Legislators could guarantee help for small businesses
The state legislative session of 2004 is under way and it promises to be an interesting
Current tax laws embedded in the state Constitution will be examined and it’s likely that amendments will be suggested and debated, especially since the economic downturn of the past three years has had such a negative impact on state and local government budgets.
Look for lots of debate about adjustments to the Taxpayers Bill of Rights (TABOR), Gallagher and Amendment 23 as this economic recovery builds steam in the coming year.
On the economic development front, the Certified Capital Companies Program (CAPCO) has come under fire from the governor’s office and others.
As I understand it, insurance companies that contribute to the fund are given tax credits for those contributions. The funds were supposed to be used to assist small businesses in Colorado and, according to some, this program has failed miserably.
The Teck-Stengel CAPCO Replacement Bill, SB 04-106, has been introduced in this session to address the perceived shortcomings of CAPCO.
This bill proposes to establish a Colorado Venture Capital Authority to oversee the program devoted to assisting start-up companies with seed money and management assistance.
This authority would solicit requests for proposals (RFP) from venture capital firms that would have management responsibilities for the fund.
The authority would limit fees paid to the venture capital firms for their services to 2.5 percent a year, thereby placing a cap on expenses paid out of the fund for services.
This would guarantee that most of the funds would be used to assist Colorado businesses. In its current form, the bill also seeks to ensure that 25 percent of the contributions to the authority are earmarked for rural venture capital funds.
That means that a minimum of $25 million would be made available to rural businesses over the next 10 years.
Personally, I like the fact that caps would be placed on fees to be paid for venture capital services. I’m pleased that the bill recognizes that there are existing private businesses that know how to identify potentially successful ventures and these companies would be used to manage the fund.
It is good to see that some of our legislators recognize the importance of continued support for small businesses in our state.
It’s important to note that this bill does not offer handouts to just anyone thinking of starting a business. Venture capital firms are usually quite selective about where they invest their time and money.
If you are interested in learning more about this bill, feel free to contact the Colorado Office of Economic Development at (303) 892-3840. If this bill passes, you’ll want to be among the first to present your business plan.
Jack Taylor is executive director of the Summit County Chamber of Commerce. He can be reached at (970) 668-2051 or email@example.com.
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