Revenue, Reform, and Resistance: Colorado’s Fiscal Crossroads

Meredith: 00:00:35

Welcome to SALTovation.

The SALTovation show is a podcast series featuring the leading voices in SALT where we talk about the issues and strategies to help you make sense of state and local tax in this episode, Ed.

Intro: 00:00:48

challenges facing Colorado in: 2025

From a growing budget deficit to controversial proposals like rolling back software tax exemptions and ongoing debate over retail delivery fees, Ed unpacks the balancing act between funding public services and maintaining a business friendly environment in Colorado and how this balancing act impacts policy, politics and practicality at the Capitol.

Meredith: 00:01:21

Ed, thank you so much for joining us again on the SALTovation Podcast. It's good to have you back four years later from your original visit.

Ed: 00:01:28

Thanks for having me back. Clearly I didn't ruin the podcast, so I'm happy to.

Meredith: 00:01:32

You just made it better.

Ed: 00:01:33

I'll see if I can right you.

Meredith: 00:01:35

Provided that longevity that we needed. So you are no longer with the Denver Business Journal like you were when you first joined us. You are now with the Colorado Chamber.

And so can you describe to our listeners your new role?

Ed: 00:01:50

Colorado Chamber in February: 2023

One is I'm the VP of Strategic Initiatives in which I that help the Chamber figure out ways to move forward on issues that help businesses.

A big focus of mine has been workforce development and trying to work to figure out how to better train our students for the jobs that are needed out there.

But the other hat I wear, which probably is more relevant to today's conversation, is I write a new site called the Summon Substance that focuses solely on statewide business partners policy and how it affects people's ability to operate in Colorado.

And while I work for an interest group, I tried to write everything down the middle because my goal is to get people talking about business issues and I figured this is the best way to do it.

Meredith: 00:02:45

Excellent. Thank you so much for your work doing that. And I guess how did you come up with that title or was it given to you?

What's the preface of the Summon Substance title?

Ed: 00:02:58

Just the idea is that the summon substance refers to when you have a whole of something, both the higher level details and the the nitty gritty details. And and that's what this site is. It is. It is not for the faint of heart. It is for people who really want to jump into business policy.

As I will go into depth about various bills, various rule makings, anything that generally the state government Sometimes the city government or federal government is doing that is going to affect business. So if you are looking for in depth business policy news, we have the sum and substance of all that. On the sum and substance.

That's where the name came from.

Meredith: 00:03:38

Love that.

Judy: 00:03:39

How was that a pivot from the Denver Business Journal? Was it different work or is it pretty similar?

Ed: 00:03:45

It's similar in some ways, different in others. It's the depth that's different. At the Denver Business Journal I covered six different beats.

State government being just one of the things that I covered. And so I didn't have as much time as I wanted often to really dive into state government, which was my favorite beat of all that.

It's the one I think that affects people the most. Yeah. And so, so launching the sum in substance allows me.

they may not necessarily want: 1500

This, I have no such limitations on this one and I do go into great depth on, on everything I try to write at these. And so it's really, it's a much narrower focus that allows me to go into more detail about the things I'm writing.

Judy: 00:04:34

Interesting. I didn't realize that disparity that, that you would be more immersed and you obviously prefer it.

So that's fantastic because I always knew you for like what you wrote about tax policy. I didn't really, I mean maybe you wrote other things too. But that's where I focused on you in my, I did business Journal.

Ed: 00:04:52

And while we interacted a lot on policy non state government, I was also covering, I was covering restaurants and tourism. I was covering the beer industry. I was covering economic development and transportation. So I covered a little bit of everything.

And so this is just a much as I said, narrower focus that allows me to kind of become even more of a subject expert on these things. What are the specific things that state is doing that affect business?

Judy: 00:05:23

Interesting. Why did the chamber think that they didn't have someone like you before?

Ed: 00:05:27

They didn't. You know, it was one of those situations where I wasn't necessarily looking for another job.

I think I had just decided that my, my time in journalism after 28 years had ended and I wanted a new challenge. And I just talked to some of my sources that I knew very well what's out there for a guy like me, you know, what can we do?

And, and that when, when Talking with Lauren Furman, the, the CEO of the Chamber kind of evolved into I think we could use you.

And, and, and it was actually I had had the idea like if I come over, I think what you're going to want to do is you're going to want to have me write a newsletter to your members, kind of breaking down what's happening at the Capitol because nobody else, you know, I knew that my leaving the DBJ was going to mean that the focus was going to move away from the things I did. The dbj, they tend to focus on real estate and other things.

I was an outlier in our 45 paper chain in how much I covered the capital for a business journal publication. And it was Lauren's idea who said, no, no, no, let's not have you, let's do a public facing website. Let's get it out there.

So it's not just our members, but anyone who's interested in policy can hear this. And that's something I've been very grateful for.

You know, is track everyone who subscribes to the newsletter and you see a lot of staffers at the Capitol with, with various lobbying firms and even a lot of elected representatives who are now subscribers. And that's the target audiences. Hey, we want you to think about business. And I'm not going to try to cram our viewpoint down your throat.

You know, everything I do, I'm going to try to. Even when the Chamber is very active in a bill, I try to get the other side of it.

But, but I want you to think about this rather than just the hot button issues. They get so much time and so much space to capital.

Judy: 00:07:08

Yes, agreed. And there's a lack of understanding which is what started this podcast to begin with is we have these conversations. What is nexus? What is this?

Why does it do this? Why does that state do that? And people really don't get it.

Even though the state taxes have been around for 100 something years and sales taxes around for almost 100 years and income tax has been around since the 40s. So people, but people still don't understand it.

And we're very multifaceted in how we go to market, especially with technology now, you're not really situs to your own jurisdiction. And so I think there's a huge disconnect between how business operates and their duties across each state jurisdiction in which they do business.

So that's what the impetus of this podcast, to be honest, was, to educate the population somehow.

Ed: 00:07:52

And, and it's extremely helpful in that sense. Too. Because I think when people think about taxes, they simply think, okay, what am I going to pay the IRS in, in April? And.

And they don't realize kind of the breakdown of state taxes, the fees that the state puts on, how, how much it reaches into their life in, in about 17 different directions, not just one big tax picture. So it's good to what you do. What, what try to educate people about specific things.

So instead of saying I dislike taxes, they can say, well, I like these, but I have trouble with these and specifically how my business has to report them. So that's a much better conversation that can lead frankly to better outcomes if we're talking about very specific policies.

Judy: 00:08:33

Well, I think a lot of people think I don't have an income tax. Therefore, you're like, government has to raise money some way somehow, so they're going to get you on property taxes, sales taxes, fees, something.

So don't think Oregon with no sales tax is actually more tax advantageous than another state. In fact, Colorado is a fairly low overall tax state. It's just that we're very complicated of us, our home rules.

We actually, Connie and I, one of my cohorts on our team, she and I helped keep United Airlines pilot training center in Colorado by showing them the value of the taxes here versus the other states that we're looking at and how people were looking at one piece of the pie and not the whole pie that we were a better place to stay. Plus, the facility was already there. It was absolutely tax advantageous to sit to keep that here.

It was very secretive when we got to do it, but they're still here.

And that was partly driven by our information because nobody has that out there that, you know, assimilated look of like, how does Chicago compare to Denver? We were able to do that.

Ed: 00:09:34

They're going to. There are going to be advantages and disadvantages in a lot of different ways. But I'm glad there are people like you explaining that to corporations.

Judy: 00:09:45

Yeah, me too.

Meredith: 00:09:49

ried to be tackled during the: 2025

? Do you have any comments on: 2025

Ed: 00:10:22

Yeah. Yes. No.

And it's funny that you asked that because, you know, as we're taping the this, we're about 36 hours out from the final gavel of the session that happened on Wednesday.

Judy: 00:10:31

I didn't realize we were that.

Ed: 00:10:32

Yeah, yeah, Wednesday at midnight or about 7:30 actually I should say.

Judy: 00:10:37

But they could extend. They have.

Ed: 00:10:40

They're not likely to go back at this point. And yeah, I had just literally just written something about the session that talks about how many issues are unresolved.

You know, I think for a lot of businesses the top issue this session was the attempt by labor unions to overhaul the state's Labor Peace act. That is the 82 year old law under which companies workforces can unionize in this state. And Colorado's law is very unique.

Most states, there are two types of states. There are right to work states where you vote and if 50% plus one of your company votes to unionize, you become a union.

But nobody is ever forced to join the union or pay dues or negotiating fees.

And then there are 23 other states that say we have a union, a pro union policy where you go through that same first election, majority votes to join union, boom, you're automatically having negotiating fees deducted from your paycheck.

Colorado's format is unique because you go through that first election and again, if it's a political majority says we're going to unionize, you unionize.

But then you have to go through a second election in which 75% of the people voting in that election must agree that you can take negotiating fees out of your paycheck.

It's typically about 2% of your paycheck each time to grant what is called union security, which is giving unions the money to negotiate on the behalf of the workforce. Unions came in this year and said that is an obstacle. We're done with it. We're tired of this. It's stopping unionization.

And Colorado does have the lowest unionization of any state in this private sector. That's not a right to work state. And push through a bill that said we're going to get rid of the second election.

The problem is that businesses said no. We've tried to negotiate other compromises, but we want to keep the second election in place.

We feel it's important for workers to say how they want their money used. And Governor Polis also said, look, I want to see compromise in this. I want to see you all work out a deal.

And that deal broke down with about four days left in the session. There was just everybody kind of gave up and walked away and said we don't have a deal.

And I think what you're going to see is that bill is going to be vetoed by Governor Polis. He's essentially said he's going to veto it. And that's going to lead to a couple of things.

ly see the issue come back in: 2027

ll run a ballot initiative in: 2026

And there are a limited number of reasons someone can be fired. People don't realize it. Now everyone says, oh, I have to be fired for cost. No, you actually don't.

Your employer can fire you for any reason they want in this state and in every state in America except for Montana, that's actually true. This way. I mean, employers, I should add, employers can't discriminate. They can't fire you because you're black. You know, that is.

That is clear breaking the law. But they can fire you because you know what? You're not working out you.

They don't need to go into great detail about why it's a just cause to fire you. This ballot initiative would say no.

Employers would have to list very specific reason among these possible reasons that you are fired, and if not, you can sue them. And that's going to do possibly even more to kind of throw off the state's business climate than expanding the Labor Peace act would have done.

Judy: 00:14:16

Interesting.

Ed: 00:14:18

So that is, you asked what were the top issues, and I kind of went down that rabbit hole because that was the issue we heard about the most. But there are a number of top issues that I think we looked at this session. I think there were some significant fights in the healthcare arena.

The idea being put forward, for example, that there was a plan to cap what hospitals charged, certain insurance plans that did not end up passing. But that was among the many big deals that we're talking about in health care. There were a bill that passed on the last day of the session that was.

Would significantly expand how the state goes after wage theft, and it would go after ways that worry business.

For example, it would assume that if someone filed a wage theft complaint against an employer and that they were later fired, that it was retaliation. It's assumed it's retaliation, especially if it's within 90 days. That is something that worries employers. That's coming out of the session.

There are good things that came out of this session. There are a couple efforts at regulatory reform that got passed.

We at three chamber commissioned the study that came out in December showed Colorado is the sixth most regulated state in America, has about 200,000 regulations, 45% of which are redundant or excessive as compared to other states.

And we were able to put through a bill, we being my bosses, not me, were able to put through a bill that's going to require more auditing of two of the state divisions that are most involved in regulation to make sure that they are regulating properly and that that could lead to bigger conversations down the road. And then there's all kinds of, I don't want to call them smaller fights, but fights that affected specific industries.

Things like there was a big to do about whether restaurants could roll back the minimum wage paid to tipped employees in cities that have raised the minimum wage above the state's level. We get into it if you want, but essentially restaurants lost that fight.

And as we see restaurants closing and continuing to struggle, they point to labor costs and say, look, this is just another nail in our coffin. So there was a whole lot of policy. It was a big year for big ideas to be considered at the legislature.

And I think there's no shortage of things that will be continuing to be fought over into 20, 26 and beyond even if they didn't pass this year.

Judy: 00:16:51

But then we're in a budget deficit, so how are we going to pay for all that oversight? That's the other question.

Ed: 00:16:56

And that's one of the reasons you saw some of these bills going down is because there simply wasn't a way to pay for some of these things that people wanted to get done. And it's a great question how we're going to pay for things.

I think you see more and more legislators turning to the idea of enterprises where we're going to charge you a fee and that's going to pay for things.

One of the biggest, one of the big fights near the end of the session was over an attempt by the Health Insurance Affordability enterprise, which now has a fee of between 1.15% and 2% on every privately sold insurance policy in the state that goes to fund a couple of programs, including a reinsurance program that keeps down prices in really high priced areas and the Omni Salute program which offers no cost insurance to undocumented immigrants. And the H A H I A E board still got a mouthful there, came back and said look, we're running short of money.

Maybe in past years we would have gone to the state and say, let's put some general fund money to these programs. They couldn't. So they said, we'd like to raise the fee. And the legislature did not let them go forward with that.

In fact, I think you see more and more legislators from both parties saying maybe these fees are not the right idea because we're hearing more and more complaints from our, our constituents about them.

So that's one way that we're going to keep talking about how to fund things is more fees, more enterprises, and, and that'll be the talk until we start to see some give in the budget.

Judy: 00:18:34

I think we're expanding the base by going after software too.

Ed: 00:18:39

Yes, absolutely.

Judy: 00:18:40

Interpreting our definition of what they taxable, tangible, personal property, I. E. Downloaded software and mainframe computer services. So we got that.

Ed: 00:18:50

Yes. I mean, that was. And that was absolutely one of the bigger fights for businesses this year.

A bill called House Bill: 1296

And the first one that you alluded to was one of the biggest controversial measures of that that would basically say software sales that are now considered to be exempt from use and sales tax would not be anymore. There was some great dispute over how much this would cost.

The, the fiscal note said, ah, we think this will bring in about $17 million more by doing this. But Governor Polls himself had said earlier, I think I can bring in a hundred million dollars from this.

And there was some belief that it could bring as much as $300 million. So no matter what number you throw at it, that's a major tax change that was put forward. It was taken out of the bill.

There was not support this year to make that major tax change.

But the authors of the bill said, I'm going to bring it back and we're going to do a very specific bill next year that says we are going to roll back these software tax breaks. So we're going to keep fighting about that. There also was a clause in that bill that was much more focused that that would have required.

We have what's called a regional home office tax credit where insurance companies, if they have 2.5% of their overall workforce located in the state of color, get a 50% discount on their premium taxes. It's a very big deal for them.

And there was a portion of HB: 1296

ith. That was taken out of HP: 1296

And, and the authors have said that not only are they going to come back next year looking to up that percentage, they said we're going to look to get rid of the regional home office tax credit, period. We don't think it's working anymore. So prepare for that fight coming up as well.

Judy: 00:20:57

And the delivery fee, someone tried to get rid of that. That fell on deaf ears. And it keeps going up every year by point. Penny.

Ed: 00:21:04

hat were authorized through a: 2021

It's interesting, I don't hear a ton of complaints from consumers that they're paying 27 cents on every 29. Thank you, 29 cents on every delivery they're getting from Amazon.

But businesses in particular say it's ridiculous that you have to add this kind of fee and break it out on the, on, on, on the receipt and it's just not working. And there were several things. There were two different bills that would have repealed that fee. They both died in their first committees this year.

that repeal on the ballot in: 2026

that we hearken back to that: 2021

And we haven't seen our populace in a very tax friendly voting stance in well, ever. And, and to put fees on gas purchases, you don't need to vote as people, you only need to vote of the legislature. So we created new fee for that.

There's a fee for diesel, there's a fee for Amazon deliveries. There's a fee if you step into an Uber or a lift. There are all kinds of fees out there that were created by that Bill.

And I think that, and I don't think the authors that bill thought that they were going to ignite a giant conversation on the use of fees.

But I think even more so than the money that that bill has raised for transportation, that is the legacy of Senate Bill 21 to 60 is it's the fee bill. And people are going to still keep fighting up those fees and any other proposed fee that comes up because of it.

Judy: 00:23:23

Well, as a tax person who's like in cahoots with the Department of Revenue all the time, when I learned about that bill was April and it was effective July, and it was enacted a year prior because Department of Revenue was tasked with implementing it. They wanted by. No. And I just about followed my channel care of thinking, I can't do this.

I can't tell my small business, medium business, you need to figure out how to collect 27 cents on every sale. I mean, yeah, that is not easy. Amazon can do it because they can have someone program it, but small business cannot do that.

So it's like an impossible thing. And then you've got all the gig economy, like you say, the Ubers, and they're not really doing it.

Clearly, Amazon is clear, but I don't think a lot of other companies are clear as to how that applies to. To them.

So I don't think it's a very easily enforceable or implementable product, which is a problem because it's not making business life easier to have to add another line item to an invoice that's not part of their institutional process. Like, oh, if in Colorado add so many cents to your bill, I'm selling you New Mexico. I'm selling to Oregon. I don't care about that.

How do I build that technology to work for when I deliver something somewhere via common carrier or motorized vehicle? Like, everybody's gonna be on bicycles anyway. I was just disgusted by that. That. And I know it's right.

It's a ton of money, but I think it's really onerous on business.

Ed: 00:24:43

Yeah. No.

little bit of stance back in: 2023

And they said, now business can eat the fee, but you still got to indicate that, that you ate that fee for that. So I was part of that advocacy.

Judy: 00:25:10

Trying to get that.

Ed: 00:25:10

Yes.

Judy: 00:25:11

Some clarity on that, I believe.

Ed: 00:25:12

I remember talking with you about that.

Judy: 00:25:14

But that was heartbreaking to me. With all the business clients we work with, thousands of companies are like, how are we going to tell them?

Like they could care a less about Colorado? We're like 5, 6, 7 million people. They care about California, California, Texas, New York, 30 million humans. Like, well, some of this stuff is.

Meredith: 00:25:28

So immaterial that now, you know, Colorado did it, then Minnesota did it, and now I think there were five or six.

Judy: 00:25:35

There's 10 states that are looking at it.

Ed: 00:25:38

Right.

Meredith: 00:25:38

So we kind of paved the way for the viability, kind of did the dirty work in that regard to, hey, is anyone going to sue over it? Is it going to hold up? And you know, kind of. Ed, like you said, the people don't care. Right.

Because I'm going to spend more than 28 cents getting in my car to, you know, go to the grocery store or whatever. Like, I'm fine with just paying the 28 cents because I'm paying for convenience. Right.

If the constituent, the voting constituents kind of in state don't care, what's to prohibit, you know, every other state doing the exact same thing, Right?

Ed: 00:26:17

Yeah. I mean the thing that every other state has going for it that we don't is they don't need to do it.

anization took on Senate Bill: 21260

This circumvents TABOR. And the court ruled. No, actually it doesn't. This, this by the letter is what TABOR said to do in creating enterprises.

It's just that in: 1992

Judy: 00:27:13

Well, despite the fact that other states don't have tabor, why are they all looking to impose a delivery fee? I find that very interesting. They could expand the base, but they resist that too. So they put a little fee on things.

I mean, it's just legislators don't understand what goes on for poor business, though. And they're the, they are the tax. They are the taxing engine. Right. That it's too much for the business. This is a society to take that burden on.

Just fund government. Right. They're not making funding government easier. So it's very interesting to me.

Ed: 00:27:42

Yeah.

Judy: 00:27:42

Speaking of which. Right.

Our sales and use tax system with our home rule cities and our state, you know, with the SUT system and just making it easier for taxpayers to comply in our state is a challenge.

Ed: 00:27:56

And it is. And, and, and I'm not sure they. They've unlocked the key to making it easier for local cities to comply or to, to for taxpayers.

And when you're still having to go to a database and look up exactly where the address is that you're sending something to. And in terms of the overlap of special districts and city and county lines and whatnot, it is, it is difficult.

I've heard the word byzantine a lot to describe our local tax system. And I think the SUC system is, which I know you all have talked about, talked a ton about, is something that is going to continue to be a focus.

How do we improve it going forward?

or the first time since what,: 2019

y are due to expire after the: 2026

Judy: 00:29:11

Yep. It's very disheartening because we have made a lot of traction in 10 years. Slow. But we've done something that people said could never happen. Right.

70 remote districts filing separately. How are you going to get anybody to do that? Not. But the set system allowed some. It's got to be filling coffers, I would think. But I don't know.

I don't have all those numbers.

Ed: 00:29:36

You, I agree with you.

You think, and those are the reports you hear is that interstate companies that had been reluctant to file taxes, you know, an Etsy or, you know, someone like that, that, that was just like, why would I file taxes for what sales were made in Colorado now do it because the SET system makes it easier to do so and because the law requires. But, but, but there's still a lot of ways it could be simplified. I know that the local governments sure think that as well. But we'll see.

will be a discussion for the: 2020

Judy: 00:30:13

Well, even you live in Wheat Ridge and we talked earlier that you live in Wheat Ridge, which is a bedroom community to Denver. So you're just across a street from me, actually. And you know, Denver's a very large metropolitan area. Wheat Ridge is not.

But if you could get all that consumption at the front door and get that 3, 4% tax, that's a nice thing, you know, so that it, if you make it simpler, they are going to fill those coffers.

If you don't have enough businesses located in your jurisdiction paying use tax on their inputs or charging sales tax at their, you know, their local, local store level. So you're getting that front door delivery, which is how our economy is going towards. It's much less go to the store, bring it home.

It's more send it, pick it up, have it delivered to my front door. So where's the tax going to go? I mean, I don't think Amazon is still collecting in the home rules of Colorado unless they have a warehouse there.

So we're still losing that money. Yeah, but I don't know Amazon for sure.

But my understanding, last I heard, was they weren't going to collect the local tax taxes even with the SUC system. But they may have changed their mind, but I don't think so.

Ed: 00:31:15

Yes. Yeah, but a lot, a lot to continue talking about with the census.

Judy: 00:31:19

Yeah.

Meredith: 00:31:22

This podcast is for educational purposes only and is not intended, nor should it be relied upon as legal tax, accounting or investment advice. You should consult with a competent professional to discuss specifics of your situation and the applicability of the information presented.