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Bill Ritter Wants To End Tax Breaks This Year To Save Budget

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DENVER — Colorado Gov. Bill Ritter wants to speed up a plan to tax things such as candy and soda, pesticides and industrial energy use to help balance the state budget.

In the fall, Ritter proposed suspending or eliminating 13 tax exemptions and credits starting in July to raise $132 million to help balance next year's budget. In December, lawmakers learned that tax revenues were forecast to drop even more, requiring them to cut another $48 million from the current year's budget for a total of about $600 million in cuts.

Ritter is proposing that seven of the sales tax exemptions be lifted starting in March instead of July. That would bring in another $18 million, which would mean lawmakers would have to cut only $30 million more than planned from the current budget.

Ritter plans to formally introduce his plan on Jan. 27. But members of his staff met with business leaders on Wednesday to warn them of what was coming.

"These are not choices we want to make, but just like cuts to K-12 education or health care or prisons, these are choices we must make to balance the budget in a way that spreads the pain and preserves programs that promote job growth," Ritter spokesman George Merritt said.

The industrial energy use sales tax would bring in the most money – $48 million a year. Taxing candy and soft drinks would bring in $17.9 million a year and taxing pesticides would bring in another $2.9 million.

Ritter has also proposed suspending or limiting some tax credits, including one for conservation easements, but he's not asking for any of those to take effect early.

The final decision on whether to eliminate the exemptions will rest with state lawmakers.

House Speaker Terrance Carroll, D-Denver, said he thinks majority Democrats will support Ritter's proposal because he said it's getting harder to find other places in the budget to cut.

"At the end of the day, this is still about us providing efficient government in a very smart and strategic fashion," he said.

Republicans, meanwhile, are preparing to fight any tax changes, calling for more cuts instead.

If Democrats would agree to give up on ending tax breaks, Sen. Greg Brophy, R-Wray, said both parties could look at completely reforming the biggest parts of the state's budget – public schools and Medicaid – instead.

Tom Clark, executive vice president of Metro Denver Economic Development Corp., said some tax increases may be needed but said that his group would wait to see what legislation is introduced on Ritter's proposal before taking a position. In the meantime, he said his group is studying how the 13 proposed tax changes would affect businesses and the economy.

"We all want a solution here, and we all realize that we're going to have to suck it up. But the question is, 'What's the best way we can get there with the least amount of job loss?'" Clark said.