One of the most expensive proposals from Gov. Jared Polis and Democrats in the Colorado legislature this year aimed at driving down the cost of living involves the state’s new paid family leave program. But the business community, which would benefit from the effort, says the amount of relief is so small and so short-lived that it won’t have a measurable effect.
House Bill 1305 would, for six months, reduce the fee split between employers and employees that the state will charge starting next year as part of Colorado’s new, voter-approved paid family and parental leave program.
The reduction would drop the fee rate to 0.81% of an employees’ wages from 0.9%, a decrease of 0.09 percentage points. For a worker making $4,000 a month, that would drop the fee to $32.40 from $36 a month. Employers pay half the fee; employees pay the other half.
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Business groups say the change won’t really make a difference for them or their employees — “It’s really a pittance,” said Tony Gagliardi, who leads the Colorado branch of the National Federation of Independent Businesses — though nonpartisan fiscal analysts say the reduction would cost the state $57.5 million to backfill the lost revenue.
Polis and Democrats, who are facing election-year pressure over the rising cost of living, have set aside $157 million in the fiscal year 2022-23 budget, which begins July 1, for government fee relief. The money will also go toward delaying the start of a new 2-cent-per-gallon gas fee and reducing medical licensure and certification fees.
Polis and House Speaker Alec Garnett, D-Denver, celebrated the fee-reduction efforts in their speeches kicking off the 2022 lawmaking session. Both said that cutting costs for Coloradans is a priority for them this year.
“The governor wants to provide the maximum support possible under state law to benefit small businesses and hardworking Coloradans,” spokesman Conor Cahill said in a written statement.
But Republicans have criticized the efforts as being too small to make a difference. (The $157 million, divided among the state’s 5.8 million residents, comes out to about $27 per person.) The GOP has also pointed out that Democrats are offering relief from fees they implemented.
“I’ve lost track of the number of fee increases the majority Democrats have passed,” said Rep. Kevin Van Winkle, a Highlands Ranch Republican. “And now they come here today and say that they’re offering fee relief? It’s absurd.”
Democrats acknowledge that the fee relief package is not a silver bullet. Senate President Steve Fenberg, D-Boulder, said affordability issues and inflation are “much larger than just what the state legislature can solve.”
“We’re thinking about what is within our control as a legislature and where do we have the ability to provide some relief,” he said. “We’re not going to be able to change everything for every family, but there are things that are within our control. It’s not going to be life-changing for people, but people need relief wherever they can (get) it, and we think these are the areas where the state can afford to bear that burden.”
The governor’s office said the paid family and parental leave fee relief was limited in scope as to not run afoul of a state law requiring that no more than 10% of an enterprise’s funds may come from the general fund. The paid leave program is set up as an enterprise.
The legislature is also set to allocate at least $600 million to buy down the $1 billion debt owed to the federal government through Colorado’s unemployment insurance trust fund, which was drained during the pandemic. Businesses and employers would otherwise be responsible for covering the deficit through a paycheck surcharge.
A bill allocating money to buy down the unemployment trust fund debt has yet to be introduced.
The legislature’s Joint Budget Committee also set aside $200 million for a forthcoming property tax relief effort. Lawmakers aren’t sure what that will look like yet — or whether it will happen. Conversations around property tax relief are heating up after the full legislature began debating the budget last week.
Critics of the scope of the relief package say if lawmakers really wanted to help businesses and Coloradans contend with rising costs they would delay the implementation of the new paid family and parental leave program and the new transportation fees.
“There are inherent problems that come with adopting government-run programs that are responsive to mandates rather than economic realities, we are beginning to see these problems surface,” said Mike Kopp, president and CEO of Colorado Concern, an alliance of business leaders.
But Democrats argue that isn’t unfeasible.
“We can’t miss our climate goals,” said Sen. Faith Winter, a Westminster Democrat who championed the policies implementing new transportation and paid family and parental leave fees. “We can’t delay that. We can’t delay paid family leave because that means another year of people making a decision between a paycheck and taking care of themselves when they’re facing cancer.”
Budget debate at the Capitol continues this week.