County officials and a state lawmakers are condemning a bill that would phase out the business personal property tax over the next 15 years.
The Senate State Affairs Committee passed Senate Bill 1, introduced by Sen. Bruce Cairns, R-Boulder, by a 4-2 vote on Feb. 2. Cairns said ending the business property tax would encourage businesses to come to Colorado. But Sen. Jack Taylor, R-Steamboat Springs, said the end of the tax would kill rural government budgets. While many Republicans support the bill, Taylor has found himself on the other side of the political fence as he fights to protect rural counties from a bill he says would devastate their budgets.
Moffat County collects 48.9 percent of its tax revenue from the business property tax. Only Morgan County is more dependent on the tax for revenue. The business personal property tax requires businesses to pay annual taxes on all business property, from cash registers to furniture to bulldozers. Colorado is one of only a few states that levy the tax.
Cairns' bill would provide a 25 percent tax exemption on all business property first used after January 1, 2004. Equipment used before that date would still be taxed at the full amount. Business property first used during each year after 2004 would receive an exemption five percent greater than the preceding year. Following that pattern, the tax would be phased out by 2019.
As the owner of Masterworks Mechanical Inc. and mayor of Craig, Dave DeRose has to look at both sides of the issue. As a small business owner, he said the business property tax is a minimal expense compared to workers compensation insurance. Any cuts in business expenses are good, he said, but this one isn't so important to him.
Nor does he expect Craig to be hurt too bad from the tax phase-out, because it isn't a great revenue source for the city. Manufacturers, railroads, coal companies and power plants generate much more business property tax revenue. None of those businesses exist within the city limits. But the county government depends on that sort of industry to fund the county budget, and DeRose can see how it would hurt them.
Suzanne Brinks, Moffat County assessor, said it's difficult to predict the impact of the bill on the county's budget, since no one knows how much new equipment businesses will acquire in the upcoming years.
Cairns recognized the bill's impact would be greater on Moffat County than on other areas, and said the county could pass new taxes to make up for the deficit.
"This is not an attack on local governments," Cairns said during a telephone interview. "This is a tax on jobs."
Cairns said governments would be encouraged to come to Colorado if they knew they wouldn't have to pay the business property tax. This would create new jobs and jumpstart the economy, he said.
Raftopoulos said that might be true for urban areas, but it won't be the case for Moffat County.
"The belief that it would bring in business is false, because you don't get that in a rural economy," she said. "Not many people want to bring their business where it's cold and snowing and hard to get to."
And while the tax exemption would help new businesses, Taylor said it would hurt established businesses using equipment they've owned for years.
"It's not a level playing field," Taylor said. "It punishes businesses already in the county."
In past years, the state has passed business property tax exemptions for as much as $2,500. State funds have been used to back-fill county revenue losses. But if the bill passes, there will be no backfill.
Rob Gebhart can be reached at 824-7031 or by e-mail at firstname.lastname@example.org.