Report: Recent Colorado regulations increase taxes, fees by $2B

The real wages and purchasing power of Coloradans declined during the last few years in part to major new laws passed, a new report says.

The latest in a series of reports on Colorado’s economic competitiveness by the Common Sense Institute analyzed recent legislation creating or expanding civil causes of action. Since 2019, the report said approximately 43 new laws resulted in various shifts of costs to businesses, which eventually will be passed on to consumers through higher prices.

“Litigation-related legislation only adds to challenges cited in previous CSI’s research finding that new policies enacted over the last several years have increased annual taxes and fees by over $2 billion and that recent high inflation has cost the average Colorado household $19,300 since 2020,” the report said.

While acknowledging civil actions play a vital role in compensating injured parties and punishing bad behavior, the report noted the legal process can be abuse by frivolous litigation. However, the report focused on the “subtle but significant impact that state legislatures can have on how costs are allocated in the civil justice system.”

The report noted Colorado ranked eighth in the nation in the 2010 U.S. Chamber of Commerce Lawsuit Climate Survey. It fell to 35th by 2017 and was ranked 21st in 2019.

The report also stated the organization isn’t taking any positions on any legislation and doesn’t imply the laws highlighted in the report are bad policy.

“Instead, it encourages policy makers to weigh carefully the benefits and costs of policy choices, especially in aggregate, as they percolate through the economy,” the report said.

The report highlighted laws lowering legal standards for liability (SB23-172), increasing recoverable amounts (SB22-161), adding categories of recovery (HB21-1188) and directing the director of the Division of Labor and Statistics to develop a system of enforcement, while preserving private parties’ right to bring a civil action (SB19-085).

“It is likely that these measures will increase compliance costs for employers, which in turn will exert upward pressure on consumer prices,” the report said.

Other legislation included new landlord-tenant laws and health care transparency initiatives included in other laws.

The report recommended the Colorado General Assembly establish an interim committee to review the aggregate cost and overlaps of the regulations. The committee should compare Colorado’s laws to other states and determine ways to alleviate costs and prevent adverse outcomes, the report said.

The report also recommended the legislature review and compare any new legislation expanding civil liability with laws in other states. It also suggested examining the extent to which new regulations could impose excessive cost burdens on businesses.

A 2022 U.S. Chamber of Commerce study found Colorado’s tort cost growth between 2016 and 2020 was 45% faster than the U.S. average, the report noted.


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