Colorado out to divert CAPCO funds
Treasurer trying to send $100 million to insurance program
Rocky Mountain News, December 18, 2003
By Rachel Brand And David Milstead,
Treasurer Mike Coffman, on a mission to kill the state-backed venture capital program, is backing legislation to intercept $100 million for the program and hand it over to Cover Colorado.
Coffman proposed Wednesday to redirect $100 million scheduled to go to the certified capital company, or CAPCO, program in April. Instead the money would offset fees for Cover Colorado, a state-mandated health insurance program for Colorado residents unable to get commercial health insurance.
Coffman joined Sen. Mark Hillman, R-Broomfield, who plans to introduce the legislation in early January. Similar legislation was defeated last year.
Coffman had originally wanted to force insurance companies to lower their rates, thereby passing along the tax savings to consumers.
In the CAPCO program, insurance companies pay out millions of dollars, and in return get credits on their state premium taxes.
The first $100 million in tax credits were given out in 2002, to be used over the following 10 years, and Colorado's six CAPCOs got their first round of funding. The next $100 million in tax credits is scheduled to be given out in April.
Most CAPCO critics think Colorado's TABOR Amendment bars killing the program, because eliminating a tax credit is essentially an increase in tax revenue, banned by TABOR - the Taxpayer's Bill of Rights - without a popular vote.
Still, the program's critics call it "misguided, ill-conceived and wasteful," and are set to end it. Meanwhile the program's proponents say it creates jobs and helps the economy.
So far, CAPCOs have invested $16 million in Colorado companies, generating $35 million in additional financing and creating 370 jobs, said Tony Monterastelli, a spokesman for six CAPCOs.
"The CAPCO program is a solid, viable way to deliver early stage investment to home-grown entrepreneurial companies," he said.
But Coffman, calling CAPCOs "flawed beyond repair," pointed out that under his plan, small businesses would enjoy relief from Cover Colorado fees of $13 million to $15 million.