Long perceived as a 90- pound weakling in economic development financing, Colorado expects to build some competitive muscle this year with a new incentive plan.
A bill in the state legislature would give Colorado the power to grant income-tax credits as a tool for attracting new jobs.
Supporters see it as a no-lose proposition. Under the plan, the state would collect more tax revenue from job growth than it would give away in credits.
“We’ve never really been able to compete in the incentive arena,” said Don Elliman, director of the Colorado Office of Economic Development and International Trade. “But if you want the jobs, you’ve got to compete.”
If House Bill 1001 passes, companies would be eligible for the tax credit if they choose Colorado over competing states for establishment of 20 or more new jobs.
The incentive is designed specifically to lure employers that are considering other states for new or expanding operations. That provision is intended to ensure that tax credits are offered only for jobs that otherwise would end up outside of Colorado.
The new jobs would have to pay at least 10 percent more than the average wage rate in the county where the expansion would occur.
Employers taking advantage of the incentive effectively would receive a credit of 3.8 percent on state income taxes for up to five years. The Colorado income tax is 4.63 percent.
For example, by creating a new job with a salary of $100,000, an employer would get a credit of $3,800 a year or $19,000 over five years.
“That’s real money to an employer,” Elliman said.
Tom Clark of the Metro Denver Economic Development Corp. said the tax credit is similar to an incentive that helped Chicago land big employers such as Boeing and MillerCoors.
Bill sponsor Rep. Joe Rice, D-Littleton, said he is unaware of any opposition to the legislation so far.
But state officials need to be careful of companies engaging in “incentive shopping,” said Jeffrey Finkle president of the International Economic Development Council in Washington.
“If they can be bought that easily,” he said, “are they the kind of companies that will stay put when the next incentive is offered?”
Steve Raabe: 303-954-1948 or sraabe@denverpost.com
