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8/8/2004

State can’t sell itself to work force

By John Fryar
The Daily Times-Call

DENVER — Colorado’s scenery — and the other benefits that come from just being able to live here — are no longer enough of a sweetener to close economic-development deals, a panel of state lawmakers was told on Thursday.

Colorado needs to have more incentives to offer businesses considering locating or expanding here, according to several local and regional economic-development agency officials.

Those officials reminded members of the Legislature’s Committee on Economic Development that Colorado is in a national and global competition for new jobs. They said other states’ and nations’ business-incentive offerings often exceed those that this state can offer.

“In Colorado, we have become arrogant,” said John Cody, president and CEO of the Longmont Area Economic Council.

“Colorado has come to believe that because it’s a beautiful place to live, it doesn’t have to compete on the same level” as other states, Cody said.

Similarly, it is no longer enough to tout Colorado has having “a high quality of life,” said Preston Gibson, president and CEO of the Jefferson Economic Council.

“‘Quality of life’ is a relative term,” Gibson said, adding that every economic-development agency in the country argues that it has a high quality of life.

J.J. Johnston, president of the Loveland-based Northern Colorado Economic Development Corp., said he has been in the economic-development field for almost 28 years, including 10 in Colorado, 12 in New Mexico and six in Texas.

The competition for jobs is the toughest Johnston has seen in that time, he told lawmakers.

Johnston said, “Unfortunately for us, we have 15 different states aggressively calling on our companies in Larimer County that I know about,” with those other states’ local economic-development agencies trying to get northern Colorado businesses to move.

Several of those states have no state corporate or personal income taxes, Johnston said, “and they have found a way to get around their business personal property taxes” by offering “investment tax credits on new capital expenditures.”

One of the special legislative committee’s charges is to study whether it would be possible to reduce, eliminate or phase out the local personal-property taxes that businesses now pay on their machinery, office equipment, furniture, computers, oil and gas drilling equipment.

The tax, which generates about $635 million a year for municipalities, counties, schools, and special districts, also is assessed on oil and gas drilling equipment, pipelines, utility transmission lines, and personal property associated with airlines, utilities, railroads and telecommunications companies.

House Speaker Lola Spradley, R-Beulah, who noted her seven years of legislative efforts to reduce the business personal-property-tax burden, told the committee the tax is a disincentive for creating jobs, particularly in capital-intensive industries such as manufacturing.

In the case of items that also may be subject to state or local sales and use taxes, the personal-property tax amounts to “double taxation, at a minimum,” Spradley said. “It is onerous.”

Several of the economic-development directors testifying at Thursday’s meeting complained about the business personal-property tax, although they also indicated that the legislative committee should broaden its focus to an examination of all the incentives and disincentives facing agencies trying to attract businesses to their communities or hold on to the existing ones.

“This is a retention issue as much as it is an attraction issue,” said Rocky Scott, president and CEO of the Greater Colorado Springs Economic Development Corp.

Scott, who said one of economic-development agencies’ objectives is increasing residents’ per-capita income, remarked that “Colorado is a pretty place, but you can’t enjoy it unless you have the income.”

The Jefferson Economic Council’s Gibson reported that Colorado’s strongest competition for companies comes from Arizona, Florida, Georgia, Illinois, Nevada, New Mexico, South Carolina, Texas, Utah and Washington.

Gibson said there are categories in which Colorado is not competitive with some of those states — particularly in the metropolitan Denver area.

He cited, for example, continuing increases in the metro area’s housing costs and transportation issues that include: the under-funding of road construction and maintenance; the lack of direct international flights at Denver International Airport; and an uncompleted beltway around metro Denver.

Gibson and others said some businesses are attracted to Colorado because of its highly educated and trained work force, but he warned that budget cuts in state funding for higher education could threaten that economic-development lure.

Scott said if government cannot afford to provide broad-based tax relief to businesses, an alternative would be to consider “strategic relief” focused on encouraging new business investment by companies that otherwise might choose to leave the state.

Scott said it may be possible to craft legislation that would accomplish that targeted tax relief in a way that it has no impact on the state budget.

John Fryar can be reached by e-mail at jfryar@times-call.com.