What investors should know about Colorado: An interview with State Representative Dominick Moreno
Colorado House Assistant Majority Leader Dominick Moreno, the youngest current member of the Colorado General Assembly, shared with GRI his thoughts on what investors should know about fracking, marijuana, the Taxpayer Bill of Rights, and other Colorado issues.
“Government agencies offer certain incentives to businesses to locate here”
GRI: What does Colorado offer investors?
Rep. Moreno: Colorado is a growing state. We added 100,000 people in the last year alone. What I think Colorado has to offer not only investors, but anyone, is a superior quality of life. Being able to live in a diverse, metropolitan city and yet, in 30 minutes, be in nature and in the mountains.
A variety of government agencies offer certain incentives to businesses to locate here. One of those [is] the Advanced Industry [Investment] Tax Credit that passed the State Capitol a few weeks ago. It looks to invest in the emerging industries that are just taking off: telecoms, energy, medical device manufacturing – all of those industries that are really on the cutting edge of technology and the next big thing. The city that I represent, Commerce City, offers tax rebates for employers that pay their workers above a certain wage. If they pay the average county wage or better, they offer a tax rebate for that.
On tensions about fracking
GRI: In 2013 you sponsored legislation that clarified mineral rights when property changed hands. Issues like these are especially controversial when it comes to fracking. How well does Colorado balance the promise of oil and gas technologies with local environmental concerns?
Rep. Moreno: Fracking is obviously a huge concern. In Colorado, you have surface property rights and mineral property rights. Mineral property rights are enshrined in the constitution. You cannot deny someone access to their mineral property rights. This does include developing natural resources associated with mineral rights, with natural gas being one of those. This has led to some interesting tensions.
We have extensive natural resources in Colorado that companies and mineral rights owners have a constitutional right to extract. You know, there is some concern among a lot of the population in Colorado about whether fracking is safe.
We’ve responded to those concerns in I think meaningful ways. One is we require oil and gas companies to disclose the ingredients that are in [their] fracking fluids. For the most part, it’s mostly a mixture of sand and water. But there are chemicals that each company injects to that mixture that on their own have detrimental effects to people’s health. We want to make sure that those ingredients are disposed of [properly]. We’ve also developed restrictions around methane. Colorado is the first state in the country to regulate how much methane emissions oil and gas companies can emit.
In every other circumstance, local governments have significant authority and powers to decide what to do with the land that’s within their jurisdiction. Oil and gas is a notable exception. It’s actually a state-regulated industry. We constantly hear that there are some communities that simply do not want oil and gas extraction, and they like the ability to ban it. In some cities, citizens have voted to ban oil and gas activities in their jurisdictions. That has led to lawsuits between the state and local governments. This is a constant battle over what the appropriate role for the state government is in extraction.
Colorado’s “grand experiment” on marijuana
GRI: You’re currently sponsoring legislation allowing pot shops to distribute marijuana at special events. What has the cannabis industry meant for Colorado?
Rep. Moreno: I think Coloradans remain largely divided on the impact that marijuana has had on our state. Colorado was the first state in the country to legalize marijuana, and it’s interesting to see what effect that’s had on tourism in our state.
A recent report showed that it has impacted tourism in a good way. Obviously, people are coming here because we legalized marijuana. But also, what impact has it had on Colorado’s branding now that we’re becoming more known for marijuana? I think there’s often a fundamental misunderstanding about what actually happened. Even though voters passed it, I constantly hear from folks “Why did you legalize marijuana?” I didn’t do it, you did!
There’s not a legislative session that goes by that we don’t address issues with alcohol. The same is true for marijuana. This industry is going to need tweaking as we embark on this grand experiment. Many other states are learning from our successes and our mistakes. If I made a prediction, I would say that marijuana is not going to be an issue within the US in the next 20 years. It’s going to continue to spread, and eventually the federal government is going to have to address this issue.
I think the legalization of marijuana came about because of frustration [with] federal inaction on marijuana. To most people, it makes no sense that, federally, we classify marijuana in the same category as heroin, cocaine, and methamphetamines – very dangerous drugs. I’m not sure every Colorado voter understood that by legalizing marijuana, we’d also set up this vast commercial infrastructure for marijuana. Now, for example, you have more dispensaries than you have Starbucks – they’re everywhere. Even though we allowed communities to determine their own fate with marijuana – only certain communities also legalized sales – it’s still an issue that we’re going to have to continue to address.
The special events permits – that came about because of the Cannabis Cup. These marijuana conferences are becoming more popular in Colorado. But there’s no clarity about what people can and cannot do in those events. Many believed they would be able to give away free samples, or to be able to sell samples – but none are actually allowed by current law. I want local governments [to] at least be able to place conditions on these events to control the situation.
“Colorado has grown in spite of TABOR”
GRI: Colorado has the most stringent version of the Taxpayer Bill of Rights (TABOR) in the country. Has Colorado grown because of TABOR, or in spite of it? Should the private sector view TABOR as a benefit or as a risk.
Rep. Moreno: I think Colorado has grown in spite of TABOR. Other states have certain requirements, hoops you have to jump through, but no other state has a situation like Colorado, where we literally take the power to raise taxes out of the hands of elected representatives and put it in the hands of the people.
Now, if TABOR was only about allowing people to vote on their taxes, I would have no issues about it. People want to make sure tax dollars are being spent wisely. I don’t think that’s an unreasonable request.
But TABOR wasn’t about that. It’s about shrinking government. It was about putting into our constitution how quickly government can grow. We have a situation now in Colorado where we’re doing very well economically, but because of restrictions we’re forced to issue taxpayer refunds while we’re not making proper investments in education and transportation infrastructure. With more people living here comes more demand for government services. If government can’t keep up with those needs, then we have serious issues.
For the private sector, I’d definitely view TABOR as a risk, because our state government is constrained to be able to invest in some really critical areas of life, whether it be education or transportation or healthcare. I know our business community astutely understands this situation and is initiating a process to try to relieve some of these restrictions. [But] at the end of the day, it’s voters that put TABOR into place, and it’s going to be voters that have to make adjustments to it.
GRI: Colorado’s infrastructure deficit in many ways mirrors what many describe as a problem of aging infrastructure across the country. What can be done to renew infrastructure investments in Colorado and beyond, given the current political deadlock?
Rep. Moreno: I literally just left a lunch at the Colorado Contractors Association, who are leading the effort to look at a ballot measure in 2016 to raise more money for transportation infrastructure. They’ve done extensive polling about what voters may or may not be able to entertain.
That will likely be some sort of sales tax increase. We primarily fund our roads in Colorado through gas tax, [but this revenue is decreasing]. One reason is obviously because gas is incredibly cheap right now. The other is that vehicles continue to make improvements in fuel efficiency. We have hybrids and electric vehicles [that] aren’t paying their fair share any more for our transportation infrastructure.
The Contractors Association has a lot of credibility on both the Democratic and Republican sides of the aisle. They’re the folks that build the roads every day. It’s great to see that they’re leading the effort to try to increase revenue for roads, and get more money for transportation. But at the end of the day, because of TABOR and a variety of issues, it’s voters that ultimately get the final say on whether or not we’re going to invest more dollars into our transportation infrastructure.
Rep. Dominick Moreno was elected to the legislature in 2012 to represent Colorado House District 32, which includes Commerce City and parts of unincorporated Adams County. He is vice chairman of the Transportation & Energy Committee, and is a member of the influential State, Veterans & Military Affairs Committee. He also previously sat on the City Council in Commerce City, where he was later appointed mayor pro tem.