After a hearing that put into clear view the wildly contrasting ideas on why the prices of consumer goods are so high, a House committee on Thursday advanced a bill that would ban price hikes of more than 10% on goods from diapers to gas to building materials.
House Bill 1010, sponsored by Democratic Reps. Yara Zokaie of Fort Collins and Kyle Brown of Louisville, is exposing the sharp differences between Republicans and Democrats — and between business and consumer groups — on how to attack the rising cost of living. It passed out of the House Business Affairs & Labor Committee by a 7-6 margin, with Democratic Rep. Bob Marshall of Highlands Ranch joining all Republicans in voting against it, and heads now to the full House for debate.
The proposal would define price-gouging as a 10% boost in the cost of goods “necessary for the health, safety and welfare of consumers or of the general public” over the average price of a previous 90-day period due to an “abnormal market disruption.” Under an amendment added to the bill, such disruptions include market changes due to, among other factors, disasters, shortages of electric power, civil disorder, war, public emergency, drug shortages, excessive market consolidation, trade disruption or inflation.
Zokaie said that she offered the amendment as a compromise to business groups who have said the bill is a punitive government overreach, but it did little to salve the critics of HB 1010. She also changed the bill to exempt short-term rentals, property sales and utilities regulated by the Public Utilities Commission and added seasonal pricing as an affirmative defense for price hikes along with additional costs imposed by suppliers.
But testimony throughout the hearing made it clear that finding acceptable compromise will be hard because bill proponents and opponents disagree sharply on why priced for Colorado consumer goods are rising.
Colorado state Rep. Yara Zokaie, D-Fort Collins
Contrasting views over price hikes
Supporters such as the Bell Policy Center and Colorado Center on Law & Policy pinned the hikes to “limitless corporate greed,” noting a report that said that 53% of increased pricing in the second and third quarters of 2023 was driven by corporate profits. Both groups cited data showing that such price hikes hit low-income families hardest because they spend a higher percentage of incomes on consumer goods, and several witnesses argued that businesses that raised prices during pandemic supply shortages did not lower them later.
“Businesses and business owners are not the majority of your constituents. People who are getting screwed over by price-gouging are,” Fort Collins resident August-Carter Nelson told the committee. “Being concerned more about businesses and the economy … is the most vile thing I have ever listened to.”
The current state of the bill, which has drawn significant concern from Democratic Gov. Jared Polis, doesn’t consider all the reasons behind price hikes, from mandatory wage increases to transportation costs to inflation, opponents said. Meghan Dollar, senior vice president of governmental affairs for the Colorado Chamber of Commerce, noted a recent study found that Colorado is the sixth most-regulated state in America, forcing businesses to raise the costs of their products and services to pay for compliance.
Grier Bailey, executive director of the Colorado Wyoming Petroleum Marketers Association, questioned why businesses raising prices would be punished when consumers can see those prices — especially those advertised by his gas-station members — and choose whether to pay them. To defend themselves against a complaint, employers would have to keep extensive records justifying costs and divert attention from operating their businesses if questioned by the attorney general, said Michael Smith, state director for the National Federation of Independent Business.
“What we have is inflation that is caused by overregulation and fees,” said Rep. Ryan Armagost, R-Berthoud, before voting against the bill. “We’re emboldening frivolous litigation. We’re emboldening a Karen culture in our state. Every level of business is struggling in our state. What have they done to deserve the burdensome and restrictive bills we have passed?”
“Certainty” vs. “cost of doing business”
The differing testimonies of CCLP Litigation Director Annie Martinez and Colorado Competitive Council Executive Director Rachel Beck typified the chasm between bill backers and opponents in their attitudes toward business and government regulation.
Martinez, who has worked as an independent contractor, blamed “exploitative pricing practices” for the rising costs of living and said that government intervention is necessary because the state “can’t rely on bad actors to do the right thing.” In an exchange with Rep. Stephanie Luck, R-Penrose, Martinez said she would trust the AG’s office to go only after businesses that raise significant concerns and said employers should accept that too.
“Sometimes the cost of doing business is getting investigated and having to answer questions,” Martinez said. “And that’s the cost of business in America.”
Beck, when she testified later, lambasted that attitude, saying that such investigations, even off frivolous complaints, will be incredibly disruptive, pointing to testimony from the AG’s office that it could look into even a single complaint to a business. While 39 states, including Colorado, have price-gouging bans, she said, there is only one state that now allows for prosecution of the activity outside of a declared emergency.
“It’s not a cost of business, as another witness said, to get hauled into court,” Beck said. “I think we can do better. And businesses deserve certainty.”
