The shape of the 2020 General Assembly is becoming clearer as we move into December and legislators are beginning to talk about their goals for the coming legislative session. Following defeat of Proposition CC which would have allowed the state to retain excess TABOR revenues in perpetuity, the main theme of the session will be finding money to implement the ambitious programs set in 2019 and envisioned for 2020. Failing to accurately interpret the voters’ sentiments in November, majority legislators blame the failure of the Proposition (and the loss of hundreds of millions of dollars) upon low voter turnout in the off-year election and continue to move forward with their plans.
2020 will see calls for outright repeal of TABOR, as well as less high-profile proposals such as indexing the TABOR cap to personal income rather inflation. The legislature might also propose raising the TABOR cap (to allow more spending authority). That cap was lowered in recent years as part of the hospital provider fee bill.
A likely proposal will be to exempt some revenue from TABOR. This is what was done in 2017 when the legislature, in a bi-partisan bill took a charge placed on hospitals and placed the revenues into an Enterprise, outside the scope of TABOR, freeing up around $660 million in spending authority. No doubt it will be under discussion.
Imposing new “fees” such as on the ride-sharing programs Uber and Lyft. This has been the subject of a stakeholder group meeting with CDOT over the interim, although little public information has come out of the effort to date. Potential uses of the fees could be for incentivizing electrification of the ride- sharing fleets as well as delivery vehicles in the metro area. The problem with new fee revenues is that they still fall under the TABOR cap unless designated as outside that realm when authorized. Existing fees might be increased, such as fees assessed on air emissions to support 20+ new employees in the Air Pollution Control Division. Enforcement of the many new rules would bring in revenue, but would still fall under the TABOR cap.
Although some tax exemptions have been recommended for repeal pursuant to a review by the State Auditor’s Office the aggregate amounts are not sufficient to fill the legislature’s revenue shortfall in order to achieve its goals, including the Governor’s preschool program, a family medical leave program, incentives to restructure Colorado’s energy consumption through massive electrification. Stay tuned and hold onto your wallets!
Various Interim Committees are also recommending legislation for consideration in January, including the following bills:
The Energy Legislation Review Committee recommended two bills of particular interest to the mining industry. Bill B sets standards for biodiesel blending commencing in 2021 from June 1 to September 15 each year. At that time, all diesel fuel sold or offered for sale in Colorado must be blended with 5% biodiesel as defined in the bill. That amount is increased June 1, 2023 to 10% biodiesel. Distributers and retailers would be allowed a waiver for good cause shown, such as an extreme disruption in the supply of biodiesel or extreme weather conditions. Implementation is under the authority of the Air Quality Control Commission who is charged with adopting rules in consultation with the Director of Oils and Public Safety. Express rulemaking authority includes the ability of the AQCC to accelerate the timeline for increasing the blending standard or to increase the blending standard itself.
The Energy Committee’s Bill 1 (providing excess TABOR revenues be refunded through incentives for clean energy projects) and Bill 2 (establishing a state electricity transmission authority) were withdrawn due to the need for additional work. However, it was clear from discussion by the sponsors that these bills may resurface in 2020 outside Interim Committee sponsorship
The Tax Expenditure Evaluation Review Committee recommended amending current law (39-26-102
(21) C.R.S.) to require energy sources used for industrial and manufacturing purposes be metered in order to qualify for the existing sales and use tax exemption.
PFOS/PFOA Emerging Issues. Following the discovery of contaminated groundwater in the communities of Fountain, Widefield and Security near Colorado Springs, and a growing number of sites in other states, legislation was passed in 2019 to restrict the use of certain chemicals containing perfluorinated compounds, man-made chemicals used in firefighting and a variety of consumer products. Site specific standards were set by the Water Quality Control Commission in 2018 to enhance cleanup in the affected areas of El Paso County. These chemicals are persistent in the environment and in the body, both difficult and expensive to remove. CDPHE was given $500,000 to study the location of these chemicals in Colorado groundwater and soils. CDPHE has informed CMA that it will be sending a survey out to various industries in Colorado to determine where these chemicals might be stored and used, to better evaluate the potential risk to groundwater. To date, we have not seen the survey. The federal government is also looking at the issue (due likely in part to the role government plays in the contamination of certain sites such as military installations. CDPHE is forming a workgroup to address PFOS/PFOA and will propose a PFAS Narrative Policy to the Water Quality Commission in May 2020.
GHG reduction. Legislation enacted in 2019 will be implemented through a variety of rulemakings across the spectrum of state agencies, including the Oil and Gas Conservation Commission, the Air Quality Control Commission, the Public Utilities Commission, the Colorado Energy Office and the Departments of Natural Resources and Agriculture. It took these agencies nearly a full day to describe their efforts to the Air Commission, detailing how they proposed to achieve the massive reductions in greenhouse gas emissions necessary to comply with HB 19-1261. In addition to moving to a 100% renewable portfolio for electricity generation, steps are being taken to electrify the transportation sector, the residential and commercial building sector (bypassing and eventually eliminating natural gas) and employ GHG reduction technologies in agriculture. No sector will be left untouched in this effort, referred to as “the Governor’s Roadmap.” To gain a clearer picture of the strategy, click here.