H.B. 1413, which would authorize the state treasurer to set up a loan program and contract with private entities to provide investments for the loans, passed the Senate by a 34-0 vote, with one excused.
The treasurer would be allowed to issue up to $40 million in insurance premium tax credit certificates in fiscal year 2020-2021 and another $28 million in certificates in fiscal year 2021-2022, the bill said. The treasurer would use the proceeds for investments for the fund, according to the bill.
Colorado's premium tax is imposed on insurance companies authorized to do business in the state, and is based on gross premiums.
The bill passed the House by a 43-18 vote on Tuesday. Rep. Shannon Bird, D-Westminster, one of the bill's sponsors, said on Monday that the bill was a creative solution to help small businesses at a time when financial resources are scarce. Bird said the bill would create a $250 million loan fund by leveraging private capital, in addition to the tax credit proceeds.
The bill passed the Senate without discussion and without amendments. The bill will now go to Democratic Gov. Jared Polis for approval.
Under the bill, proceeds from the tax credit purchases would be invested in tranches of up to $10 million each, for up to $30 million in fiscal year 2020-2021 and $30 million in fiscal year 2021-2022, although the total investment across both years would be capped at $50 million. The investments would have to be matched at a ratio of 4-to-1 by investments from other sources before being used to make loans to Colorado businesses.
For a tax credit certificate issued in fiscal year 2020-2021, the credit buyer could claim half the credit in calendar year 2026 and half in 2027. For a certificate issued in fiscal year 2021-2022, the credit could be claimed beginning in calendar year 2028. The credit cannot exceed a taxpayer's liability for that year, the bill said.
The credits could not be used to offset a liability incurred in a taxable year beginning after Dec. 31, 2031, according to the bill. The fund would be repealed on July 1, 2029.
Companies across the country have been negatively affected by the different states' reactions to the pandemic, which often included the shutting down of nonessential businesses. Polis declared a disaster emergency in Colorado and ordered nonessential businesses closed in March.
Republican leadership in the House and Senate did not respond to requests for comment.
Bird did not respond to requests for additional comment.
--Editing by Neil Cohen.
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