After a year off, legislative interim committees met this interim to discuss topics relevant to Colorado and to recommend legislation to the Legislative Council Committee. This week, we’re providing a summary of each committee and its recommended legislation. The Legislative Council Committee met on Monday, November 15, and approved all bills recommended to it by the interim committees for introduction in the 2022 legislative session.
For more information about interim committees generally and how they operate, see “Interim Committees: Just the Facts, Ma’am”, posted 7/21/2017.
Early Childhood and School Readiness Legislative Commission
This interim, the Early Childhood and School Readiness Legislative Commission (Commission) focused its efforts on the transition to the new Department for Early Childhood (DEC) and the creation of the universal preschool program. DEC will coordinate early childhood programs and services throughout Colorado, including the new statewide universal, voluntary preschool program. House Bill 21-1304 established DEC and required the creation of a transition plan, which describes the coordination and administration of early childhood services and programs by DEC and existing departments. On November 18, 2021, the Commission will meet to review the approved transition plan.
During its interim meetings, the Commission heard several presentations centered on workforce updates, reports on home-based child care, and the impacts of COVID-19 on early childhood education. The COVID-19 pandemic not only affected the early childhood educator workforce, but many children also experienced learning loss.
On November 1, 2021, the Commission voted to recommend one bill to the Legislative Council for introduction during the 2022 legislative session:
- Bill A – Early Childhood Educator Income Tax Credit. The bill creates a refundable income tax credit for an eligible early childhood educator who has an adjusted gross income below specified thresholds, holds an early childhood professional credential for at least six months of the taxable year, and is either the head of a family child care home or is employed with an eligible early childhood education program or a family child care home.
Pension Review Commission and Pension Review Subcommittee
The Pension Review Commission met twice during the interim. It heard presentations from the Fire and Police Pension Association (FPPA), the Public Employees’ Retirement Association (PERA), and its own Pension Review Subcommittee. The Pension Review Subcommittee itself met three times to hear presentations from: (1) Gabriel, Roeder, Smith & Company (GRS) regarding its statutorily required independent review of the economic, non-economic, and investment assumptions used to model Colorado PERA’s financial situation; (2) PERA regarding GRS’ recommendations and a general annual update; and (3) the Segal Group, Inc. regarding its summary review of December 31, 2020, actuarial valuation results for PERA’s division trust funds.
The Pension Review Commission requested that three bills be drafted and recommended all of them to the Legislative Council for introduction:
- Bill A – FPPA Statewide Retirement Plan. Effective January 1, 2023, the bill merges three pension plans administered by the FPPA—the statewide defined benefit plan, the statewide hybrid plan, and the social security supplemental plan—into separate components of a new plan to be known as the “statewide retirement plan”.
- Bill B – State Payment Old Hire Death and Disability Benefits. To ameliorate a shortfall in the statewide death and disability trust fund and ensure that there will be sufficient money in the trust fund to pay future death and disability benefits to FPPA members hired before January 1, 1997, the bill requires the state treasurer to pay $33.191 million from the general fund to the FPPA for deposit into the trust fund.
- Bill C – Compensatory Direct Distribution to PERA. To fully recompense PERA for the cancellation of a previously scheduled July 1, 2020, direct distribution of $225 million, the bill requires an additional direct distribution to PERA of $303.57 million to be made on July 1, 2022. This amount is the sum of $225 million plus an estimate of investment gains that would have accrued on that amount from July 1, 2020, through June 30, 2022, based on PERA’s actual one-year total fund policy benchmark return from July 1, 2020, through June 30, 2021, plus PERA’s assumed one-year rate of return of 7.25% from July 1, 2021, through June 30, 2022.
Legislative Oversight Committee on Tax Policy
The newly created Legislative Oversight Committee Concerning Tax Policy, a permanent successor to the previous Tax Expenditure Evaluation Interim Study Committee, met five times during its inaugural interim. The committee’s first order of business was to define the scope of tax policies that it and its subordinate Task Force Concerning Tax Policy would consider, and it identified five areas of study, which can be summarized as the income tax base, homestead exemptions, enterprise zones, property tax treatment of short-term rentals, and expanding the sales and use tax to services. The task force has been studying these issues, and presumably, the committee will consider these tax policies after the task force makes its recommendations about them.
In addition, the committee considered the state auditor’s thoughtful and thorough tax expenditure evaluations. After listening and considering the evaluations, the committee approved 10 bills for drafting, of which five were approved as committee bills:
- Bill A – Alternative Transportation Options Tax Credit. The bill replaces an existing income tax deduction for expenses incurred by employers when providing alternative transportation options to employees with a refundable income tax credit of 50% of such expenses for such employers. The credit is allowed for 10 income tax years beginning on January 1, 2023.
- Bill B – Repeal of Infrequently Used Tax Expenditures. The bill eliminates nine infrequently used tax expenditures that apply across the state’s insurance premium tax, income tax, sales and use tax, and liquor excise tax.
- Bill C – Sales & Use Tax Exemption Municipal Public School Construction. The bill extends the sales and use tax exemption that applies for sales of construction and building materials to contractors and subcontractors related to certain public works to the sales and use tax levied by home rule cities on such materials for use in connection with the building, erection, alteration, or repair of a public school.
- Bill D – Increase Alcohol Beverage Excise Tax Exemption. The bill increases the volume of alcohol that is subject to the excise tax exemption for alcohol beverages brought by air passengers into the state from a foreign country.
- Bill E – Farm Close-out Exemption Exclude Motor Vehicles. The bill excludes vehicles subject to state registration requirements from the state sales and use tax exemption for property sold in a farm close-out state.
Water Resources Review Committee
During the 2021 interim, the Water Resources Review Committee (WRRC) held three meetings and took one field trip to the Colorado Water Congress in Steamboat Springs. The WRRC met with a broad range of water users and government officials, including local water providers, water policy experts, state water planners, and concerned citizens. The committee received briefings on major water issues affecting the state, including anti-speculation, recreational in-channel diversion, compact compliance and groundwater challenges, water efficiency in agriculture, dredge and fill permitting, and alternative transfer methods.
On October 27, the WRRC met and voted to advance the following three bills for the consideration of the Legislative Council:
- Bill A – Groundwater Compact Compliance and Sustainability. The bill creates the groundwater compact compliance and sustainability cash fund (fund), which may include appropriations or transfers by the General Assembly, federal funds, and gifts, grants, and donations. The Colorado Water Conservation Board will disburse money from the fund based on recommendations from the board of directors of either the Rio Grande Water Conservancy District or the Republican River Water Conservation District, after approval by the state engineer. When all groundwater reduction requirements and all statutorily mandated standards are achieved, the fund is repealed, and any remaining money is transferred to the general fund.
- Bill B – Investment Water Speculation Prohibition. The bill defines and prohibits investment water speculation and authorizes the state engineer to investigate purchases of agricultural water rights that are suspected of investment water speculation. Persons engaged in water speculation may be subject to a fine not to exceed $10,000. The state engineer may refer any frivolous complaints of water speculation to the attorney general for investigation and prosecution in the courts. Persons who make frivolous complaints to the state engineer may be subject to a civil fine not to exceed $1,000.
- Bill C – Expand Water Resources Review Committee to Include Agriculture. The bill expands the scope of inquiry for the WRRC to include identifying, monitoring, and addressing agricultural issues. The bill also changes the name of the committee to the “Water Resources and Agriculture Review Committee”.
The WRRC also unanimously approved a letter to the Task Force on Economic Recovery and Relief Cash Fund. The letter requested that the Task Force consider water investment in its recommendations.
Wildfire Matters Review Committee
The Wildfire Matters Review Committee (WMRC) met five times during the 2021 interim. On October 28, 2021, the WMRC voted to advance the following five bills to the Legislative Council:
- Bill A – Wildfire Mitigation and Recovery. The bill creates the wildfire mitigation and recovery grant program within the Colorado state forest service (CSFS). Grants are available to counties with forested areas to help them prevent and recover from wildfires by removing wildfire fuel and debris in a manner that reduces the amount of carbon that enters the atmosphere. The CSFS must submit an annual report to the General Assembly concerning the grant program beginning January 1, 2023. The grant program is repealed September 1, 2028, following a sunset review.
- Bill B – Increase Wildfire Risk Mitigation Outreach Efforts. The bill directs the CSFS to convene a working group to develop and implement an enhanced wildfire awareness month outreach campaign in 2023 and 2024, in partnership with the Department of Fire Prevention and Control and the U.S. forest service. The state forester is required to report to the WMRC during the 2023 and 2024 legislative interims on money expended and efforts to increase outreach and awareness of wildfire risk mitigation.
- Bill C – Resources for Volunteer Firefighters. The bill expands eligibility for certain state emergency wildfire response cash funds to fire departments. Specifically, fire departments that rely primarily on volunteer firefighters to provide fire protection services can receive reimbursement for fire suppression activities from the cash funds if certain conditions are met. The bill also allows the local firefighter safety and disease prevention fund (fund) to be used for behavioral and mental health services for wildland firefighters. Money from the funds is distributed through a needs-based grant program, and the bill requires priority be given to fire departments that rely primarily on volunteer firefighters and demonstrate a loss in tax revenue due to wildfires. Finally, the bill requires a $5 million annual appropriation to the fund.
- Bill D – Assistance Landowner Wildfire Mitigation. The bill creates the wildfire mitigation resources and best practices grant program in the CSFS to be used to conduct outreach among land landowners regarding wildfire mitigation best practices. The grant will be available to local governments, tribal agencies, and nonprofit organizations beginning January 1, 2024. The CSFS must submit a report to the WMRC concerning the grant program beginning in 2025. The grant program is repealed January 1, 2029. The bill also replaces the current state income tax deduction for wildfire mitigation expenses with a state income tax credit beginning in tax year 2023 through tax year 2025. The credit is available to landowners who meet income requirements and is equal to 25% of the taxpayer cost for wildfire mitigation expenses, up to $625 per year.
- Bill E – Wildfire Incentives for Local Governments. The bill creates the wildfire mitigation incentives for local government grant program in the CSFS to provide matching funds to local governments that raise dedicated revenue for forest management and wildfire mitigation activities such as forest thinning, wildfire fuel reduction, and outreach to property owners and the public. Beginning November 1, 2024, the CSFS must publish an annual report on the grant program.