Gov. Jared Polis signed into law a pair of tax credits Tuesday that are aimed at growing two specific Colorado industries — one that the state has been working to boost for more than a decade and one that is newly on its list of sectors in which it could lead the nation.
In a separate ceremony, the Democratic governor, as expected, also signed a bill adding a wide range of digital electronic equipment to the list of devices that Colorado consumers have a right to repair.
The signing of the two tax credits — one for the quantum sector and one for the film industry — comes after a session when a growing number of Republican legislators began pushing back against tax credits, a business-cost-saving device they’d traditionally backed. Both still passed with some bipartisan support, but the debate reveals a growing divide between some legislators and industry leaders on the best ways for the state to boost jobs.
Quantum booster
House Bill 1325, sponsored by Democratic Rep. Alex Valdez of Denver and Republican Rep. Matt Soper of Delta, creates $74 million in new tax credits for the quantum sector, as a way to boost the state’s effort to be recognized as a national quantum hub. Competing against Chicago to win designation as a Regional Technology and Innovation Hub, Colorado could garner $70 million in U.S. Economic Development Administration funding expected to generate a $1 billion economic impact and 10,000 new sector jobs.
To boost the state’s efforts, HB 1325 offers $44 million in tax credits for construction of a shared academic research center and incubator to house start-up quantum companies seeking to bring products to market — a project led by the Elevate Colorado consortium. And it offers $30 million in refundable income-tax credits that benefit applicant banks or lenders who grant debt to start-up companies that otherwise may not qualify for such loans, in the event that the companies default on those loans.
Colorado state Rep. Alex Valdez speaks on the House floor for his bill to create new quantum tax credits.
HB 1325 passed the Senate 30-2 but cleared the House 48-16 after receiving opposition from both conservative Republicans and progressive Democrats over its direction of state funds to help a specific industry. Still, Polis and his legislative partners meant for it to send a signal of what the state was willing to do to win the competition against Chicago, as the bill doesn’t take effect unless the state is named a hub.
“We are competitive. We are going to get this and show everyone we’re a world leader,” Soper said on the House floor. “And in 10 years, people will talk about Colorado the same way they talk about Silicon Valley.”
Shining a light on film sector
HB 1358, also signed by Polis on Tuesday, is an effort to attract more filmmaking to Colorado, but no one backing the bill insinuated that industry officials soon would compare the Centennial State to Hollywood. Instead, they argued the bill, sponsored by Democratic Reps. Leslie Herod of Denver and Marc Snyder of Manitou Springs, would target specific projects with limited incentives and let Colorado keep film jobs while boosting spending particularly in rural areas.
Twelve years after the state began offering spending refunds to qualified producers of movies, TV shows and video games, the bill permanently transforms that $5 million allocation into a tax credit that producers view as more valuable in getting upfront funding. It offers credit equal to 20% of in-state spending for projects in which at least half of the cast and crew are Colorado-based — or 22% for shooting in rural or marginalized urban centers — and removes a previous requirement that the rebate be available only in years in which state revenues exceed the Taxpayer’s Bill of Rights cap by at least $50 million.
Proponents like Colorado Deputy Film Commissioner Arielle Brachfeld noted a University of Colorado study showing the state achieves a return of $18 in economic activity for every dollar it spends and said it boosts the sector without putting $120 million to it like New Mexico does.
Tax credits create bipartisan backing, opposition
Colorado state Sen. Chris Hansen speaks on the Senate floor during the 2024 legislative session.
Opponents came from both sides of the political spectrum. Sen. Chris Hansen, D-Denver, pointed to a different study showing that Georgia recovered only 19% of the $1.1 billion in tax credits it gave to filmmakers and argued that the money flows to out-of-state production companies rather than creating full-time jobs in Colorado.
Polis, however, said during a signing ceremony at a location made famous by the film “The Shining” that the benefits of the tax credit extend beyond just the direct jobs it creates.
“Supporting our creative industries like film will strengthen our local economy, enhance tourism and solidify Colorado as the best state to visit and work in,” the governor said in a news release. “This bill will help bring film makers to the many community gems in Colorado, just like the Stanley Hotel here in Estes Park.”
Like with HB 1325, most of the Republicans in the House opposed HB 1358, with many questioning the use of the tax credit to try to boost the industry. The once-popular economic-development tool began to lose support this year as it popped up repeatedly as a way to fund programs without requiring money to be set aside in the next year’s budget.
Flurry of tax credits
The Common Sense Institute noted in a May 17 report that 101 bills passed this year that would use tax credits, which reduce the future amounts of tax income the state receives and, in doing so, reduce the refunds that go to residents when the TABOR cap is exceeded. It estimated that those bills, including significant increases to the Earned Income Tax Credit and family tax credits given to lower-income individuals and families, will reduce TABOR refunds by 47% — about $2.8 billion — over the next three fiscal years.
“Tax credits come from TABOR. What they do is take money that belongs to the people through TABOR,” said Rep. Scott Bottoms, R-Colorado Springs, when arguing last month against a tax credit to help employers offer apprenticeships, which Polis signed into law. “Let the people keep the money that comes from TABOR … Don’t take the money first and then try to piecemeal it back.”
Colorado state Reps. Brianna Titone and Steven Woodrow speak in March on the House floor about their newest right-to-repair bill.
In another action Tuesday, Polis signed HB 1121, sponsored by Democratic Reps. Brianna Titone of Arvada and Steven Woodrow of Denver, which allows consumers to repair or take in for repair electronic devices from cell phones to computers to washing machines. The bill expands previous state laws granting a right to repair to wheelchairs and agricultural equipment, and while manufacturers worry it strips their rights to ensure product quality, consumer advocates say it will save residents money and cut down on e-waste.
“This action makes Colorado the Right to Repair state — we will be able to fix more of our stuff than people in any other state,” said Danny Katz, executive director of the Colorado Public Interest Research Group (CoPIRG). “Coloradan consumers are now empowered with more options on when, where and how we fix our stuff.”