House committee hears wide-ranging tax bill to tighten credits, expand some child-care incentives; sponsors lay it over

Representatives sponsoring House Bill 12-96 described the bill as an omnibus package that updates, narrows or expands multiple Colorado tax expenditures to better match legislative intent and administrative practice.

Representative Yadira Garcia, a sponsor, told the committee the bill “modif[ies] tax expenditures to better meet their legislative intent, reduce administrative burden, and increase administrative efficiency.” She said many changes were drawn from evaluations by the Office of the State Auditor (OSA).

The bill includes a mix of policy changes and technical cleanups. Sponsors highlighted several major elements: raising the threshold for the regional home office (RHO) premium rate reduction from 2.5% to 7% of an insurer’s national workforce; extending the child-care contribution tax credit and reauthorizing the facilities investment child-care tax credit; converting a property tax reimbursement program to an actual tax credit at filing; repealing or capping several seldom-used or administratively complex credits; modernizing the tax treatment of downloaded software; and repealing a sales-tax exemption for interstate telephone communications. Representative Garcia said the RHO change is intended to better align incentives with job creation, saying that “we are paying these insurance companies to outsource jobs to other states while still giving them $17,500,000 of taxpayer dollars.”

Supporters at the witness table urged the committee to approve many of the changes. Melissa Mattis, director of early childhood at the Colorado Children’s Campaign, urged extending the childcare contribution tax credit, describing it as a “lifeline for childcare providers” that helps sustain donations, training and capacity. Caroline Nutter of the Colorado Fiscal Institute and Joshua Mantel of the Bell Policy Center both testified in support, saying the bill implements state auditor recommendations and modernizes the tax code.

Opponents at the panel raised sector-specific concerns. Insurer representatives and local economic development officials from Colorado Springs warned raising the RHO threshold could discourage employers and harm communities that rely on insurance-sector jobs. USAA’s government affairs executive said USAA grew Colorado employment by 412 jobs since 2022 and urged the committee to oppose the RHO changes. Broadband, aviation and rural economic development stakeholders warned that capping enterprise-zone investment credits or excluding certain sectors could remove a tool used to attract investment in rural or low-income communities.

Department of Revenue staff told the committee that some changes would expand the number of claimants for particular credits and could require additional customer assistance and tax-examiner staff. The department said the conversion of one property tax reimbursement onto the personal income tax form could increase claimants from roughly 14,000 to an estimated 78,000, prompting higher demand for taxpayer support and administration.

Sponsors said they would offer and clean up an amendment and requested the committee lay the bill over for action at a later date. The committee did not take a final vote on the bill during the hearing; sponsors said they would return for action later.

The committee then moved on to other agenda items and witness testimony for the bill concluded.

Ending: The bill remains pending; sponsors said they will return with cleaned-up amendment language and continue to rely on Office of State Auditor evaluations and stakeholder input before asking the committee for a final vote.