An Inside Look at Lobbying in Colorado with Jenn Penn Part 2
Hosts & Guests
Jenn Penn, Contract Lobbyist at Dome Strategies
Meredith Smith, State and Local Tax Senior Manager
Judy Vordran, Leader, Educator, Advocate, J.D., CPA
Topics Discussed in this Episode:
- TABOR and the Colorado Municipal League
- Non-partisan legislation and
- 2023 goals of the Simplify Colorado Sales Tax Coalition
What You Will Discover:
- [01:15] SB 2232
- [06:08] TABOR
- [13:02] Goals for enhancing the SUTS program in 2023
- “The Colorado Municipal League is a non-profit that represents the municipal governments at the legislator but they are also an advocacy and informational arm back to those local governments for all of the things that pass.” – Jenn Penn [04:12]
- “A lot of cities don’t have captive legal teams and have to source that with a third party. A municipal league is the keeper of the information for all the different cities and a tremendously helpful resource.” – Judy Vorndran [04:43]
- “Joint resolutions direct local governments and the business community to work together and have conversations to find a better, more simplified way to work on building permits and building permit process.” – Jenn Penn [14:53]
- “Colorado is one of the first states to implement the retail delivery fee. What is to prohibit another state from doing the same thing? There is a lot of precedent nationally that could be set based off of this delivery fee.” – Meredith Smith [18:54]
TaxOps Home – www.taxops.com
Welcome to SALTovation. This SALTovation show is a podcast series featuring the leading voices in salt, where we talk about the issues and strategies to help you make sense of state and local tax. Welcome back to part two of our conversation with Jen Penn, where we are discussing ways of simplifying tax through lobbying and other special interest groups.
Enjoy, you know, one other piece of legislation and we've passed a, you know, gosh, I think like eight or nine bills over the last, you know, seven, six or seven years. Um, but another one that I will highlight for the podcast is Senate Bill 2232, which we just passed last session, and we're still working to make sure that, um, local governments, um, business owners and, you know, folks are aware of this.
Bill is really around trying to make sure that. Local governments are not charging a business licensing fee for businesses that don't have a physical presence in that local jurisdiction. And so, in Colorado, we have seen local governments, um, charging business licensing fees in pretty much every jurisdiction.
So, if you are doing business in the state of Colorado, you know, you may be seeing, you know, $10 here, $20 here, $40 there. And so, some. Some businesses weren't, you know, doing business in the state of Colorado, or they weren't shipping to those local jurisdictions because they didn't want to pay those local, uh, jurisdictions, business licensing fees.
So, and just by shipping, you know, some roasted coffee into one local jurisdiction would then trigger a $10 $20 licensing fee. So, Senate Bill 32 is really gar. You know, the goal of it is to get rid of those licensing fees unless you have a physical presence in that. Taxing jurisdiction. And so there has been some confusion with the implementation, and so we are working with our friends at the Colorado Municipal League to make sure that local governments know that they are no longer allowed to charge a licensing fee unless a business has.
A physical presence. And so, for any of the businesses that are watching, if you are getting those business licensing renewal fees and you don't have a, have a, uh, physical presence in that local taxing jurisdiction, please push back on that local jurisdiction. You can reach out to the, the Simplification Coalition, um, or you can push, you know, reach out to the Department of Revenue or.
You know, I would suggest first reaching out to that local taxing jurisdiction, especially if you don't, you know, keep in mind you, if you don't have a physical presence in that taxing jurisdiction, don't pay those licensing renewal fees. So that's an example of our coalition saving your business. Money, um, and hopefully a lot of money.
Oh, future $10 times 70, you're talking 700 a year, and some of the license fees are 40 or 50. Mm-hmm. So, we're talking thousands of dollars. Yes, it is. To license when it's what, 58 bucks every two years in Colorado. So that's a really big deal and it just adds insult to injury for businesses, especially as small taxpayers that are, you know, I got to pay a thousand dollars a year just to collect your sales tax.
I am doing you a favor. You can appreciate that we have had this. Whole issue where vendors have to collect the tax. It's a lot to put on business that we've allowed this in general. Mm-hmm. But the fact that you've had this other thing you've got to add to give them $4, people don't take well to that. So, I, that was phenomenal that we got that.
And, and the Yes. Absolutely. And the Colorado Municipal League is, is putting out information to all of their members to make sure that their members are aware. Um, so we need to just keep the, because we're, we're still seeing some hiccups there. Yep. We are still seeing some hiccups there. And then we should probably explain the Colorado Municipal League.
They, you might want to explain what they are mm-hmm. To our state, um, to everybody so people know what that means. Yeah, so the Colorado Municipal League is basically a, you know, an association or a nonprofit organization of all of our, um, municipal governments. Uh, so they represent all of the municipal governments at the legislature, but they're also, you know, an, an advocacy arm, but also an informational arm back to those local governments about all of the things that pass.
So, they're kind of the trade organization or the chamber, if you will, for those local governments. And there's a lot of lawyers who work there. Mm-hmm. So, it's sort of like almost us outsource legal counsel to some degree, because a lot of cities don't have captive legal teams. They have to co-source that with a third party.
So municipally is kind of like the keeper of the information for all the different cities and I think they're a tremendously helpful information. Informa a resource because they see all of it. And in, you know, like everything in life, we look within our own backyard. We don't think of next door because we've got to just focus on what's in front of us.
And this way we get a little bit more information disseminated across the jurisdictions because it's not just the home rules, it's the statutory as well. And we call it statutory city means a state collected city. A home rule has its own governmental authority to collect statutory cities. We still have those, there's like 600 or something in the state of Colorado, but they, uh, run everything through the Department of Revenue.
So, but they still are a city, and they still have to do things for their citizenry. It's just a CML kind of helps them out because they're, we're locking a lot of small places. I mean, we're a state of what, less than five, 8 million people. I mean, some of these cities have like five people working there.
Yeah. Right. I mean, they're not big and they're managing sewage and whatever. All their water, I mean, whatever they've got to deal with for their citizens, they're, they're running a tight ship. And potholes, some of it's even manual. Yeah. Potholes, right? Yeah. Well, and I want to. Talk through something that, you know, maybe may or may not complicate your life.
Jen is so right. Colorado has Tabor. So, the, for those not familiar with the acronym, the Taxpayer Bill of Rights, which, mm-hmm. Which kind of. In short form, if there's any sort of like revenue or tax increases, has to go out to a vote of the people. And so how does that, how does that complicate your life?
Well, you know, I, I think you kind of covered it a little bit. So, Ta Tabor is, um, the Taxpayer Bill of Rights and it passed in 1982 by the voters, basically says that any. Tax increase in the state of Colorado has to go to a vote of the people. Um, so the legislature can't raise taxes without a vote of the people.
So, you know, the gov, the state government can only grow so much. So, things like the SUT system. We had to advocate for a long time in order to get that funding because, you know, we did need, um, you know, to get state funds allocated in order to have the state go out to RFP and then build that system. And so, anything that costs money, you have to really work with, um, the legislature, the stakeholders, the, you know, executive branch to make sure that you can secure that funding and that the state budget has that.
Funding allocated within their resources. Um, because, you know, the state unlike, you know, the federal government or some other states does not have, you know, a bottom list bucket of dollars that they can pull from to build. And, um, you know, that definitely has its pros and cons. Right. So, it's not as if we can say like, all right, well we think this, this is going to be beneficial to the state.
Here's why, you know, we're just going to increase, you know, sales, like the state sales tax rate by 1% for the next five years to fund this thing so then we can make it happen. Because if you did that, when you couldn't, and two, you know, there's, there's just a lot of, you know, can get, the steak can get sued straight away mm-hmm.
For, you know, IM implementing something that you can't do. So, I can appreciate that. You know, there's just a lot of, just kind of complexities associated with trying to get anything passed that may or may not need money. Right. And I think, you know, we've even had some conversations as to. Some tax, some tax pieces, you know, even the, you know, 27 cent delivery fees, call it.
Is that a tab violation? Is it an increase in taxes or is it not? Because it's a fee and you know what, you know, what really is it? So, I can only imagine that, you know, there is conversations at the Capitol were. You know, a legislator wants to do something when it's like, well, well we can't, or, you know, how can we or trace it back so that it doesn't become, you know, that we're not violating, you know, Tabor.
Yeah. And then we had other issues where we had to decide like how much power, because of our constitution, can our state impose on the cities? Unless it's, and then there was, so the state has a, what is a group of people? They have, they've got a legal team in-house. Mm-hmm. At the Legislature. Later, right? Yep.
So, you've got a bunch of lawyers that are, tell these legislators what they can and can't do. Help with bill drafting legal language. I mean, there's a plethora of resources at the state, and they're amazing. Mm-hmm. I think of these, I cannot believe how amazing these people are, that they know their stuff so well.
And then there was this issue we learned that if it was a matter of statewide concern, then the legislators can override. City authority, but we didn't want to play that card. Really. We wanted it to be a fair and equitable part nonpartisan. Right. We wanted it. Right. We wanted the mayors to know we're not out to take away your authority, but.
We've got to fix some of these things without heating you over the head with this matter of state white concern. But that was always very interesting, like, can we do this? Can we not do this? And they would look at it and whether it was a Taber violation and so forth when we were putting some of these laws in place.
Mm-hmm. Through the coalition. Yeah, so, so good questions, Judy. There is, uh, an office of attorneys that work, um, you know, nonpartisans, meaning they work for all the legislators, Republicans and Democrat, and they can't show any bias, and they're attorneys, so they draft all of the legislation. They're called the Office of Legislative Legal Services, and so they act as the attorneys for the legislature by drafting and giving legal.
Advice to the legislative branch. Then we also have the, uh, attorney general's office. So, if there is a, um, legal action taken against the state, once a bill or becomes a law, then that would go to the attorney general's office. So, if the legislature or the governor, or different part of the branch of government is actually sued, then the attorney general's office is in charge of defending the state.
So, my husband used to work for the AGs office for seven years, and he was a first, they call it in, so he actually had the tax. Section was rep was reported to him. Not that he understood the tax stuff, but he represented certain regulatory bodies like the nursing and mm-hmm different groups are advocated for at the attorney general's office, and they take cases forward on behalf of the state, either in a defense or an offense depending on bad actors and so forth.
So, I remember indirectly learning that because of what my husband was doing and I'm ex. Explaining to him like what the team is doing at the AGs office at taps. That was kind of funny years ago. Like to go. Mm-hmm. What? What do you do? Yeah. Well, and as we kind of wrap up 2022. You know, Colorado's going to start their 120 days, what'd you say?
The second week of January. So, in a few weeks, is there anything that you would like to see the Legislator con consider this next session? Is there anything that the coalition is continuing to push on or is working through? You know, as, as 20, 23 goals. Yeah, of course. We have a few things in the hopper. Um, so we worked with the legislative simplification task force on a couple of things.
You know, these. A couple of things through. The task force won't have official bill numbers until they're officially introduced in the legislative process. The legislative process begins, um, I believe it's January 9th. It's that first or second Monday in January, so I. One is a bill to, uh, continue to enhance the sets, the sales and use tax, uh, system.
And so, we have a variety of things that are in that bill that will continue to enhance and build out that system, you know, including adding, uh, use tax to the set system. Um, currently it's really focused on sales tax, so building out sets, um, to, to have use tax included. Uh, we're will also be looking at including the retail delivery fee, the 27 cents, uh, fee that goes to transportation so that taxpayers businesses can remit that fee through the set system that Judy referenced earlier.
Some other stuff that really gets into the nitty gritty like. Bulk uploads and downloads and developing like simplified spreadsheets and, you know, processing, uh, creating a process for simplifying, uh, filing for zero returns and some other, you know, Things that just will help enhance the SETS program. Uh, we're also, because if you think about it, they have to take the account information in.
I know this, we, we, we had all the cities and different people reporting. They're like, sometimes people fat finger the accounts. There's no check like, oh, is that your account in the city of Denver? Is that your account in Aspen? There's no check. Mm-hmm. So, they don't even know if they've done it right.
So, then the city gets information and doesn't know what to do with it because they can't align it with a license. So, there's some, there's some issues that need to be cleaned up so that everybody can get information and give it to each other. Yes. And so, some of the cleanup is, is, is to for the business side, and some of it is for the local side.
And so that the system can just, you know, continue to be invested in and to continually be enhanced. Um, so that is a bill that we're working on. And then we're working on what we, uh, a joint resolution. So, they're what we call legislation, bills, and then resolutions. So, um, bills that pass become law and those are binding.
And then there are what we call resolutions. Resolutions are, are joint resolutions. They're not necessarily binding. But a joint resolution, what we're working on would basically direct the, um, uh, the, the local governments and the business community to work together to, to have conversations and find a better simplified way to work on building permits and, uh, building permit process.
So, we've been having conversations with the construction industry. At the taskforce level for the last couple of years, um, building permits and then the taxes that are due with those building permits throughout the entire construction process is something that is also something that simplified Colorado Sales and Use Tax Coalition has been working on.
And it's really d. You know, needs a more in-depth conversation of those stakeholders that are really involved in that. And so that's what this resolution is going to direct. So that would be something else coming in 2023. The third thing that we tried to run through the task force, but the task force, the legislative task force has a, um, revenue neutral charge.
And we tried to write it in a couple of different ways that just didn't really get. Um, to revenue neutral to also achieve the goals is, um, there's a couple of, of things that really could be cleaned up, if you will, around the retail delivery fee. You know, I know that there are some folks that have some strong feelings around the 27-cent retail delivery fee.
The, you know, my client, the Colorado Sales and Use Tax Coalition is not looking to repeal that, and the political climate in Colorado is not one that would. Ever pass, but we are looking to make some changes to simplify how that process for, for our small businesses, uh, around, excuse me, around there.
Point of sales systems and reporting, and we know that there's been some hiccups with the rollout and collection of the retail delivery fee. And you know, one of those is already going to be part of, you know, allowing taxpayers to remit through the set system. But another is, you know, looking at how can we make the burden a little easier, um, you know, through like point-of-sale systems and stuff like that.
So, those are conversations that we're still ongoing. We're hoping to pull together a bill. We don't have draft language and we don't know exactly what it's going to look like at this point, but we hope to have something in 2023. I when that, I didn't even know about that. I don't remember. I think I found out about that through our coalition, and I remember thinking, that's it.
I quit. I can't ever do this. I don't know anybody's going to deal with this. You got someone in Illinois selling to a Coloradoans via voter vehicle. Throw 27 cents on there. Have you? Anybody's seen a GL system. Anyone sees all these software that invoice people they don't know it's Colorado versus Wyoming. I mean, it's just crazy that we did this and it's one thing to administer it, it's another thing to implement it.
It's a lot for, for small and large business. It's a lot of technology. It's a, it's more of a coding thing that's convoluted. I'm like, you got to be kidding me. Anyway, it was fascinating. Yeah. And, and there's a lot of stakeholders because the definition basically says anything delivered by a motor vehicle in the state of Colorado right.
Will ha, you know, have a 27-cent delivery charge. That goes back bicycle to, everything's going to get delivered by bicycle now. That's how it goes. Whoa. Foot and bicycle. Yeah. I'd like to see that, you know, during a blizzard, but you know, we'll see. Can you imagine? Yeah. But if it's a motorized bike. Yeah, exactly.
No, it's a, it's a motor vehicle, so it depends on how it's, you know, if an e-bike is a motorized vehicle, that's explode so Well, and I think what I think what's more at. Stake is realistically, because Colorado is one of the first, if you know, to do this. And so how, what legs does Colorado have to stand on to do this and what's to prohibit any other state from doing the same thing?
Right. So, I think there, there's, you know, a lot of precedent nationally that could be, you know, could be set based on this, on this delivery fee. So, who knows? But lots to look forward to. Jen, thank you so much for being here, for breaking down the barrier, maybe changing some perceptions as to what you know lobbyists do.
It's not all about protecting big oil in the government that maybe has a stigma associated with it. So, thank you for the work and what you've done for the state of Colorado, and thank you for being with us and spending some time with us today. Thank you so much for being help us with the coalition. Yes, thank you so much for having me.
And you know, I hope that folks will visit our website. Again, it's simplified CEO sales tax.com and I hope that folks will reach out, get more involved, uh, sign up for our emails. Um, you know, and again, you know, lobbyists. Are, you know, folks that just advocate on behalf of, you know, their interests. And, uh, you know, you'll also hear the term special interest all the time.
And I would add that everyone is a special interest if you, you know, mm-hmm. Read books, if you're in a book club, if you have a pet, if you're part of any chamber, any coalition, any club that your special interest. And so all of the groups that I just referenced, except for maybe book clubs, um, but libraries, um, have lobbyists.
So pretty much everyone has lobbyists and everyone's a special interest. Um, so again, it's just targeted communication. It's not like a shameful thing or a bad thing. It's actually a really good thing. And if it weren't for you, we wouldn't be where we were. Great. Honestly. So, thank you for your service.
Yeah, and legislators really do rely on folks like me to help provide them with information because there's no way that they can know everything about everything. Mm. Right. Especially when they're just learning where the bathroom is down the hall and how much time they have to use it between during break and where the secret bathrooms are.
Because there are secret bathrooms. Yes. In Colorado we have secret bathrooms where they're now Yes. Cause Judy hangs out with me at the Capitol I to go to the back one that's like the, this one I'm like, yes. I'm like, there's bathroom. I don't have to go to the public space. The unmarked bathrooms, they're not secret.
Bathrooms unmarked. They're unmarked bathrooms. They're unmarked. Exactly. Yes. Well, thank you so much and this has been another episode of Cultivation. Till Next time. Thank you. This podcast is for educational purposes only and is not intended. Nor should it be relied upon as legal, tax, accounting, or investment advice.
You should consult with a competent professional to discuss specifics of your situation and the applicability. The information presented.
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