As states assess their budgets for this year, many have elected to raise or renew food and beverage taxes in order to balance budgets and offset costs associated with product packaging disposal.
Associated Press Writer
DENVER (AP) — The Colorado Senate on Wednesday narrowly passed nine bills taxing everything from candy and soda to online sales, energy used in manufacturing and pesticides to balance the budget, despite fears the taxes will cause layoffs.
They're among a package of tax changes proposed by Gov. Bill Ritter to help close a combined $1.5 billion budget shortfall this year and next year. Majority Democrats in the Legislature are rushing to pass them so the state can start collecting the revenue starting next month.
Sen. Chris Romer, D-Denver, who backed the bills, said lawmakers were taking a "calculated risk" in passing them. He said there was a chance they could lead to slower job growth or some layoffs,
A total of 13 sales tax exemptions and income tax credits would be temporarily suspended or permanently eliminated under Ritter's proposal to raise about $133 million in the first full year. Of them, the energy tax would bring in the most, an estimated $38 million in the first full year.
According to the Department of Revenue, 36 other states charge sales tax on industrial energy use. Colorado manufacturers haven't had to pay sales tax on their energy bills since the state sales tax was created in 1935.
Evraz Rocky Mountain Steel in Pueblo, the state's largest energy user aside from utilities, says the tax will cost it $2 million a year and may lead it to cut 30 to 120 jobs because of the energy tax.
That hike passed by a vote of 18-16 and among those voting yes was Pueblo's senator, Democratic Sen. Abel Tapia.
He sits on the committee that develops the state budget and was laid off from the mill himself over 20 years ago. He said he is concerned about layoffs at the mill, but is also worried about budget cuts that might lead to the closure of a private prison and cuts to home health care which may force more people into nursing homes.
The tax bills have already been approved by the House but some must now go back there for another vote because of changes made to the bills. The Senate, for example, voted to make permanent the 2.9 percent sales tax on materials used to make direct mail coupons; the House only backed charging that tax for three years.