Wednesday, December 8, 2010

Walking and chewing bubble gum

I thought it would be interesting and fun to share an example of an email exchange between a non-constituent and me about a story covering the legislature in the Denver Post.

Here's what Jon wrote:

Mr. Brophy and Mr. Vigil,


So let me get this straight, both of you intend to introduce competing bills on daylight savings time ( at a time when (1) the state is facing nearly a billon dollar budget shortfall; (2) the state constitution has been intentionally violated year after year by your underfunding K-12 education; (3) higher education is on the brink of total fiscal collapse; and, (4) the economy is in the worst shape since the great depression; etc. etc. etc.


And you two want to debate whether to change daylight savings time? Really?  Are you kidding me?


Tell me why this is acceptable to the two of you:  In 1989, when I graduated from Fort Lewis College, I and my classmates could work a summer job to pay for tuition--today it’s starting to look like it will be less expensive to send my 17 year old daughter to a college out of state than it will be to pay in-state tuition.  While you two wallow in frivolity, I’m wondering how the hell I’m going to pay for my kids’ college tuition that you two keep raising.


Why don’t you two spend your time and energy solving real problems?



Dolores, Colorado

And my response:

I'm perfectly capable of walking and chewing bubble gum at the same time.

I'm also introducing bills to:
1. Help the natural gas industry increase demand for their product
2. Give small rural schools a new tool to keep their doors open while recognizing that the number of students will likely keep declining.
3. Cut red tape at schools so kids can keep their life-saving medication with them instead of locked in a cabinet in the office
4.  On tort reform to classify mountain biking as intently dangerous, so that ski areas, for instance, won't be sued when someone crashes on the slopes - hopefully encouraging more tourism.

I'll be introducing a Constitutional amendment that will keep the legislature from increasing taxes by calling them "fees".

Finally, I'm reaching out to the new administration with examples of how the Ritter Administration harmed the oil and gas industry with over-burdensome regulations and how we can smartly improve what was done in a way that encourages economic activity while protecting the environment.

I'm continually surprised by what the media finds worthy of coverage.  I spend most of my time working on the nuts and bolts of reducing the scope of influence of government in our lives and making the government that we need effective, but I seem to draw the most amount of coverage  on relatively frivolous issues.


Sent from my iPad

Wednesday, October 13, 2010

2010 ballot questions

Cheat sheet

P: yes
Q: yes
R: yes
60: no
61: no
62: yes
63: yes
101: no
102: yes

Supreme Court
Bender – no
Martinez – no
Rice – no

Appellate Court
Daily – yes
Gabriel – no
Lichtenstein – no
Richman – no

County Court
Yuma Judge Sara Wagers-Johnson – yes, she’s awesome, we need more like her
Phillips Judge David Colver – yes
Kit Carson Judge Michael Grinnan – yes

13th Judicial District - vote to remove term limits on DA. I still support term limits on legislators and commissioners, but the requirements for DA make the field of qualified candidates pretty small; we should remove the term limits on this office.

The shortest reasoning I can give you on the ballot questions:

P - this moves the regulation of bingo and raffles to the Dept of Revenue from the Dept of State. It is a smart consolidation of similar functions into one department.

Q - sets up a way to move state government functions if a disaster emergencies is declared. Right now it would take a state-wide vote to authorize the meeting of e legislature at a lace other than Denver; this is smart, just in case.

R - does away with the assessment, collection and payment of possessory interest (property) taxes on low value properties. This is really smart because it often costs more to assess and collect this tax than the total tax bill.
60, 61, & 101 as a package really do go too far. I don't think their passage brings about the end of government, but things would be completely different at every level from the state right down to your local cemetery district and telephone cooperative. I am pretty sure that these three are headed to defeat, so I won't write too much about them right now.
I will make two important points. If you think that state government is too big and needs to shrink (as I do) guess what, we get to (or have to) do that anyway as the Democrats have handed us a near $1 billion gap to close in the next fiscal year. These three would add about $730 million to that gap. Also, I am positive that passage of 60 and 101 would end state subsidies for higher education; I’m not using a scare tactic, I’m just calling it like I see it. All of the out-state junior colleges, state colleges and community colleges would close.
If you have specific questions about these three, just flip me an email and I will try to respond.

62 - I encourage you to ignore most of the rhetoric related to this one. It is really a question of whether abortion should be banned in all cases except life of the mother. That is how this would play out if 62 actually passes. It would also ban the morning after pill, most likely, but only most likely. If you are Pro-Life without two of the big three exceptions, you should vote for this; if you aren't, then vote against it.
63 - this would protect your right to health care choice in the Constitution. I really wish that we didn't have to put stuff like this in the Constitution, but after the passage of Obamacare over the objection of a majority of Americans, it is obvious now that we have to pass this. It would keep the government from forcing you to buy health insurance.
102 - this one is more of a coin toss for me. It changes the statutes to keep some people accused of crimes from being referred to a pre-trial services program. I'm a yes because I'm not sure that these programs actually work like they are supposed to work and I'm concerned about some people skipping out if there isn't a bail bond held for their future presence. This is a classic example of what economists call "rent seeking" which is where a person or business tries to use the power of government to drive payments or business to them. That doesn't make the idea wrong, but you should know that the bail bond industry will to make more money if this passes and the pretrial service programs will make less.

Sunday, April 4, 2010

Tough Choices - HB1365

The Front Range of Colorado is faced with an unpleasant reality. The EPA is poised to implement clean air standards that have been building since the late 1990’s that will regulate nitrous oxide (NOx), ozone, mercury, sulfur dioxide (SOx) and regional haze (the brown cloud).

The standards go too far and should be fought with all of our might. It is time that Colorado and the other states stand up to the federal government and re-assert our authority over all of the issues that pertain to the state instead of the central government.

I think the people are ready for that too. More folks know what the 10th Amendment is all about now than at any time since the founding. It is time to push back against the heavy hand of DC.

It is a battle that needs to be fought, the question is: do we sacrifice Colorado businesses and citizen’s pocket books in that fight or do we take on Washington in a way that poses less financial risk to us? If the Feds implement their plan to clean up our air, look for car emissions standards like California, new formulations for our gasoline (like California has), restrictions on all power plants, tighter restrictions on local refineries, those funky gas nozzles like you see in California, and even no mowing your lawn during the day or barbequing. They have a whole laundry list of bad ideas to throw at us.

HB1365 is designed to hold off those federal requirements by crafting an alternative solution to meet the new air quality standards. It directs the Public Utilities Commission and the Colorado Department of Health to work together to devise a strategy to meet all of the standards in a few bold moves instead of waiting for each of the new standards to be introduced by the EPA. This is the first time both departments have been told to work together and been given the authority to do so.

It is likely that their plan will recommend the mothballing and/or conversion of three or four really old, 1950’s era, coal fired power plants to natural gas fired power plants. These facilities are located right on the Front Range. They’ll most likely recommend some additional cleaning technology on the newer coal facilities, like Pawnee at Brush.

All of this will cost Coloradoans some money, slightly higher utility bills, but probably lower if done as part of a global strategy than on a piece-meal approach as directed by the EPA. And don’t forget what all those other things on the list of “ideas” the EPA has would cost if implemented.

The bill also corrects a preference in the way the PUC views coal fired power plants over natural gas fired power plants. Currently, utilities can recover costs and earn a rate of return on the value of the coal fired plant which costs multiple times more to build than natural gas fired plants. Under the bill, utilities can make long term price contracts with natural gas providers and earn a rate of return on the value of those contracts.

With the new discoveries of gas in shale formations, natural gas companies are eager to agree to long term contracts and prices are low, so low that electricity produced from natural gas is now slightly cheaper than that produced from coal plants.

The benefits include a lot of drilling for natural gas, primarily on the Eastern Plains. The new demand will require 250 new wells a year over and above current production. Cleaner air is a benefit as natural gas burns much cleaner than the older coal fired plants do. Less train traffic and significant investment in the power plant at Brush are also good for Eastern Colorado.

You’ve probably heard a lot about this bill; the environmental groups like the bill for the air quality improvement and the natural gas companies like it because of the new business.

The coal producers hate it because it takes business away from them, the railroads for the same reason and the unions because coal workers are unionized and natural gas workers aren’t.

The total bill for fuel alone in one year for the 900 megawatts of electricity under scrutiny in the plan that will be crafted by this bill is $250,000,000. Now you know why you’ve heard so much about the bill; both sides are willing to spend quite a little money to influence the fuel choice when a quarter of a billion dollars a year is on the line.

I voted for it because no one has ever held off the EPA on clean air standards, there is a better way to meet those standards than letting the EPA devise the plan, and drilling for natural gas is good for Eastern Colorado.

I’d rather fight the Feds over health care and other issues.

Tuesday, March 23, 2010

Denver just like Washington DC

The striking similarities between the way Congress acts and the way the Colorado General Assembly acts some times shock and disappoint.

Take HB10-1001 which raises the renewable energy standard for the two power companies that serve the Front Range from 20% to 30% by the year 2020.

I still remember the summer of 2008 when gas hit $4.00, natural gas spiked, and everyone’s utility bills were outrageous. I’m afraid that those days may come back, so I support an “all of the above” energy strategy that promotes development of a wide variety of energy sources so we will never again be hostage to one source of energy.

1001 doesn’t do that. It carves out market share for chosen and favorite sources of electricity without allowing out of favor forms of energy a seat at the table. Special interests controlled the bill, just like they so often do in Washington DC. And, just like when the socialized health care bill passed, 1001 passed without one Republican vote.

Further, embedded in the bill, is another carve out for another special interest. Just like in WDC, the unions have favor with the majority party, so they get special consideration in the installation of solar panels in Colorado.

Read the law out loud, it’s embarrassing.


The performance of all work: in other words, you can’t even do it yourself anymore.

Maybe one of the most frustrating and entertaining parts to read is this:


Yes, the law controls approved to non-approved (cheaper) workers at the work site.

This bill was 1001, the number one bill of importance in the Colorado House and part of Governor Ritter’s agenda for the year. The agenda in Denver is no different than the agenda in Washington DC: special interest legislation to empower the party and the party’s friends.

Monday, March 1, 2010

Right to Float?

HB10-1188 takes on a complicated issue: is there a right to float down waterways in Colorado?

For years, the accepted answer was yes, as long as you don’t make contact with the bed or banks of the stream. This kept people off small rivers and streams, but allowed recreational activity on rivers like the Arkansas, Eagle, Colorado, Taylor and Yampa to name a few. I suppose that rafters technically break the law when they bounce off boulders in the middle of the stream, but I don’t know of any instances where someone was prosecuted for trespassing for that. I thought this was a settled question.

I was wrong.

There is now a landowner asserting that under a Colorado Supreme Court case called People v. Emmert, no one can float down a river through private property, where the same person or entity owns the land on both sides of the river, without permission. Emmert holds that not only does a landowner own the bed and banks of the river, but also controls the surface.

Emmert is in conflict with a statute passed as SB77-360 which established floating without touching the bed or banks. SB77-360 was carried by Senator Joe Kinnie and dealt with trespassing on the bed and banks but still allowed floating. Senator Kinnie said in committee: “This ... will not stop tubing, canoeing or boating on the water, but will give the property owners the help of law enforcement officials against a few people bent on causing trouble ....”

The problem is that Emmert was decided in 1979, two years after SB360 passed and the statute modified by SB360 was referenced in the opinion, so clever lawyers are arguing for this landowner that the landowner can stop passage down the river that is bounded by his property.

Enter Rep Kathleen Curry’s and Senator Mary Hodge’s HB10-1188 which would establish a “right of navigation” in Colorado, would allow incidental contact with the bed and banks of a stream and allow portage around a hazard or obstruction in the waterway.

A right of navigation is usually a dominant right, over and above other rights, like property rights. In other states, the right of navigation usually conveys ownership of the bed and banks of the waterway to the state. However, the latter is disallowed in this bill.

The new ability to touch the bed and banks and the portage are both substantial changes from the current status quo and, I think, infringements upon the rights of the property owners of said beds, banks and adjacent lands.

I am inclined to believe that on large rivers in Colorado, there exists a public right of way just like there is for roads that are bounded by private property. You can drive down a road, but you can’t stop and have a picnic on the adjacent privately owned land without permission. I think we should treat rivers in much the same way.

The big question that would need to be answered is: which rivers and streams does this “right of way” notion apply? The bill chooses to use streams commercially floated in 2008 and 2009. That’s probably too narrow, but a good starting point. It may be good enough to not name the rivers or establish in law which ones qualify. A law which doesn’t allow contact with the bed of the stream really settles that question. You can’t float it if you can’t float it (without touching that is).

Establishing this right to float would also establish that a landowner couldn’t block the waterway as that is specifically addressed in 18-9-107 where it is unlawful to block a road, street, waterway etc.

The challenge left is in making sure that fencing across a stream to keep livestock out doesn’t constitute blocking a waterway. That should be easy enough.

I will support 1188 if it re-establishes the status quo, but not if it does any more.

Thursday, February 25, 2010

Budget Balancing Bills

The Senate this week will pass 30 some bills to bring the budget into balance for the current fiscal year.

Most of the bills are just minor adjustments to each department of state government that reduces spending to reflect the money saved by furloughing state employees.

There are no bills that truly seek to reform government by controling the growth of spending on Medicaid or revamping our educational system into something that works better, smarter and faster.

Mostly business as usual and a continued lack of leadership during these tough times by the Governor and the majority party.

There are a couple of bills that are really offensive: one that transfers $87 million in cash funds to the general fund – a common occurrence during tough economic times and one that establishes a new bed tax on nursing homes to raise money that will be used to seek a match of federal funds for those same nursing homes.

The cash fund raid takes money from a dozen other areas of state government, most of the $87 million comes from severance taxes on oil, gas and coal. The same industries demonized by many of the Democrats voting to raid the funds. How ironic.

The nursing home bed tax will be used to offset a cut in funding to the same nursing homes. The money raised from the bed tax will be sent right back to the nursing homes so that the state will qualify for a federal match in funding for those nursing homes. Man, that’s creative!

I’ll end up voting for the bills that really reduce spending even though I am disappointed that no real creative thinking is going into solving the budget problem by reforming government in a way that permanently reduces spending.

I will vote against the cash fund raids and nursing home bed tax.

Tuesday, February 23, 2010

common sense water legislation?

The Senate passed SB 165 35-0 this week. Don’t let anyone tell you that Democrats and Republicans can’t work together to solve problems.

SB 165 is a bill that deals with the water that comes up with natural gas in natural gas wells. The water is called produced water and except for produced water from a separate kind of natural gas wells, coal bed methane wells, this produced water will not be regulated by the state in most cases.

Here’s what happened: some senior water rights holders filed a suit against gas producers from coal bed methane (CBM) wells saying that the water that was pumped up with the natural gas was tributary to a river and since that water was taken out of the ground and moved somewhere else, it didn’t seep out into the river and the senior water rights holders didn’t get as much water as they would have so they were “injured”. The Supreme Court agreed with the water rights holders and the gas companies were told they had to be regulated and would have to replace the water they took. This decision threw every natural gas well that pumps up water into jeopardy. Would all gas wells have to replace that produced water? There are tens of thousands of them and if so, it was going to be very expensive.

Everyone went to work to prove that all or almost all of the non-CBM wells were non-tributary, meaning that the water that was pumped up with the gas would never enter into our river or surface water network. Almost all of the water used for agriculture and drinking comes from this surface water network, rivers and shallow wells, so protecting it is a big deal.

After spending millions on engineers, the state and the gas companies agreed that the water that is with the gas is non-tributary in almost all cases.

As a side note, you should know that water lawyers who make their living suing people for injuring senior water rights holders hate this decision. They might have completely pure motives and think that the water that is 2000-10,000 feet deep is part of the surface water system or they might just want to retain the ability to make a boat load of money suing natural gas corporations. Could go either way.

Then the state, which means Governor Ritter’s Department of Natural Resources, did something really unusual. They decided to reward natural gas companies who use this produced water to offset the use of other surface water.

That’s right; Governor Ritter actually did something good for the oil and gas industry.

Some of the natural gas companies effectively recycle this produced water and offset the need for water from another source, mainly surface water. Doing this reduces the amount of water they would use from the river systems, it reduces truck traffic that would be needed to haul the water and it’s responsible. Now the state is actually rewarding companies for doing this.

The only case in which this produced water will be regulated by the state is when the water is used for some other purpose; in that case, the use will be treated just like every other instance where non-tributary water is put to beneficial use.

I worked a lot behind the scenes on this issue. It is really nice to see everyone’s efforts rewarded with common sense legislation.

Sunday, February 14, 2010

Software/Internet tax exchange

This exchange between David Thielan, who posts on many liberal blogs, is pretty informative, so I’m compiling his writing and my answers to the points he raises. It’s long, but I think you’ll enjoy it.

David is a really smart liberal who does a good job writing from the left. He’s often wrong, but that’s redundant as I already told you he’s a liberal and, therefore, just doesn’t understand human nature.

This is what he wrote on ColoradoPols – don’t go there as it is just a mouthpiece for SEIU, bought and paid for.

Sales tax on software - oncoming train wreck
Sat Feb 13, 2010 at 15:12:24 PM MST

First off, I think we should bring in most tax revenues through a progressive income tax and limit sales tax to cases where we want to reduce consumption (cigarette taxes) or the tax goes to direct use of the good (gasoline tax). Second, if we are going to have sales taxes (and we are), then I don't think anyone should get a free ride - so I support the concept of taxing software sales.
With that said, this impacts me personally as my company sells software. I'm not concerned with adding a tax to the sale as our customers are not price sensitive. What I am concerned with is the hassle as I don't want to have to have employees spend a ton of time administering this, and I don't want to force out customers to spend a lot of time telling us where they are using the software we sell them. We are all very hassle sensitive.

DavidThi808 :: Sales tax on software - oncoming train wreck

Under the proposed software sales tax, can the state tell me how to tax the sale? The following are all real cases that my company has seen, either selling or buying software.
1. In the car (as a passenger) I buy a program for my iPhone. I make the purchase in Boulder but by the time it's downloaded we are in Denver. And I first use it South of Denver on our way to Colorado Springs. Which City/County gets the sales tax?
2. My company purchased a site license to a program used to create our documentation. It is used by 2 employees, one in Boulder and one in New Hampshire. Both downloaded a copy. Neither knows which one used it first. And at the time of purchase they would not have been able to predict who would use it first. Note that we did not buy 2 copies - we bought a single site license. Which state gets the sales tax.
3. We are an IBM partner. One option we have is to pay $795.00/year and we then get all IBM software for free. One year we never used any software - was that still a sale as it was never installed & run on a computer in Colorado? In this case would we pay the sales tax the first time we actually get a free copy - and in that case only if the first use was in Colorado?
4. We sell to customers in Colorado where at the time of sale they do not know where the software will first be installed. In the case of one 65K sales I asked and they think it was installed first in Colorado on a virtual machine, but then shipped to China to run on servers there. So it was never run in Colorado. Is it where first installed or first run?
5. We sell floating developer licenses. We have a customer where they have some developers here in Colorado and the rest in China. Sometimes all the licenses are used by developers in Colorado, sometimes all in China, and usually it's about 2/3 China and 1/3 here. And at the time of purchase they have no way of knowing who will use it first.
6. Potential customers download our software, install it, and try it. When they decide to purchase we then ship them a new license key to replace the demo key. So upon purchase they are not downloading or installing any software, just a key. Is that a software sale?
7. We have a customer that has a large presence in Boulder. We sold to a group in New Jersey, to be used in Poland, and paid for out of Chicago. But the Boulder facility may (they aren't sure) use the system with our software, but probably running on servers in New Jersey.
8. We have customers who put our software on Amazon's cloud system. They don't know what state the software first runs on, not does Amazon. A customer in England could have our software first running in Colorado while one in Colorado may never have it running here.
9. We have customers pay us to add specific functionality to our program. So it's professional services in that they are paying us to do something specific. But the end results is that we ship them a new version of our commercial product as the feature is added to the commercial product. Is that a software sale or professional services?
10. We sell annual support & updates to our customers. This is a combined deal where they get both for the price. As the updates is the new version of the commercial software, is that taxable? And if so, what percentage of the support & updates as the support part is not software?
11. If a customer downloads our software from a server in Asia, does it count as a sale from Colorado?
12. We use SalesForce for our salespeople. Their software runs on servers in California and we access it via our web browsers. As the software does not get installed here, do we owe Colorado taxes on that purchase? What if they use JavaScript in their web pages so that it then does run code in our browser from their server?
13. If I buy commercially available web page templates, is that software? It's html which are page layout commands but it is not a program that runs.
14. There are electronic books with embedded flash in them - is that software?
15. Multiple Kindle books can be tied to the same account so all members of a family can read a book purchased once. If my daughter in Chicago gets a Kindle we'll tie her to our account. If I buy a book that she reads first - which state gets the sales tax? What if I buy it for her?
Before making this law, you need to have clear answers for the above. We have sales prices on the order of 50K - 250K so the Department of Revenue is going to want any money due to it. But if the above questions do not have a clear answer, we will be left waiting in most (not some - most) cases to have DoR determine what is owed to who.
The other thing is I see this creating a barrier to closing a sale - and that will harm us (and other Colorado companies). If we tell a potential customer they need to break out their purchase and identify which components will first be used in Colorado and where - that's the kind of requirement that will always slow a sale. And will sometimes lose one. (Needless to say, if we lose a 250K deal, that's one less person we hire.)
On top of that, we have to determine what taxing districts within the state a given sale falls in. How do we determine if a Boulder address is within the city limits? In addition, this guarantees we will not open a sales office in DTC (something we have considered) because the last thing we need is a second jurisdiction we have to figure out local taxes for.
Keep in mind we're a small company. There are literally thousands of others like us here in Colorado. We are all coming out of the recession and trying to focus all of our time and effort and growing our companies (and that adds jobs). You need to give as a simple straightforward way to determine the correct sales tax.
And to double down on this clusterfuck, there is the proposal to require companies in other states to report to Colorado based on sales. Can Colorado even tell them the criteria to determine what is included? (I bought a book on my Kindle when I was in Arizona, read it in Arizona, and deleted it when done - still in Arizona. The book was never on my system in Colorado. How can Amazon track that?)
Senator Brophy has a good post on this - including the little issue of the state learning what you are buying (that inflatable sheep was a gag gift - I swear!).
I understand the need to increase revenues. I agree that it is fair for software companies to pay their fair share. But software is not buying a physical thing at a physical location. It is the purchase of an amorphous object that can then first be used in multiple locations.
The legislature needs to get this figured out before dumping it on us. Otherwise it will cost Colorado companies sales (and jobs).

Here is my email response to the 15 questions David raised in his piece:

Ok, I'll answer your questions as I can.
1. it’s state sales tax only, so it doesn’t matter where you are what matters is that you are a resident of Colorado. Now, if you were in Hawaii when you bought it, you’d have an argument, but DOR would still expect you to pay.
2. The cost is apportioned between all employees who use the software and those that are stationed in Colorado would be charged for their portion. First or last to use doesn’t matter at all. Really, now tell me that that doesn’t encourage jobs to be located elsewhere.
3. This is where it gets interesting and the idea is to enforce this tax by audit anyway so you are going to get hassled. This type of contract might be a service contract and not taxed, but if too many start doing that, I bet they change the rules.
4. again, comes back to employees who use it who are stationed in Colorado.
5. same as 2 and 4.
6. yes. Just shut up and pay dang it.
7. just like 2 and 4 and the audit will determine this.
8. employee location, again.
9. no tax on services and there is a way for the auditors to determine if the software is mostly customized; if it is, no tax at least on the portion that isn’t “off the shelf”.
10. similar to #9. if the upgrade is mostly off the shelf, tax will be collected. That portion that is customized will be tax free for now.
11. if the customer is in Colorado – remember, this is a tax on consumers, be they corporate or individual, not on your company.
12. all that matters is where your employees are located and the audit will determine that.
13. yes
14. most likely, yes, they will now be considered “tangible personal property”. Gotta love these Dems don’t ya?
15. if you buy it, you will be responsible for the sales tax, but that is under 1193, not 1192.
16. don’t forget that every personal download of software is subject to sales tax now, too. This doesn’t apply only to businesses, but to individuals paying for any download. The chance of an individual getting audited is very slim, but it exists and since I don’t trust government, I assume that enforcement will be selective – can you say political enemy beware?

Are you thoroughly pissed yet? You should be. This is non-sense. I adamantly oppose your progressive income tax as it punishes work, savings and investment, but I do support wholesale tax reform that takes into account modern technology. I am beginning to believe that we really can’t evenly and effectively tax anything that can be bought on the Net. I like our mix of low tax rates in Colorado on multiple events/items, property, sales and income. I think we should swap out our sales tax on items for a sales tax on services instead. I also oppose corporate income in general and would get rid of it.


Friday, February 12, 2010

Candy and Soda Tax

In the desperate search find someone to tax who won’t hold it against them, the Democrats decided to add sales tax to candy and soda. I guess they decided to write off the little kid vote in 2010.

HB10-1191 adds sales tax to sweetened drinks that have less than 50% fruit juice, and unrefrigerated candy that doesn’t have flour in it.

The cost of a twelve pack of coke or pepsi will go up 2.9%.

Representatives of both companies explained that their experience shows that a price increase of this much will cause a corresponding drop in consumption of 1.7% to 2.8%. They suggested that since their sales in Colorado have been under pressure since the 90’s and especially since the start of the recession, this bill will likely lead to lost jobs in Colorado as the companies can only stand so much damage to their bottom line. Tax increases have consequences.

The candy tax is especially goofy, as Kit Kat candy bars are not considered candy, they have flour in them, but of course Hershey candy bars are taxed. Licorice isn’t taxed, no kidding, check the label, there is flour in licorice, but sweet tarts are taxed.

It really shows desperation to raise revenue instead of doing the hard work of reforming Medicaid and our education system to balance the budget.

In economic terms, this bill sucks $18 million a year out of the private sector and plows that money into state government, meaning that investment and savings will be reduced and poor choices will be continued by government.

This bill is part of the “dirty dozen” tax increases offered by the Democrats and Governor Ritter this year. As the Pueblo Chieftain editorialized today, elections have consequences. Do not forget who has done this to you.

Tuesday, February 9, 2010

Download tax

HB10-1192 will tax software downloads in Colorado. That’s right; you will now owe sales tax on your downloaded software. You already pay sales tax on software if you buy it off the shelf, but now, thanks to Gov Ritter and the Dems you’ll owe it when you purchase and download software on the Internet.

There is some argument over whether or not this is a brand new tax, but there is no argument that this tax hasn’t been on the books since 2006. Now they are going to start trying to collect it. You should be mad.

Every time you download new anti-virus software. Every time you buy that new killer app for your Iphone. You will owe some sales tax to the state. It doesn’t matter that the state has no business in your computer and no part in the transaction. They want their money from you.

Businesses are the real target of this tax. Sometimes businesses buy really expensive software and the state wants a cut of the action. Doesn’t matter that the download cost the state no services; the state wants their money.

This part adds up to some real money. Some businesses are just going to say no. They will locate elsewhere. These companies are very mobile; you can’t just add a tax like this and think that there will be no consequences. They will move; other companies will say thanks but no thanks, we’ll move to Nevada.

In either case, it is bad for Colorado.

We need to encourage businesses to locate here, not chase them out. This is another of the colossally bad ideas put forth this session.

Monday, February 8, 2010

Taxing Farmers and Ranchers

Among the myriad of tax increases proposed by the Democrats this year is a bill to add sales tax to pesticide purchases and medicine purchases for livestock.

When this bill passes, and it will pass, Colorado will be one of only six states to charge farmers and ranchers sales tax for the inputs they use to produce food.

What’s interesting is that the law will create an incentive to purchase your pesticides and medicine online or from an out of state retailer. Yes, I know that Colorado residents are supposed to pay use tax in place of the sales tax when they do that, but the reality is that most people won’t. At least they won’t until they think the chance of being audited is high. Trust me; I know these guys and they don’t like paying taxes.

Taxes on production inputs do not exist in any other industry in Colorado, but now agriculture will face that type of tax. And ag is an industry that can’t pass costs on; we compete in a world market and are price takers. We accept the price offered by the buyer, and when competing farms located in Kansas and Nebraska don’t have the same costs it makes Colorado farmers less competitive and gives them an incentive to not pay these taxes.

So what does this new tax mean in human terms? Well, if you are a full time farmer this bill will likely take $2000 to $6000 out of your pocket.

That’s a lot of money.

Sunday, February 7, 2010

Taxing the Internet

The tax collectors and liberals in Colorado have dreamed up a scheme to tax the Internet.

HB10-1193 seeks to force Internet retailers, like Amazon and Ebay, to collect sales tax from Colorado customers.

The problem is the Supreme Court, in Quill v. North Dakota, says that they can’t make them collect the sales tax, so someone came up a new way to use the regulatory authority of the state to make Amazon and Co so miserable that they’d say “uncle” and just start collecting the sales tax for Colorado “voluntarily”.

Here’s how the regulatory proposal works:
Internet retailers will have to tell their customers every time something is bought online that the customer owes “use” tax to the State of Colorado. Use tax, little did I know, is owed on any item purchased for which sales tax is applicable but not collected. No, really. Failure to make the notification results in a $5 fine per occurrence.
Internet retailers will have to notify customers once a year by mail what their annual purchases were and that use tax was owed on those purchases.
And the pièce de résistance is that the Internet retailer will have to submit to the State of Colorado a list of everything that you bought online! YIKES!

That’s right, Big Brother, aka Dept of Revenue, wants a list of everything that you have purchased on line so they can send you the bill for sales tax.

They will want a list of all the books you bought, all the movies you bought, Valentines presents, and you name it. It just gives me the shivers.

Remember how the ACLU howled when the Patriot Act sought to access library records with subpoenas? Haven’t heard from them on this one yet.

Taxing the Internet is really the Holy Grail of tax and spend liberals. You are going to have to pay the bill and lose the liberty.

Saturday, February 6, 2010

PERA solution

The Colorado Public Employee Retirement Association fund took a beating in 2008 losing nearly 30% of their value in one year and taking the funded ratio of assets to liabilities to near 50%.

This is a huge problem. The fund is $30 billion in the red and facing the real possibility of crossing a tipping point from which there will be no recovery. If things don’t change soon, a tipping point will be reached in 4 – 6 years, followed by a fund that is completely out of money in another ten years.

If that happens, either retirees will get no money or the state will have to figure out how to pay the current equivalent of $2.85 billion a year in benefits out of the general fund – the money that funds K-12, Higher Ed, Corrections, etc. $2.85 billion represents 40% of the general fund, in other words, we’ll be broke.

Fortunately, a solution was crafted the put the fund on track for solvency in 30 years without increasing taxes.

The solution is hard to take; it reduces benefits and requires the state and employees to put more cash into the fund. Basically no one likes it, but most understand that it’s something that has to be done.

I wrote a response some of the critics of the solution with Sen Penry in the Post.

We didn’t respond to the PERA members who are critical of the reduction in benefits.

I understand that they won’t like the cost of living adjustment (COLA) increases being cut from 3.5% to 2%. I wouldn’t either, but I suspect that they’d like a bankrupt fund a lot less. As the United retirees who have seen their retirement benefit cut to a fraction of what it was; a real fraction, not a reduction in the rate of growth, but checks that are actually cut by more than half of what they were before United’s fund bankruptcy.

Finally, it is important for retirees to remember that a future legislature can increase COLA’s if warranted and affordable. I just hope that if a future legislature does, they will be smart enough not to over promise what can be delivered.

The Legislature has tinkered with PERA some 93 times since 1969. Maybe that is part of the problem.

Monday, January 11, 2010

Palin Book Report

I finished Going Rogue by Sarah Palin. I thoroughly enjoyed it and highly recommend that you read it

The book tells the story of how she became who she is, what she’s done, and gives a convincing look behind the scenes of all of the things that happened. What brought her to the national stage and what was going on while she was on the national stage.

One of the first things I noticed in reading the book was that in the first 27 pages she mentioned twice how much she read as a kid. It must have stung the inferences from Katie Couric and the like that she is not very smart or very well informed. She goes out of her way to show, or to try to show, how well read and how well informed she is.

What she writes about politics in the campaign really rings true to me which makes me think that most of what is in the book is accurate; to be sure, it’s written to put her in the most favorable light but after the shellacking she has taken by the mainstream media and many people in her own party she deserves the opportunity to set the record straight. When I say the book rings true to me it’s because I understand politics and what goes on in political parties and how the media can be a little lopsided. What she wrote has the ring of truth to it; I’ve seen much of the same myself.

As a side note I didn’t believe the hype around Y2K, because when I read what they wrote about agriculture I knew it was untrue. I figured if they had something that basic and simple wrong the rest of their hypothesis about the impending doom associated with Y2K would be inaccurate at best. That’s why I tend to believe the things Sarah wrote in her book; those things I know about, she got right.

The biggest concern with regard to her political career is that she quit the governorship without finishing her first term. She actually lays out a convincing case for why that was the right thing to do not only for herself but also for the state of Alaska.

It was the right thing to do for her because her detractors were logging ethical complaint after ethical complaint against her and since in Alaska, members of the executive branch have to pay of their own pockets for their defense in these cases she was slowly going broke. That’s shameful. I wouldn’t want to live in a state were only a rich guy can afford to be governor.

It was best for Alaska because her administration was paralyzed by all of the people going out of their way to destroy her chances to become President of the United States. You can see how that would be the case. They were charging everybody on her staff with ethical violations for almost everything too. The staff members had to pay to defend themselves out of their own pockets also; how can you expect anyone to work under those circumstances?

So she made a tough decision, knowing full well that people just like me all over the United States would likely hold it against her if she quit, but she did it anyway because she knew it was the right thing to do for herself and her state. It’s obvious however, that she’s not giving up. She continues to be a thorn in the side of the left by using Facebook and Twitter to pick apart their bad ideas. They don’t know what to do with her. Maybe her dad was right: she is not retreating; she was reloading.

I would vote for her in a heartbeat for president. No, I don’t think she knows as much about foreign policy as John McCain or for that matter me, but I’m a nerd who reads all kinds of books and follows news sources to specifically to learn about foreign policy issues. She has shown that she makes good decisions, surrounds herself with capable people, and puts the interests of the folks ahead of self interest and even ahead of the interests of her party. I think she’d make a fine president.