House panel hears extensive testimony on omnibus tax-expenditure bill HB 12‑96

Representative Leslie Garcia and co-prime Representative Zocai brought House Bill 12‑96 before the House Finance Committee for testimony, saying the omnibus bill would modify multiple tax expenditures to better match legislative intent and reduce administrative burden.

Committee members heard nearly three hours of testimony and questions on measures ranging from adjustments to the Regional Home Office (RHO) premium-rate reduction to expansions of child-care-related credits and a proposal to tax certain downloaded software. Sponsors said many changes were based on recommendations from the Office of the State Auditor (OSA) and that some provisions extend or expand credits (for example, extending the child-care contribution tax credit to 2032 and moving a property tax reimbursement program to a tax-credit model) while other sections would repeal little-used credits and tighten eligibility where the auditor found the incentives did not achieve their purpose.

WHY IT MATTERS: Sponsors said the bill realigns tax incentives with their original purpose and seeks to produce administrative savings and better-targeted credits. Representative Garcia highlighted the RHO section, saying the OSA found that some insurance groups received increased credits while reporting net job losses in Colorado; sponsors propose raising the percentage-of-employees test from 2.5% to 7% to better target the incentive to firms that actually sustain Colorado employment. Sponsors and witnesses also emphasized the bill’s potential to modernize taxation of digital goods and clarify who may claim care-economy credits.

WHAT WITNESSES SAID: Supporters included the Colorado Children’s Campaign, the Colorado Fiscal Institute and the Bell Policy Center. Melissa Maris of the Colorado Children’s Campaign said the child-care contribution tax credit brings more than $60 million in donations annually and is a “lifeline” for providers; she urged the committee to preserve and extend it. Caroline Nutter of the Colorado Fiscal Institute and Joshua Mantel of the Bell Policy Center supported targeted repeal of underused credits and updates recommended by the state auditor.

Opponents and concerned witnesses focused on particular provisions. Representatives of insurers (including USAA) and regional economic development organizations warned that raising the RHO eligibility threshold could discourage insurers from keeping or expanding job centers in Colorado. Industry witnesses and trade groups also pressed concerns about proposed changes to the software-sales tax exemption, enterprise-zone caps and limits tied to particular industrial sectors, arguing those changes could reduce investment in rural or transformational projects. Tax attorneys and representatives of the Colorado Chamber of Commerce disputed estimates in the fiscal note for revenue impacts of taxing downloaded software and raised TABOR (taxpayer bill of rights) concerns.

NEXT STEPS AND PROCEDURAL NOTES: Sponsors said they will return with a cleaned-up amendment and that the bill will be laid over for future action. No committee vote was taken on the bill during this hearing; sponsors asked that questions be directed to subject‑matter staff and the Department of Revenue for technical clarifications.

ENDING: Committee members asked department staff about operational impacts in the fiscal note (for example, Department of Revenue needs to staff for an expected increase in claimants if a property-tax reimbursement program is converted to a tax credit). Several members pressed sponsors on timing, precedent and legal questions about combining policy changes into a tax cleanup bill. The hearing closed after public and expert panels finished testimony; sponsors indicated they will file amendments and return for action at a later date.