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Sponsor: Bill will create jobs
Doug Johnson of UniverCity Connections believes a bill providing tax credits to angel investors putting their money into start-up companies will create hundreds of new jobs in Colorado and help stimulate the lagging state economy.
Sponsored by Democrat John Kefalas of Fort Collins, the bill is expected to cost about $1.5 million, a price that if not reconciled will likely kill it as the state grapples with a possible $1 billion shortfall through next year.
"I completely understand that unless we can come up with a non-general-fund way to pay for this, it will be difficult to get out of the finance committee," Kefalas said.
"I don't want to further strain the budget for next year, but this is a very good economic development tool that will ultimately increase revenue because it will help businesses move along and create jobs. My job now is to figure out how to pay for it."
The proposal, which would grant 30 percent state tax credits to investors providing seed money for startups in biosciences, information technology, aerospace and clean energy, needs to show it can create 750 new jobs to be revenue neutral, said Johnson, who testified for the bill on Wednesday.
Early seed money can help fuel additional investment capital, which can create more jobs and funding, added Mark Forsyth, executive director of Rocky Mountain Innovation Initiative, or RMI2.
Eighteen states offer some form of state tax credits to angel investors that invest in specific industries. And in Wisconsin, the tax credits have resulted in the doubling of investment capital available to companies, Forsyth said.
One of 10 startups currently in RMI2 said it could create 10 new jobs in Northern Colorado if it could get another $1 million to $3 million in investment capital, Johnson said.
"That's the power of what companies can do when they get the funding," he said.
The proposal stems from Northern Colorado but could benefit the entire state, from solar farms in the San Luis Valley to wind farms in Lamar and clean-energy sectors in Fort Collins, Johnson said.
"It's not just a Northern Colorado proposal," he said. "The state will benefit in immediate job creation. "I told the committee if they're looking for a shovel-ready economic development tool, this is it."
The proposal was developed and supported by the Fort Collins Area Chamber of Commerce, Colorado BioScience Association, UniverCity Connections and RMI2.
House Bill 1005
> What it does: creates a 30 percent state income tax credit for angel investors in start-up companies in the clean energy, bioscience, information technology and aerospace sectors.
> Sponsor: State Rep. John Kefalas, D-Fort Collins
> Cost: $1.5 million
> Recent action: Approved 8-3 by the Business Affairs and Labor Committee on Wednesday.
> What's next: The bill moves on to the House Finance Committee perhaps as early as next week