A barrier to aerospace companies growing and staying in Colorado may soon be removed if a House bill that cleared the finance committee Thursday becomes law.
The bipartisan measure is an effort to keep the state competitive in a rapidly changing national landscape by matching similar tax breaks given to the aerospace industry in other states.
Introduced by House Speaker Mark Ferrandino, D-Denver, and House Minority Leader Brian DelGrosso, R-Loveland, House Bill 1178 would give sales-and-use-tax exemptions for spaceflight property with minimal impact on Colorado’s tax revenue.
“There are several other states that have moved this way,” DelGrosso said. “Now, Colorado has become uncompetitive.”
Aerospace accounted for $8.7 billion of the Colorado economy in 2011 but is rarely discussed in the Colorado legislature — something many industry and political leaders believe must change.
“We are good right now, but there are storm clouds on the horizon and we have to be proactive,” said Vicky Lea, manager of the Colorado Space Coalition and the aerospace industry for the Metro Denver Economic Development Corp.
The national aerospace landscape is shifting dramatically as a result of a number of factors, including federal budget constraints, which the state’s aerospace cluster has relied on heavily.
Colorado — which has long rested on its educated workforce, academic and research institutions, high quality of life and relatively low cost of living — is at risk of losing its place of aerospace dominance.
The state punches above its weight, employing the third-most aerospace-related workers, behind California and Florida but ahead of Texas and Arizona. Colorado is the only top-five aerospace state without a sales-and-use-tax exemption.
The bill, which is written to sunset in five years, would decrease tax revenue for the state by about $74,000 in the 2014-15 fiscal year and more than $77,000 for fiscal 2015-16.
“The fiscal note is so small because it is being avoided by the companies,” Ferrandino said. “They are either shipping it out of state or some are saying, ‘Well, we are just building it somewhere else.’ “
While the fiscal impact is relatively small, not everyone believes it is a good state-budget concession.
“While it is tempting to dismiss the impact of this credit on the general fund because it is not very much money, we believe we should apply the same principles and standards to any tax credit,” said Ali Mickelson, tax-policy attorney at the Colorado Fiscal Institute, testifying against the measure.
The committee approved the measure, 13-0, sending the bill to appropriations.
Kristen Leigh Painter: 303-954-1638, kpainter@ denverpost.com or twitter.com/kristenpainter
