March, 2005

Special Issue: Focus on Colorado

The State EITC Online Resource Center is pleased to present a special issue electronic newsletter on current policy developments around the Colorado state Earned Income Tax Credits. For more information, please go to: www.stateeitc.com.

Feel free to forward this newsletter to your interested associates and to email amy@thehatchergroup.com with news, information or other resources to be added to the update. If you do not want to receive this newsletter in the future, please reply with the word UNSUBSCRIBE in the header.

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Advocates in Colorado are mounting a determined campaign to re-establish and increase the state’s Earned Income Tax Credit. The credit has not been available the last three years because of the state’s fiscal situation, but pending legislation would make the credit permanent and increase its size. The measure has passed the House Finance Committee and will soon be heard in the Appropriations Committee.

However, a recent bipartisan agreement to address Colorado’s budget deficit threatens to overshadow the need for a permanent state EITC. If passed by voters in November, the budget agreement will help boost revenues to the state, but effectively eliminate the state EITC. While legislators who back the budget agreement are demonstrating a reluctance to support proposals that reduce revenues or affect the budget compromise in any way, advocates are continuing to fight for this crucial support for working families.

“We have a tough challenge ahead of us, but we’re going to keep working to highlight the benefits of the state EITC and ultimately pass a good bill,” said Kathy A. White, project coordinator for the Colorado Fiscal Policy Institute. “This is too important to so many Coloradans struggling to make ends meet. We need to make sure that in solving Colorado’s budget problems doesn’t involve sacrificing Colorado’s working families. Passing a permanent state EITC this year is essential.”

The Bell Policy Center in Denver released a timely policy brief discussing the benefits of increasing the Colorado EITC and making it permanent. The report details the history, design, effectiveness and impact of the state and federal EITC in Colorado. It provides, for example, detailed county-level data on the EITC’s impact on working families. In 2002, more than 243,000 Colorado households, or 12.4 percent of all tax filers, claimed the federal EITC. The report shows that the EITC allowed these recipients to put the money directly back into the local economy. A 2003 survey of EITC recipients in Denver showed that they most often used their refund to pay immediate bills, make car repairs and buy school clothes for their children.

“Historically, the EITC has been the most effective way to help working poor families move out of poverty. It has enjoyed broad bipartisan support on the national level and in several other states, including Colorado,” Bell Policy Center analyst Spiros Protopsaltis said in a recent press release. “But in Colorado, the EITC is only available when there is a TABOR surplus. This means that working families are losing this critical assistance when they need it most – during an economic downturn such as the one we’ve experienced over the last three years.”

The EITC legislation, House Bill 1232, sponsored by Rep. Betty Boyd-D and Sen. Ken Kester-R, would make the EITC permanent, as well as expend it incrementally from 10 percent to 20 percent of the federal credit.

A wide-ranging coalition supports the measure, including 9to5 National Association of Working Women – Colorado, All Families Deserve a Chance Coalition, Bell Policy Center, Colorado Center on Law and Policy, Colorado Coalition for the Homeless, Colorado Fiscal Policy Institute, Colorado NOW, Colorado Progressive Coalition, Colorado Social Legislation Committee, Colorado Women's Agenda, Denver Women's Commission, Energy Outreach Colorado, Lutheran Advocacy Ministry, Metro Denver Homeless Initiative, Project Wise, Stride, Women's Lobby of Colorado.

Learn more about the Colorado EITC.

Read the Bell press release.

Read the Bell policy brief.

Read Spiros Protopsaltis’ Testimony to the House Finance Committee.

Read an editorial by Spiros Protopsaltis in The Boulder Daily Camera.