to us address some of what you are saying. So it really does two things. One, it lowers the MSRP that qualifies for this tax credit. So generally speaking, people who have more income and buy more expensive vehicles may not be swayed by a small tax credit, but people who may be looking at a lower cost tax credit or lower cost vehicle overall, that tax credit is a bigger portion of their overall purchase price. So that's a piece of it. The second piece is by specifically focusing on that lower cost vehicle. There a number of different programs that can be stacked together particularly for income qualified families So we have in addition to this tax credit there also a low MSRP adder and then there a number of other programs that we run that provide additional incentives for income-qualified families. So we have seen as evidence a really market-breaking adoption of EVs in the state of Colorado. Over the last year, we were the number one for adoption in several quarters, and so that is the evidence that we look at, but I would certainly not disagree that many of the EV tax credits, especially in the federal level, did go to people who might have purchased them anyway. And again, my colleague Mike Salisbury is here with more technical questions on the EV tax credit. Representative Zokai. Thank you, Mr. Chair. Just as a follow-up on the EV tax credit conversation, are there other reasons we might want to make it attainable for a family to purchase an EV outside of just climate goals? Deputy Director. Thank you for the question, Representative. Yes, I would point to two things. One is just in addition to the actual climate goals, the air quality impact is also front of mind. As you know, air quality is a big problem throughout the state of Colorado, particularly in the Front Range. And second, we do see the lower cost of ownership being a major selling point for families across the income spectrum, but especially low-income families. We know that gas prices are rising, but even with low gas prices, we tend to see cost of ownership with EVs being very competitive and being a cost saver for families. Thank you.

Thank you, Mr. Chair. Just for Mr. Salisbury, since I'm so busy there looking up all these things, so I am still curious what our actual climate goals are since we're talking about achieving them. I'm hoping that, you know, before I get to the end of my fourth term here, that will, I mean, I'm only in my second term, but I'm still absent any actual climate goals. So since you had the opportunity to look them up, could you just tell us what the climate goals, what that will achieve in terms of presumably a reduction in degrees Celsius from the uptake of these EVs, since that's the basis for this tax credit by which we are bilking the other citizens of Colorado. Mr. Salisbury. Excuse me. Thank you for the question, Representative. I did not have a chance to look up that specific number. I do know that electric vehicles are a great way for us as a state to reduce our climate impact, reduce greenhouse gas emissions. The transportation sector is a very difficult sector to decarbonize, and without that, we are very, very unlikely to hit the state's climate goals from the transportation sector without high levels of EV adoption.

Mr White nice to see you sir Nice to see you too Representative Hit the little button Two minutes Thank you Mr Chair members of the committee My name is Parker White. I am the director of the Colorado Competitive Council. We are formally opposed to House Bill 26-1289, though I want to note at the outset that we are actively working with the bill sponsors and the administration in hopes of reaching agreement on several positions. There are several elements of this bill that raise concern for our members, including reductions to enterprise zone incentives that have historically encouraged investment in local and rural communities, as well as changes affecting incentives tied to spaceflight activity, an industry where Colorado has worked hard to build national leadership. And on that front, before moving on, I want to note that Colorado is already home to a certified horizontal launch facility in Adams County. As the nation grapples with the rapidly increasing need for launch capacity for both defense and commercial purposes, growth surrounding both horizontal and vertical inland launch capabilities will be a growth area nationally that Colorado does not want to cut itself out of. I'm happy to talk about space policy in this regard with any of you and closely track aerospace and defense conversations at the federal level, so I'll be available for questions. But our principal concern is the language governing corporate income tax and the treatment of foreign source income in Sections 5 and 6, particularly as it relates to the Bell's reference to the Water's Edge Standard. As currently drafted, the language would open the door for foreign-based corporate income to be counted within Colorado's income or corporate tax base. That would represent a significant shift in how companies calculate their tax liability and would create a substantial amount of uncertainty about whether international earnings would be swept into Colorado taxation. That's an issue that can't be viewed in isolation. It must be considered alongside other recent legislation moving through this body that substantially increases corporate tax liability. Multinational companies make location decisions based on predictability and capital liquidity. And when tax treatment becomes uncertain, investment decisions slow, expansion plans get reconsidered, and capital flows to other states. We look forward to working with the sponsors and the administration as we move forward. Thank you.

Chair, members of the committee, thank you for the opportunity to testify today. My name is Chris Sparrow. I'm the general manager of the McLean Western in Longmont. McLean Company is a national wholesale distributor that supplies thousands of convenience stores and retailers across Colorado with food, beverages, and other products, including tobacco products subject to Colorado's excise tax system. McLean has two distribution centers in Colorado with a total of 817 employees. 242 of those employees are professional drivers who distribute to our customers all over the states. I'd like to briefly address the provisions of Colorado House Bill 26-1289 that repeal the distributor allowance for collecting and remitting tobacco taxes. Under Colorado law, distributors like McLean manage the cigarette tax stamp system in collaboration with the Colorado Department of Revenue. We serve as the state's agent in collecting and administering the excise tax on behalf of the state. That means we purchase cigarette tax stamps from the state, pay the excise tax up front, physically apply these stamps to every pack using specialized equipment, track inventory, and report that activity to the Department of Revenue. Importantly, the tax is often paid before the product ever reaches a retail store. In other words, distributors are effectively the state's collection point for the cigarette excise tax. The small distributor allowance that exists today helps offset the administrative and financing costs associated with performing these responsibilities We understand that the legislature recently repealed the retailer vendor fee during last year special session and we have heard the view that that bill aligns with that change However, the distributor allowance is fundamentally different. Retailers would receive a fee for simply collecting and remitting sales tax as part of their usual point-of-sale process. Distributors, however, must perform several operational tasks to manage the cigarette tax system by purchasing stamps, prepaying the tax, physically stamping each pack, maintaining compliance systems, and reporting their activities to the state. These functions are required by law and are essentially how Colorado collects its cigarette excise tax. We would welcome the opportunity with the committee to discuss alternatives, including further evaluation of the compliance costs associated with administering the tax system. Thank you for your time, and I'd be happy to answer any questions.

Yes, my name is Bill Roach. Thank you for removing Section 17. I just want to say in light of the fact that it's the 150th anniversary of the state where we're known as the Centennial State, I'll still be able to tell my grandchildren that we will hold the historic moniker of the Silver State, and I'm grateful for that. Thank you for the common sense move.

Oh. Okay. I'm prepared for that. Just want to be clear.

Again, I just want to thank you. Please hit the button. You got it. Okay. Again, I just want to thank you for not putting the tax on the silver and gold in, because that's going to save a lot of businesses, a lot of hassles. Okay.

Is it okay to say thank you very much, but we don't need to testify due to the dialogue? Is that appropriate?

My name is Ashley Sandoval. I just want to thank you for your consideration. Thank you for taking out Section 17. That's all.

Thank you for removing Section 17 of the bill. My name is Chad Roach. I'm founder of Cornerstone Capital, and we very much appreciate this. We work in a broad degree of finance, both venture capital, private equity, and precious metals. And our clients would have taken all this volume into another state, and we just appreciate not redirecting that capital flow out of the state of Colorado. Thank you.

Hi. I'm Elizabeth Haskell with the Colorado Municipal League. The league is in an amend position today. We have two sections. The first section that we're concerned about is Section 2. This exempts the building materials for rail from use tax for municipalities. My members are concerned about that because for some smaller municipalities, their sales or use tax is the only tax they can collect. They maybe don't have any property tax or any other opportunities to raise revenue for themselves. And then Sections 21 and 22, we do support those sections because that will add money to the HUTF, which we will benefit from.

Thank you, Mr. Chair and members of the House Finance Committee. My name is Kelsey Johnson, and I'm Vice President of State Government Affairs for the Global Business Alliance. I'm here to request the removal of Section 5 from HB 1289. Thank you for the opportunity to share our perspective on the negative impacts that this tax policy would have on the state and its budget crisis. The Global Business Alliance, or GBA, proudly represents over 200 American companies with a global heritage. The mission of GBA is to defend and promote an open economy that welcomes international companies to invest in America. Our members help grow Colorado's economy and provide high-quality jobs in local communities across the state, employing over 132,000 people in Colorado. with over 40,000 of those jobs in the manufacturing sector. There are over 1,100 international companies with a physical presence here in Colorado. Employment in international companies in the state has increased by 9%, while Colorado's overall private sector has increased by 5% over the past five years. Nationally, on average, these firms pay more than $92,000 in annual wages and benefits above the American average. Colorado's foreign direct investment has outpaced other types of investment in job creation and growth. This could all be at stake if Section 5 remains in the bill. House Bill 1289 clarifies some existing tax provisions, including Colorado's existing Water's Edge combined reporting provisions. Unfortunately, the new changes offered in Section 5 result in a system that is an outlier among the 27 states with Water's Edge combined reporting. All those other states have protections in place to ensure income that is not subject to federal tax, is not subject to state tax. If Colorado adopts Section 5, the state could see unpredictable revenue generated from the change, but most likely a significant loss in revenue. Not only that, the state could see a dramatic increase in audit activity, prolonged litigation exposure, which creates risk for Colorado and Colorado taxpayers. It also creates significant complexity and results in double taxation as companies would be taxed on the same income both in their home country and in Colorado. In the past, this type of policy led to international disputes with states. If there is a desire to clarify some of the provisions, GBA recommends amendments to address your concerns consistent with a Water's Edge tax regime like all other states. We would be happy to work with you to identify specific proposals to accomplish such goals. Please don't risk the foreign direct investment in jobs that it creates by continuing to consider Section 5. Please amend it out of the bill. Thank you for your time, and I will stand for questions.

Thank you, Mr. Chair. So the Colorado Municipal League, you made a comment that piqued my interest. So with the rail sales and use tax exemption, I would assume there probably are a lot of small rail municipalities in the state that if we took that off and they started building passenger rail they would lose out on quite a bit of any kind of revenue and yet their services in the municipality would be inundated with a ton of construction and everything So is that what you're trying to get at? Because, again, I thought that was a...

That's exactly what I'm talking about.

Chair, members of the committee, thank you for the opportunity to testify. My name is Catherine Erdogan. I'm the CEO and co-founder of Common Harvest Colorado LLC, a local food hub based in Denver, sourcing from over 75 farms across the state and distributing throughout the Front Range. I'm here to support HB 26-1289. Common Harvest Colorado is a small business working to make fresh, local, nutritious food common for all communities regardless of income. Over 79% of our annual revenue is from sales to K-12 school districts, food pantries, and county health departments serving low-income and low-access communities. With the passing of Prop LL and MM, we anticipate huge growth in sales to schools in school year 26-27 and beyond. This work requires us to make significant investments in costly equipment, such as cold storage, refrigerated delivery vehicles, and software upgrades to our e-commerce platform. These infrastructure investments are vital to our operation, but we would not be eligible for the Community Food Access Tax Credit without the changes made in HB 26-1289. In addition to the expanded eligibility to the tax credit as a food hub, the ability to request the tax credit quarterly instead of annually is crucial to maintaining cash flow. As an intermediary between producers and consumers, we need to pay our farmers on time, but too often are waiting weeks and months for customers to receive funds through reimbursable grants before they can pay us, so cash flow is always tight. Common Harvest Colorado works to build a more sustainable and equitable food system that supports regenerative agriculture, local economies, and ensures all Coloradans have access to fresh, nutritious local food. The passing of HB 26-1289 is a critical lifeline for small businesses like ours in fulfilling this work. I appreciate your time and consideration of this matter, and I urge you to vote in support of HB 261289.

Thank you, Mr. Chair. Question for Mr. Pence. we just heard some testimony around section 5 and the concern of double taxation I wondering if you could address those concerns Mr Pence

Representative Zokai, I would say that there's two things that protect against multiple taxation. The first is that all we're talking about here is how we constitute the group that we're going to look at. And from there, we still have to go through the apportionment process, which formulary apportionment limits the income that we're taxing to the income that was earned within Colorado. In addition to that, Colorado has a fairly unique tax expenditure called the foreign source income exclusion that operates similar to the foreign tax credit. It takes into account foreign taxes paid under the federal foreign tax credit and converts them into a subtraction. So to the extent that these multinational companies are paying tax to foreign countries, we'll take that into account and effectively give them credit for it.

Chair and members of the committee, thank you for the opportunity to speak. My name is Aaron Meshke. I live in Boulder and represent myself. There is no way to adequately cover a 70-page bill with a 30-page fiscal note in two minutes, especially when it requires an advanced finance degree to digest all of the changes. I will start by saying that if a bill is over 20 pages, it almost certainly doesn't mean the single subject requirement. Just because all of the things in HB 26-1289 relate to taxes doesn't mean they qualify as a single subject because there is everything in this bill from shifting tax credits, expanding EV rebates, and wildfire mitigation to electric lawn equipment and impacts on aviation fuel. Even with generous crossover, this bill should be at least 12 separate bills, but the more you cram into one crazy package, the more you can trick people. A joke was made about this being government efficiency, but it actually limits conversation, participation, and full representation that is necessary on these distinct issues. This can be seen in all previous testimony, as most witnesses only addressed one topic of the original 39 sections. In a focused bill, two minutes is short but can be sufficient. Not so with such a wide-reaching measure. The different parts of this bill should pass or fail on their own, and almost every one of these changes should be brought to taxpayers because they are tax increases, even if the Robin Hood bait and switch happening in so many bills this session balances out in the fiscal note. At the end of the day, Colorado legislators have decided the state needs money more than its hardworking citizens and businesses and is prioritizing subsidization of EVs over maintaining federal tax breaks. The redistribution this session is out of control and these socialist policies will fail like similar attempts around the country. The broad changes in HB 26 will impact the taxpayer bill of rights significantly while also covertly raising taxes on a number of businesses and citizens So it should have to go to voters I ask for your no vote on this bloated bill Thank you

All right. Good afternoon, Mr. Chairman, members of the committee. Nick Steingart, I'm the Director of State Affairs with the Alliance for Automotive Innovation. We're a trade association of the leading auto and battery manufacturers. Here today in an amend position on the bill, I want to start off by saying I know it's a big bill. A major tax rewrite is not an easy task in that our comments are limited to the EV purchase incentive. You know, it's no secret that Colorado is one of the leading states for EV adoption, and that didn't happen by accident. The state has consistently put policies in place to support EV adoption and the ownership experience for EV drivers. Of course, one of those policies that's been in place for a handful of years is the EV tax credit, which I would argue is the major driver for the increase in EV adoption over the last couple of years, which had been the largest increases of any state in the country. As we've heard, Section 7 makes several changes, including lowering the MSRP cap from $80,000 to $50,000. We certainly understand the intent behind the proposed change, but I do want to stress that vehicles in that price range are not just luxury nameplates. That could impact thousands of purchasing decisions, including families considering a mid-range SUV, rural drivers thinking of making the switch to an electric pickup, small business owners looking at delivery vans. In fact, 48% of EVs sold in Colorado are between $50,000 and $80,000. And on top of that, the average MSRP on an EV sold in Colorado last year was $56,000. So in other words, half of the EVs sold today would be ineligible for the incentive if this change remains. I will close by saying we're not opposed to making changes to the MSRP cap. That's why we're here in an end position, but a little concerned that this goes too far and will preclude a lot of would-be buyers from getting into an EV. And thank you for the time this afternoon.

My name is Gary Bailey. I'm the Executive Director of Colorado Wyoming Fuel Marketers, Petroleum Distributors. I want to talk a little bit about allowances today. Since Senate Bill 260 In some other ancillary legislation, fuel marketers have been assessed the better part of $270 million since 2023. Once Senate Bill 260 fully goes into effect, we'll pay $170 million a year through the RUF and an extra $62 million a year through the bridge and tunnel enterprise. And we agreed to that because we support transportation funding. The only thing that we asked during Senate Bill 260 was maintaining our allowances on the underlying fuel tax. Compression allowances are scientific, and when LSA did their auditor report, they basically did a survey of surrounding states, and surrounding states have different compression allowances based on temperature, altitude, and volumetric thresholds for the amount of biodiesel, the amount of ethanol that's contained within the fuel. Bad debt allowances are also important. Similar to the nicotine allowances, fuel distributors pay excise taxes before it gets to retailer, before it gets to governments, before it gets to farms. Because it's more efficient for the state, regardless of whether we get paid back that tax or not. And so that half a percent allowance on just the excise tax is super important to maintain. I think it's important for the committee to think about what happens when you remove the only fundamental difference between the fees that we pay that go to the HUTF and the excise taxes that we pay that goes to the HUTF. And what that means for the long-term sustainability of the $170 million which will be indexed that goes to the HUTF when fully implemented. I think that the SAF, as well as the electric vehicle credits, need some substantial review. But I think I'm over on time.

Thank you, Mr. Chair and members of the committee. My name is Megan Dollar, and I'm here on behalf of the Colorado Chamber of Commerce. We're here in an amend position. We appreciate what the sponsors and the administration are working on in this piece of legislation. and certainly appreciate the changes being contemplated in Section 6 of the bill. But we do have concerns from our members with giving the executive director and the Department of Revenue broad discretion when it comes to Water's Edge elections. When corporations choose worldwide combined reporting or the Water's Edge election, they're looking for tax certainty. And the feedback that we've gotten is that giving that amount of discretion to the department does not allow for certainty at all. We are working with the department and the administration, as well as the sponsors, to find language, compromise language, that would create more certainty for businesses should the bill pass. Additionally, I do also want to mention that we've gotten feedback from our aerospace members that there are concerns with Section 20 that removes the sales and use tax exemption for property used in spaceflight. They have acknowledged that this has not been used often in the past, but believe that there are projects coming up where this could be really beneficial. and really shine a light on Colorado. So with that, I'll end my testimony. Please don't ask me any questions.

Good afternoon, Mr. Chair and members of the committee. My name is Suzanne McDonald. I'm the president of the Cormark facility located in Aurora, Colorado. Cormark is a wholesale distribution company that services the convenience store industry nationwide Cigarettes are one of the primary items that we sell As part of our operation we are responsible for collecting and remitting excise taxes on behalf of the states we serve. In Colorado, compliance requires the application of tax stamps. For wholesalers to legally sell cigarettes, we purchase stamps through the Colorado Department of Revenue, process the stamp application to cigarette packs, and report the sales back to the Department of Revenue. Stamps must be applied to each individual pack, and we stamp approximately 43 million packs of cigarettes per year. The stamping process is driven through a combination of manual labor and advanced automated stamping machines. The capital investment to complete this process, excluding stamps, is approximately $743,000 per year. This includes our stamping machines, glue, ink, security systems, rent, and labor wages. Since 2020, warehouse wages have increased 24% and transportation wages have increased 32%. Cormark's cost to administer the stamping process for Colorado is $2.5 million annually. Our current stamping allowance is 0.286%. Based on annual sales of cigarettes, our stamping allowances is $1.3 million, creating a deficit of $1.2 million. Eliminating these discounts would impose a significant financial burden on Cormark, potentially leading to lost sales and budget cuts. These changes could undermine our ability to continue providing compliant and reliable tax collection on behalf of the state of Colorado. Cormark is asking the General Assembly to amend HB 1289 to keep the discount for allowing cigarette tax stamping. Thank you for your time.

Hello, Mr. Chair and members of the Colorado House Finance Committee. My name is Alan Pesetsky, and I'm testing filing here today on behalf of the Global Business Alliance. I've been practicing corporate tax law for over 35 years, and I'm here to request the removal of Section 5 from HB 1289. Section 5 would modify Colorado's existing combined reporting rules to create an unfavorable tax environment that will deter investment and growth in the state. Colorado, like 27 other states, currently has a Waters Edge combined reporting system, and there is no reason to modify the existing system. Unfortunately, although the section retains a water's edge election, it makes changes to it, creating a system significantly different than every one of the other 27 states. This is because Section 5 comes from a model statute and ignores the fact that in every one of those 27, they vetted the language with stakeholders and modified the model to ensure that the income of foreign companies that is not subject to federal tax is also not subject to state tax. States have done this in two ways. They either only include the active business income of a foreign company called effectively connected income or ECI. This is what the feds also tax or they exclude income of a foreign company if it is exempt by treaty under federal law. One of these two ways is the way to ensure that you are consistent with other states. Section five doesn't have these modifications and would tax all U.S. source income like the model. And this will result to complications and disputes. You heard earlier from Josh Pence that there would not be double taxation for international companies. I can tell you that the reasons he gave will not do that There will still be double tax We would love to work with Josh or anyone else to ensure that that doesn happen but the language here will double tax international companies investing in Colorado. And because no other state does this, it creates huge complexity because you can't look to other states for guidance as to how to administer these rules. So I urge you to modify this because don't double tax companies risk investment and this also will result in a revenue loss of perhaps a hundred million dollars of a year by some stated studies. Thank you very much and I'm happy to answer any

Good afternoon. My name is Greg Fulton. I'm the president of the Colorado Motor Carrier Association. Our industry represents trucking companies affiliated business across state. Today, we pay 35% of all the state transportation taxes and fees, and that's one of the greatest burdens in the entire country. We recognize the importance of transportation, and we step up to the plate. Our association's here asking for two key amendments in the bill. First off, we're asking for the removal of the reduction of the fuel tax allowances. Secondly, we are asking that rather than repeal the commercial vehicle enterprise tax, credit for commercial vehicles, let this be extended by additional three years here rather than. Let me first frame this by the current situation of trucking. We're in the fourth year of a freight recession. What's this mean? It means that basically we have seen freight rates drop since 2022 by as much as 90%. We have over 100,000 trucking companies that have closed since 2022, bankruptcies were up by 35% in 2025. Upward of 200,000 trucking jobs have been lost, 30,000 of those being actually union jobs, which are the teamsters. While freight rates have dropped, operating costs, mainly because of insurance, have risen. Thus, we have the highest recorded operating costs per mile in our history. Diesel fuel has risen by almost 50% from one year ago. Heavy-duty truck sales have fallen by 13.6%. Because of the new tariffs on imported parts, newer trucks have added costs of up to $8,000. The rapid rise by more than $1 per gallon, diesel has added to the challenges for our companies. Diesel is the lifeblood of our idea. The current price is $5.07 per gallon. And for a long haul truck driver, that means to fill up his truck, it's $1,200, went from $1,200 to $1,500. The reduction in the fuel tax allowances would add to the pain as it would further increase the fuel prices distributors are forced to pass on those costs, which will further actually make it more difficult, especially for the small trucking operators, which 90% or 10 trucks or less in Colorado. At the same time, we anticipate due to this substantial increase in the price of diesel and the ongoing freight recession, we may see more failures. And so when we're looking at it, actually the thing for bad debt out there, we believe that that 0.05 or in that end of it is a very small element. Actually, it's much understated. We're going to see, unfortunately, a much larger bad debt that will be passed out of the fuel distributors.

I think one thing I will just say, it takes 30 more seconds if you don't mind, is it's more that it was a lack of information that the auditors and those have used in the past in terms of this. Secondly, we, unlike the other groups here at the panel, I know they were overworked in terms of the staff and the committee members, but we were not informed or aware that this was even being considered. At this time, when we were having the worst recession in our history, we would ask that this be continued and allow for greater opportunity to market this sort of important exception. Thank you very much.

Thank you, Mr. Chair and committee members. My name is Mary Zarmack. No problem on that, Mr. Chair. A lot of people have a hard time with it. I'm here today. I'm one of the owners of Smoker Friendly and Gassimat. We're a three-generation Colorado company based in Boulder. We have 59 stores in Colorado as well as our corporate headquarters. 47 states have cigarette stamping allowances. 27 states provide a vendor allowance for other tobacco products. Cigarette stamp discounts and tobacco vendor allowances are not preferential tax breaks. They are an integral component of Colorado's excise tax and tobacco enforcement framework. They support timely tax collection, market stability, and the state's legal duty to diligently enforce the master settlement agreement. Any proposal to eliminate these provisions should carefully weigh short-term minimal fiscal gains against long-term risks to compliance, enforcements, and legal obligations of my distributors. also needless to say I'm concerned when a distributor loses any type of allowance they work on paper thin margins as Ms. McDonald and the gentleman from McLean mentioned that's going to cause the cost of products to go up and I would like you all to reach back to EE in your mind and think about the important legislation that hangs on the passage of EE and And that is free pre-K. If my prices go up, I'm not going to just have my 7% decline that I've been seeing as the years. That's kind of evened out now. We just see a month to month 7% decline after the large tax increase. But even more because the prices, they'll be pushed against the wall to raise their prices to make up for it. They have to. So that's my concern, and that's why I am very opposed to HB 1289. And thank you for your time.

Thank you, Mr. Chair. I have a question for, and I'm sorry if I say this wrong, Mr. Pozeski? Yep, that's it. Okay, perfect. I had a question around the double taxation concerns you raised. I know that this might be different from how other states do it, but Colorado generally I think is unique in how we do our state taxes. There is still the foreign source income subtraction. Does that not alleviate those double taxation concerns? Mr. Pesetsky.

Any follow up, Representative? Okay. Representative Brooks.

Well, thank you, Representative Brooks. I mean, I guess I would say that I'd hope the committee would honor the agreement, the partnership that came out of Senate Bill 260. Look, the net effect, like I said, we're already going to be paying $40 million more July 1st, right, between the RUF, BTI, PFAS, FIRF. So this takes away $9 million. Okay, so what's the net effect of $9 million on that? I think it's more administrative. So there's all these tax exemption certificates that we manage for governments and farms and nonprofits, you know, where we float the tax for all those people instead of making them apply to the department for refunds. I think, like I said, structurally, it's really, really important that the people who are trying to help, the distributors who agreed to actually help the HUTF, not trying to disparage the industry, but the people who are actually trying to support highways, or the nicotine distributors who are trying to support Governor's pre-K program with a ginormous tax increase coming up in July. those are the people who are trying to help the state. I'm not sure why the allowances for those people are being kind of taken away. To me, I think that structurally, though, the committee really should think really hard about, without the allowances, what are the structural differences between fees and taxes relative to fuels?

Thank you, Mr. Chair. I just wanted to follow up on my question to... Oh, my gosh, I'm going to say it wrong. Mr. Pozeski? Yeah? Okay. Now that I've thought through that, So the $100 that would be the U.S. source income would be taxed in the foreign country. The subtraction that we give is for foreign income so that we don't tax it. So shouldn't the subtraction be in the foreign country? Does that make sense?

I'm not sure I'm understanding that. I would think, because the foreign company that receives it isn't, has nothing to subtract it from. They don't, it's US source income. Now they wouldn't even be filing a Colorado return. With the changes to Section 5 they be filing a return that includes of income income but they wouldn get this subtracted because it foreign source income under that definition

I think my question essentially is that the double taxation seems to be happening in the taxes paid in the foreign country rather than here. We're giving the subtraction when it's the flip side of that, right? No. Again, that $100 of income that's received, let's call it by a U.K. company, received $100 of income. It's going to be taxed at whatever the U.K. tax rate is. It's like 25%. But because of this change, it'll also be included in the Colorado taxable income, unlike any other state. and then it will be taxed under Colorado's tax rate, whatever that is. So it's actually taxed twice, once in the UK and once in Colorado, and not by the feds because the feds would not tax this. The UK company would not be subject to federal tax. We could take this offline too. I don't want that. Absolutely, yeah, and I think that's in the situation where we have a headquarter here in Colorado, but I'm happy to chat more offline about this. Yeah, let's do that. But I do think that I understand what your concern is and I think that we could get there and fix that $100 question and address what the concerns that were raised by others.

Thank you, Mr. Chair, and apologies, didn't realize we're gonna be three hours over at the other committee. And I guess I came in and I was hearing the testimony on some of the vendor tax fees and fuel fees and everything else. So there's a multitude of fees that we're repealing. During the special session, we repealed one of the other vendor fees, certainly for the restaurants. It was a big, significant hit to the restaurant's bottom line because they still had to collect their taxes. For whoever would like to chime in, or if there's multiple people, what is going to be the net impact to your business, and then how will that get passed on, and what's going to be the net result to the consumer? Who can talk to that? Who wants to answer that? Not Megan Dollar. Mr. Fulton.

And then, Mrs. Armack, I think you also wanted to answer that?

That's all of our time for this panel. Much appreciated. If we could have Travis Madsen, and then online, Emily Setolkowski, Michelle Meyer, or Mayor, Natalie Menton, and Michael Neal. Mr. Badson, if you could hit the little button. Floor's yours for two.

Thank you. If we could go online to Michelle Meyer, please unmute yourself.

Okay. Well, next we'll go to Natalie Menton. Please unmute yourself. The floor is yours for two.

considerations. Thank you. Thank you. Please hold for questions. I see we have someone here from Metro Caring. Can you unmute yourself? The floor is yours for two minutes.

Thank you. Next, we'll go to Dr. Michael Neal. Nice to see you, Mr. Neal.

Committee, any questions for this panel? Representative DeGraph.

Madsen.

Mr. Metz.

So all of those other things aside, you're making the decision that you say for this bill, all of those things aside, it's worth it for the Colorado taxpayers to pay this. And I'm just saying we need to say what the benefit actually is to them. And a climate goal would be a degrees Celsius. So you're saying it's in terms of climate goals that this is a value added. So I'm just asking because the Colorado Energy Office, who should be telling us, can't. So since you made the definitive statement, I'm asking you, what is that climate goal? Degree Celsius that goes in the denominator. Do you have one? Do you know one?

Thank you, Chair. Thank you, Representative DeGraff. I think the best resource I have to point you to is a report that came out in December called Affordable Climate Pathways for Colorado. So the climate goal looked at in that report is our statutory climate target, which was initiated in House Bill 1261. I might have the number of the bill wrong there. And it was modified a couple times over the years. But looking at our state statutory climate target and then evaluating the tools we have available to achieve that target, energy efficiency is a core one. And that includes both electric vehicles, which are up to five times more efficient than combustion versions, as well as heat pumps. We can save money and we can reduce pollution at the same time. And I'd be happy to share a copy of that report with you after the hearing.

Is there a question, Captain? what would you base those deductions on if you don't have an actual climate goal

All right, excellent. Thank you. Last call for witnesses on 1289. If you've not been called but would like to testify on 1289, now's your chance. Come on down. Going once, going twice. Witness testimony phase is closed. Bill sponsors I understand you might have some amendments

Second by Madam Vice Chair Tell us about L001

Committee, any questions on L001? Okay. Is there any objection to L001? There's been an objection. Please poll the committee. Representatives Brooks.

Macho.

DeGraff.

Garcia.

Gonzalez.

Hartsuk.

Marshall.

Stewart.

Zocay.

Tatone.

Mr. Chair. Yes. Amendment 1 passes 7-3 with one excuse. Sponsors, any other amendments? Is it okay, Mr. Chair? It sure is.

I'd like to move L-002 to House Bill 1289.

Tell us about L-002.

Any committee, any comments on L002? I dare you.

Representative Brown.

Representative Marshall, did you want to add anything?

Any further questions or comments on L002? Seeing none, is there any objection to L002? Seeing none, L002 is passed.

Motion by Representative. Representative Garcia, second by Madam Vice Chair. Tell us about L003.

Any questions on L003? Representative Garcia, can you remind us what the PTC conversion is?

Committee, any questions or comments on L003? Seeing none, is there any objection to L003? Seeing none, L-003 is passed. Bill sponsors. Representative Garcia.

Thank you, Mr. Chair.

Motion by Representative Marshall, second by Representative Zocay.

No, it's okay. It's okay. You want to swoop in and take the bill sponsors' glory? You can go ahead and second that one. I didn't want to second that one.

Representative Garcia.

Any further discussion on L-009? Any objection to L-009? There's been an objection. Please poll the committee. Representatives Brooks.

Camacho.

The graph.

Artsock Yes Marshall Yes Stewart No Okay No No Mr Chair No that fails 5 Any further amendments? Representative Marshall.

A motion by Representative Marshall, second by Representative Gonzalez. Representative Marshall, tell us about L-10.

Representative Brown?

Representative Garcia.

Any further discussion on L10? Representative DeGraff.

Any other comments on L10? Seeing none, is there an objection to L10? Yes, there is. Please poll the committee. Representative Brooks.

Camacho.

DeGraff.

Garcia.

Gonzalez Yes Artsuk Yes Marshall Yes Stewart No Zoka No Tatel No Mr Chair No. L-10 fails. Next amendment. Bill sponsors. Oh, Representative Marshall.

Second by Representative Gonzales. Yes, Brett Marshall, tell us about L015.

Representative Brown.

Any other comments or questions on 015? Seeing none, is there any objection to 015? 015 is adoptive Any further amendments, bill sponsors or representative Marshall?

No, please don't

Okay, any further amendments? Seeing none, the amendment phase is closed Wrap up, bill sponsors, representative

Representative Garcia.

Closing comments from the committee. Representative Gonzalez.

Representative DeGrasse.

Representatives, okay.

Representative Marshall.

Tremendous work on a very difficult piece of policy. Thank you to the witnesses for heeding the committee's pleas not to pile on. I think the process that this bill has gone through shows that there's more than one way to let your voices be heard, and you did an excellent job of doing so. So just a couple notes. Representative Brown, you mentioned that the bill is multifactorial, but I emphasize that it is a single subject. That said, I am sympathetic to how complex the policy is and just want to urge the sponsors to continue sharing your work product with the public. So we are hearing from them and getting their input and honoring transparency. Just real quick, as for our climate goals, it's March in Colorado, and it's going to be in the high 80s this week. According to NASA, there is unequivocal evidence that Earth is warming at an unprecedented rate and that human activity is the principal cause. Our ski runs are muddy hiking trails. And when our children and grandchildren look back on this time and ask what we did the answer will unfortunately be not enough With that a proper motion routes 1289 as amended to the Committee on Appropriations Representative Garcia.

The second is going to go to Representative Stewart.

Representative Stewart, please pull the committee. Representatives Brooks.

Macho. Yes.

Gonzalez. Nope.

Marshall. No.

Zoka. Yes.

Mr. Chair. Yes, that passes six to five. Thank you. All right, folks, keep an eye on your calendars. We will see you Thursday upon adjournment. Until then, we stand adjourned.