Liberal and Loving It

Deborah and Me

I was talking with Deborah Fallin at CEA to set up an interview so I could get the CEA view on the tenure reform bill and lay that out in an interview. Beverly Ingle was slammed so Deborah found another person to speak to the bill. She called suggesting a phone interview immediately. I proposed instead that I drive down to do it in person as a phone interview would not serve them as well. Deborah agreed that in person would be better for them and went to set it up.

Then she read my interview with Senator Mike Johnston…

Deborah told me she had lots and lots of problems with what I wrote. What she called out as the most egregious was:

First, do you think the economic future of Colorado is imperiled by our existing K-12 system? (If your answer is no - you're an idiot.)

She felt this statement showed that I was hostile to the CEA's viewpoint and asked me if I thought the K-12 system was a failure. I replied that with DPS and other schools that serve poor kids having a 50% drop out rate that yes, our K-12 system is a disaster. She was not happy with that reply. Ok, so the CEA and I differ on do we have a serious problem with our existing system – fair point.

But Deborah, when you claim that sentence means I don't support public education – I disagree. I have 3 daughters who went to public school up here in Boulder (the youngest went private for 6-8). I served on MEAC at BVSD for years. I have consistently supported public schools not only in word and deed, but in where I sent my children. The fact that I don't agree with you that the system is doing well does not mean I don't support it.

And I don't think this is a reason not to talk. First off, I've interviewed numerous people I don't agree with and have consistently been told that I have done a very fair job of presenting them. Interviewing someone to do a hit piece on them is a waste of their and my time (admittedly, I'm more concerned that it would be a waste of my time). Second, if you only talk with people who fully and blindly agree with you, how can we craft effective solutions? Politics is the art of bringing in multiple points of interest to find a solution that works well for those involved. And most times that discussion leads to better legislation.

Deborah is also mistaken, as I told her, thinking I am a supporter of Senator Johnston's bill. What I do support is looking for solutions to fix our K-12 system, and trying the approaches that look most promising. I desperately want the CEA to list out what they think will work, what they think is a problem, and why. If the present bill is a mistake, list out why so we know. If there are changes it desperately needs, tell us.

But don't just tell us what you are against without listing what you are for. As the Republicans have shown in D.C., "just say no" may throw up roadblocks, but it does not solve problems. We should be working together to figure out how to best improve the system. Even if you think things are peachy, won't you agree that there is room for improvement? You speak for the teachers in this state – shouldn't you be involved in making this an honest effort to find the best solution?

I hope you'll reconsider the interview. I believe the CEA can offer a lot in helping us improve the system and I personally would like to hear what that is. And I think others would like to also. But if not, these are, I think, some key questions I think our legislators should ask of you:

1. One a scale of 1=awful, 3=ok, 5=awesome, where do you think our K-12 schools should be rated in terms of how they server poor children?
2. What school reforms have you favored aside from more money?
3. Should we measure the effectiveness of individual teachers? How?
4. Do you think there are a few tenured teachers who's performance is so poor they should be fired? If so, how can we change the system so that this can be accomplished?
5. Do you think the mother's educational level and the child's teacher have a much larger impact on how well a child does in school than anything else? Or are there other items/influences that are as significant?
6. Should we have a longer school year?

Deborah Fallin & Beverly Ingle, I ask you to please consider working with the legislators and others working to improve our K-12 system. While everyone has a different view of what is needed, I think we can all agree that a better education for our children is a worthy goal. And while change is scary and so some of your members will be resistant to change, I think part of your job as a union leader is to sell them on the necessity of change that will provide significant benefit to the children put in your charge.

Thank you

Colorado moves to the head of the class

Senate Bill 191, the Tenure Reform Bill (officially the Great Teachers and Leaders Bill) is the hot bill in the legislature this session. And it is by far the most important bill for the future of our state long term. So I sat down with Senator Mike Johnston to get his take on the bill (I'm interviewing someone from the CEA next week on this).

Q: I commented about the large number of lobbyists just outside the Senate chamber while they were in session.

A: Senator Johnston replied that he appreciates having the lobbyists and others here to discuss the bill with. First because he finds that when he discusses what the bill truly does, and doesn't do, "a great deal of the fear is allayed." And those discussions have also lead to "some great improvements to the bill." He spoke very highly of the CEA and how he has made this a collaborative effort with them. He spoke to the fact that they do not agree 100%, but that it has been an effort together to improve the bill.

My $0.02: This is how a citizen legislature is supposed to work, and in the case of Mike, he is using this robust discussion to both improve the bill and to insure people truly understand what it will do. Working through something this complex where it will bring about significant change is difficult to do with all the stakeholders, but it is critical to do so to create a bill that will bring about significant improvement and will get the people that have to implement it to do so well.

Q: Why did you shoot for this Senate seat?

A: He started off teaching and found that he could positively affect kid's lives for the hour he had them in class. So after a number of years he stepped up to be a principal where he found he could positively affect kid's lives for the school day he had them at his school. He then got involved in education policy, both in Obama's campaign and at the state level as he's seen that at this level he can positively affect kid's lives in all our schools.

Q: Why did you introduce this bill?

A: "When you look at schools across the country and see what they're doing, the successful ones, they have two things in common. One is they attract and keep great people, and the second is they're relentless about setting really high goals for kids and using data all the time to monitor how kids are doing." He also discussed how the research shows that the top two items that have maximum effect in the school is first the child's teacher and second the school principal. That all the other items like class size, etc. is rounding errors compared to the impact of these first two items. And the principal impact is primarily their insuring they have quality teachers.

Q: How important is this bill.

A: The most important bill for this state. This bill will determine if we have the leaders and workers to keep this state competitive. We have to grow our future. If we don't pass it, we will "perennially disadvantage Colorado in the talent pool with other states." Without this we will have the same or decreasing number of kids prepared for work, prepared for college, etc. Businesses in Colorado are already having to hire in people from out of state because of our existing K-12 system.

Mike also discussed how some states are stepping up to fix their K-12 systems. As this happens, the states that climb out of this mess will be the economic future of this country. And he wants Colorado leading that future.

Senator Johnston at this point said what I think is the single most important argument for this bill – "we hold these truths to be self-evident that all are created equal… no matter what place you live in or how much money your parents make or what the color of your skin is. Whatever public school you walk in to in this state, you'll walk out college ready."

Mike then discussed how this is an issue of global competitiveness and national security. That "we're beginning to lose that engineering edge that we kept for so long." He has a clear picture of how we're now competing world-wide, and it requires a strong K-12 system to be competitive with other countries. He had an interesting observation that one of the key signs of a declining empire is that we have to import our best thinkers. And if we lose the edge we presently have, it's very hard to get it back.

My $0.02: This is where Senator Johnston made the two key arguments for the critical importance of this bill. First, this is fundamental to the American Promise, that no matter who you are, you have an equal chance to be successful in this country. At present, that promise is a lie to every child in a sub-standard school. This bill delivers on the fundamental promise of what it means to be America – and does so to every child.

Second, that the world is now competitive on a global level, that the needs for educated workers is ever increasing, and that without this change we will fall behind not just other states, but other countries. At my company we sell world-wide and interact with programmers world-wide. We're still a generation ahead here in the U.S., but other countries, P.R.C. and Eastern Europe in particular, are catching up fast not just on numbers of highly educated workers, but on numbers of very innovative people.

The Boulder area has the highest percentage of high-tech workers in the country (Silicon Valley has a larger total, but a lower percentage). Colorado has a shot at being the green energy center of the world. We're in a very good position. But if we don't improve our K-12 system we will piss away our existing advantage.

Q: One argument is that you can't reduce a teacher's performance to a single grade for the year. Yet teachers reduce the efforts of their students to a single grade for the year. Why shouldn't this work for teachers?

A: First he said that this is a question that the bill opponents have not spoken to. Second he listed out how the bill uses multiple measures to determine the effectiveness of each teacher – it won't be a single CSAP score. He then summed it up beautifully – that the bottom line is a student needs to walk out the door May 30^th knowing more than they knew when they walked in September 1^st. We spend 42% of the state budget on education because we think we can make kids smarter.

Q: If this bill is effective, it will lead to the firing of bad teachers.

A: Mike first said that he thinks the number of bad teachers is very small. And he then brought up the spot-on point that those teachers are in two groups – those that can and & will improve with the right incentives, and those that even with the incentives either can't or won't improve. And he then said that those that don't improve, we all agree should not be in the profession.

He also pointed out that there is nothing in the bill that requires the dismissal of a single teacher or principal. It just makes it possible. And it gives you an evaluation tool to make a fair evaluation of each teacher and principal. And at the same time there are strong protections in the bill "to protect against arbitrary & capricious dismissal."

My $0.02: This is where we will determine if the bill is effective – and in three ways (I'm adding one to Mike's list). First, no teacher is perfect. Even for the superb teachers, this will provide feedback on how effective they are at their job. Virtually all teachers will use this as an aid to improve on the job they do. And it will help determine what level of students and what classes a teacher does best in. All teachers will improve with the measurement systems.

Second, if the sub-standard teachers find it a major incentive to improve. If we see significant improvement in student outcomes over the next couple of years in most classes that previously had sub-standard improvement, then we have a giant win – for both the students and the state. This is gigantic.

Third, the key measure is if we see tenured teachers and principals fired. This is key both because there is no true incentive if no one is fired, and we have children left in sub-standard environments if the ones that can't/won't improve remain in their job. This is how we will know if the bill wrought real change. If firing a teacher remains virtually impossible, or even extremely difficult, then this bill will be a wasted effort and we will need to try again.

Q: The students taking "son of CSAP" have no dog in the fight. Should we make the CSAP score impact a student's grade?

A: He supports this idea. One of the first points he brought up is the tests need to be turned around faster. Right now they are taken in March and you get the results in August. That's way too late to use in the class the student was in. Mike would like to see the grades turned around in 3 weeks so the results can be used in that class. Then it can be part of the child's grade.

Q: How does this impact PRO-COMP (DPS system)?

A: No impact – PRO-COMP will be Denver's system to implement the requirements in this bill. They may have to add a couple of small tweaks, but it should be no significant change. And Denver will use PRO-COMP, they do not have to have to add a second system.

Q: The number 1 influence on how a student does is the mother's educational level (more than the teacher). Can you do anything to improve this?

A: Senator Johnston lead off with a superb answer – that getting this right means the next generation of children will have mother's with a much higher educational level. And that resolves this issue – in 20 years. As to trying to improve this today, he had a really interesting response – "when we have 8 to 4 perfect, and every kid walking in the door is getting an outstanding education… then we can go start telling parents how to parent." I asked if almost perfect would be enough as you'll never hit perfect, and he said yes he would settle for that. He also talked about the parent partnership items in the bill, how some schools have parent contracts, and other efforts to draw in parents.

My $0.02: I think it speaks very well of Senator Johnston that he understands how this is a very hard problem and it will take a generation or two on some parts of this (at which time we will have new problems). And it also shows an amazing level of humility (for a politician) that he is not willing to tell others what they should do until we can lead by example with the schools running well. That's a very strong point.

The Bill

Personal story: Many years ago I was on a school district committee in Plano Texas. We were on an evening tour of some schools where we walked in one classroom and you could tell from the empty classroom that the teacher was sub-standard. A couple of the committee people mentioned that and the school principal commented that this teacher was a dead year for kids – but she should be retiring in 4 or 5 years. No child should face a "dead year" in school.

How important is this bill? Name another bill that has had every living Governor come out in favor of it? This bill is where we determine the long-term future of our state. With it Colorado will increase its economic position in the world. We will increase the number of high-paying quality jobs in industries that haven't even been invented yet.

If this bill does not pass, then when do we address this question? Yes this bill, like health care reform, is a leap in the dark. If effective, it means significant change in our educational system. But any bill to fix our K-12 disaster (and it is presently a disaster for Colorado) will be a leap in the dark. With that said, there has been a lot of work done to make this bill as good as possible. And it will be tweaked in the following years as we see it in action.

I understand why many in the educational system oppose it – change is scary. But I ask of you the following – why did you go in to teaching? What is that fundamental core reason that drew you to a job where most of your day you talk to no other adults, where most parents show up only to complain, and where you have to somehow draw kids in who would rather be doing something else. Fundamentally the decision to be a teacher makes no logical sense. For all of you that were drawn in to educate children, to help them grow up to make full use of the incredible potential each child has – this bill is important. No, not important, this bill is essential. Every child that had a "dead year" before your year makes your job that much harder, and frustrating. This bill will eliminate that. With this bill the children entering your classroom will be better prepared. I think this is change that you should embrace.

And to the legislators opposing this bill I have two questions. First, do you think the economic future of Colorado is imperiled by our existing K-12 system? (If your answer is no – you're an idiot.) Second, what's your alternative to avoid the economic decline we are facing with our existing system that you are introducing as a bill this session?

Podcast (says Senator Bennet at first but it is Senator Johnston – sorry, brain fart): Mike Johnston Interview

Paul Weissmann Interview

Note: This is different from my previous interviews. Rather than interviewing on the issues central to Paul's efforts, I put together a set of questions about how the state is fundamentally run – where the government is trying to go and how it's trying to get there. As this is a new approach for me, please comment with any suggestions on how to do this better.

I met with Rep Weissmann at The Blue Parrot (great restaurant in Louisville) yesterday afternoon where he works as bartender. It was definitely impressive how he could handle orders (granted it was a slow period) and an interview at the same time. Aside from the fact that I ordered a beer and got a Pepsi (just kidding)…

Question: What is the state's strategic plan?

Answer: With the recession "it's getting through fiscal year to fiscal year." Prior to that had five year windows measured where we are and what to shoot for. This was focused on spending a bit more now to reduce larger costs down the road. Big example, the changes in corrections which take more money now, but hopefully lead to reduced prison populations down the road. He also listed wellness care and pre-natal care in Medicaid.

Paul also commented that the state lags the economy by about 2 years. The federal money runs out, commercial real estate lags the economy by a couple of years, and unemployment lags. So the state will be hurting this year and next – at a minimum.

My $0.02: A strategic plan should be much more than what can we do now to reduce costs in the future. The biggest question should be, what should the state be trying to accomplish. For example, having "affordable" higher ed available is a goal. Having 50% of our children graduating from college by age 23 is a strategic plan. Working at a strategic level is also valuable in tight times like this, because it helps you determine what to fund and what to cut.

Question: How does the state measure improvement?

Answer: Look at it program by program. For prisons you look at the recidivism rate (presently 20% are back within 3 years). For K-12 you look at the drop-out rate – "all indications they're not working". They've tried to put systems in as part of the budget process to better measure programs. Paul specifically called out that it's not just a measure of did you graduate from high school, but are you ready for the next step be it college, trade school, a job, etc. (He nailed a key point of measuring with this.)

Rep Weissmann then discussed improving efficiency. His primary example is OIT as a way the state changed how it operates to improve its productivity. By consolidating all systems under one department and having people who better understand how to manage IT, they have found some savings. (More on OIT below).

Question: How much must the state save residents for each dollar spent on a program?

Answer: "It's a program that saves more than we're putting in to it." We used the example of a new program where insurance changes are reviewed before they go in to effect. Rep. Weissmann says that when they measure this new program in a year or two, they'll look at the cost, and if it's less than what was saved for the people of Colorado, then it's successful. He also pointed out, and this is so true, "a lot of this is a gut reaction of the legislators at the time." And part of it is the department's position on if something is worth it (my guess is they all think all their own programs are great).

Paul also has a proposal to look at taxes, tax extensions, tax credits, etc by the same measure. We have this complex tax system but the state has never looked at what we get, if anything, for each of them.

My $0.02: I think looking at the return on various tax items is a superb idea and, if done right, will be major. But on the measure of which programs are successful enough, the state has limited funds. If a program that saves the residents $1.05 for every $1.00 spent is funded, that means another program that would save residents $30.00 for each $1.00 spent never gets funding. I think the state needs to set a range where if it's less than 10:1, then a program is ended. If it's greater than 30:1, it's gold. And those in between are evaluated carefully.

I am not saying this is the only measure. Many programs return a social good also and that should be taken in to account. But a lot of what the state does is a straightforward measure in this way – and should be evaluated by this criteria. And do so in a way that we end up with the programs that give us the most bang for the buck.

Question: How much will the state spend to save a life?

Answer: "That's a question I can't answer." We will put in more money on pre-natal care than we will put in for a guard rail on a highway. Paul then discussed the large amount we spend pretending to have a death penalty. He is very impassioned on this subject seeing it as a total waste of funds to no benefit (which gets back to my point above of measuring the cost/benefit ratio of each program).

Question: Should the state have a collaborative or antagonistic relationship with business?

Answer: They tried to consolidate all of the business/state interaction to a single office, both to make the process more efficient, and to have an office that would "sort of be your lawyer and sort of be your tax advisor." Paul, in a very professional way, tore in to the "desk jockeys" that are focused on not doing anything they might get called out for rather than giving people answers.

I asked why the one stop shop didn't work. Rep Weissmann's answer was "I don't know." Paul also had some nice words for Don Marostica and what he is doing for businesses in this state.

My $0.02: Yes! Yes, yes, yes! It is a shame the one stop shop was not implemented because this would be of substantial help to small businesses in the state and boy could we use the additional jobs we would see if something like this was effectively implemented. (I'm also curious what Don Marostica does for small business in Colorado – I'm a small business owner and we've never heard anything from OEDIT.)

Question: what about high overhead taxes like the business property tax, etc.?

Answer: Boy, nobody likes this tax. Paul tore in to it worse than I would. He sees the business property tax being phased out over the next 5 years – it's mostly a local not a state tax issue.

I brought up the problem with taxing digital products. He brought up other taxes like on phone use that have the same problems. His guess is in 2 years we'll look back and see that we got almost nothing from the software tax. He then shot in to the various tax credits including the beautiful line "11 million dollars to the refineries yet they're not going to move anywhere." (When he said this I had visions of mechanical legs on the bottom of one of the refinery complexes standing up and walking the whole thing up to Wyoming.)

Very interesting item came up at this point. What credits they rolled back this session, what taxes they added, what they decided to start enforcing – that was all set by the Governor. There were other credits that Paul wanted to consider. Some that did go through he does not think will produce much (not true – they have produced a lot of pissed off businesses). "Hey we're the legislative branch, we can do it if we want… but you also need the guy on the first floor to sign it. And he wasn't willing to go other places."

Question: OIT?

Answer: Big problem with CBMS is you had people managing it who did not understand managing IT projects (very true). I pointed out that OIT is still not getting it done and Paul replied "they're getting closer, they really are." He also said the scope of the project has been reduced substantially. I think his view of OIT was best summed up by his final statement – "hopefully that will happen less often."

One interesting item that came up, state law has a "local preference" requirement for purchasing. And OIT is supposed to follow that. Interesting as I know of 5 local companies that OIT refuses to even look at their systems (one believes their system could fully implement CBMS today).

Question: Why has Higher Ed costs grown at twice the rate of inflation since 1980?

Answer: It's a financial fight for the top professors, and those professors are needed to bring in the research dollars. He also points out that the hyperinflation in higher-ed is not sustainable. But he had no magical answer here as all the other schools are doing the same thing.

My $0.02: This is a major problem and the present course is making higher ed less affordable every year. The legislature needs to step up on this issue.

Question: How do we fix K-12?

Answer: First off Paul is not a fan of NCLB. He brings up the very legit point that the kids have no incentive to do well on the CSAPs and in high school many just randomly fill in the bubbles. He also says that under our state constitution, it's not clear the state can put any requirements on local education. He is also a strong proponent of neighborhood schools. With a neighborhood school he then thinks you have a much stronger community to keep the kids focused.

Rep Weissmann did have a long discussion about what works in public school. It was very insightful and he focused in on needing people who are effective & care and programs that work. All really good. But I then pointed out that all of what he spoke to requires that you have the right people in there – and asked if he thinks the tenure reform bill will go through. He replied "No." What's interesting here is that Paul's opposition is to how the teachers are measured. But he does say there clearly are bad teachers, and the kids, the parents, and the principals know who the poor teachers are.

My $0.02: First off I agree that the students need to have an incentive to do well on the CSAP (or son of CSAP). I think we should add that if a student does not make proficient on the CSAP, they must repeat that class. Second, I think local schools are great if they are well run, but are a horrible trap if they are bad. Forcing students to local schools traps students and gives a school no incentive to improve because they get their kids regardless of the job they do.

A also think Paul is avoiding the central issue here. He does say that we have poor teachers who are easily identifiable. He does say that it requires quality teachers to educate our kids. He does agree our schools are not improving. But while he brings up legitimate criticisms with the proposed tenure reform, he does not propose any alternative. You can find fault with any proposal (that's the entire Republican plan in Washington), the trick is to improve the proposal so it will fix a serious problem we have.

Question: What can the state do to help small business?

Answer: The only thing the state should do is make sure there is an infrastructure (including broadband), and good education. Outside of that he doesn't see anything the state should do to create jobs. I suggested that his one stop shop idea should go on the list as that would create jobs. He did not see that it would (it would – not a ton , but some).

My $0.02: Speaking as a small business owner, I think his answer is really good. But… The one stop shop, or even a competently run Depart of Revenue, would lead to more jobs because less time/money/effort figuring out what we have to do for the state means more time/money/effort put in to sales. Increased effort in operations does not increase income. Increased effort in sales does – and that leads to additional jobs.

It's also interesting that he identifies education as key to the success of businesses in this state – it is. And Paul realizes that K-12 is doing a poor job and not getting any better. But on improving the system, a no on tenure reform and no proposed alternative.

On the plus side, Rep Weissmann is a strong proponent of simplifying the tax code and eliminating taxes that have a high overhead to compute/collect. He did not list this as something that would increase jobs (it would), he is working to get this done.

I then went in to a couple of questions specific to Rep Paul Weissmann.

Question: If you could pass one bill, what would it be?

Answer: His bill to eliminate the death penalty. And put those savings to the cold case effort.

Question: If you had one word of advice to new legislators, what is it?

Answer: Be honest. He meant this as be true to your beliefs as well as speak honestly about what you are doing. (Superb advice.) His full answer on this was quite long and very impassioned. The entire answer would be good listening for each new rep (podcast below).

Question: Is FastTraks coming to Louisville, Boulder, etc.

Answer: If we add in a surtax in the affected areas. It's unfair that everyone paid for all the rest and it will be just us paying for our part. But the rest of the district won't pay as they got theirs. And we got stuck with the short end of the stick. (Unfair – no shit. But it's an honest answer.)

Question: What are you going to do next.

Answer: He says he has no idea. The way he answered, I truly think he hasn't given it much thought yet. But I do think he will remain in public policy somehow/somewhere.

Podcast: PaulWeissmann

Mark Ferrandino Interview

I was able to get a short (20 min) interview with Representative Mark Ferrandino today. Mark comes across as a total nerd – or what I would call a smart, straightforward, interesting guy. He's an economics nerd, not a software nerd – but cool is cool. He comes across as a very thoughtful caring guy.

First the question most wanted to know. No Ron Rockvam has not challenged Mark to a duel on the House floor. Mark says Rockvam has been just outside trying to marshal up enough votes. (I have this vision of Rockvam cackling evilly while trying to cast a spell over the various legislators as they pass by – where's Harry Potter when you need him.)

He's been involved in politics and the public sector for most of his life, growing up in a household that was involved in New York state politics, then going on to public sector jobs in D.C. and then state Medicaid. So he comes from a background of government, and a wide swath of government. That's a great set of training for a rep because they can dig in a lot deeper and ask the right questions with that skill set.

Mark also said that what happened to Matthew Sheppard was very significant for him. He saw that as a need to get involved in politics to insure nothing like that can happen again. I find this interesting because it was a great injustice that drove him to political office. What drives you in tends to be what you focus on in office.

Mark is clearly having fun in the job. To him the fun is being able "to have a positive impact on people." He clearly enjoys the work involved in the legislature. He also puts a lot of time in helping other legislators run for office.

So then we got on to payday lending. Rep Ferrandino speaks in very even measured tones about what payday lending is. He is very straightforward as to the impact it has. But in all that he paints a devastating picture of the "cycle of debt when using these predatory lenders." He sat down and worked through how the industry is set up, how it makes its money, what it tries to accomplish. It is an incredibly powerful argument that, looking at what the industry at core is focused on, and realizing that it is all about trapping people in a cycle of debt.

One point he brought up, and I was not aware of this, when someone pays off their loan in full, and has not come back for a couple of months, they will call them up and tell them "we have $500.00 for you" to try and draw them back in. That's not helping only when needed, that's trying to foster a never-ending cycle of debt.

Mark keeps circling back to the business model the industry has and how it revolves around this predatory practice. Because of this he understands how the industry is fundamentally, will always be fundamentally a system where – "this isn't access to credit, this is access to debt."

So will it pass? He isn't sure as both sides think they have the votes. Mark's guess is it will be 33-32 on the vote, but he's not sure which side will get 33. He said along with all the progressive groups helping lobby for it, the faith groups are also working hard to get it passed. (So here's hoping that some of the legislator's look to their religion for a guide – as every religion calls out usury as an evil practice.)

He thinks the payday industry has put in a million dollars lobbying for this. And because the mailers etc. aren't clear about what the bill is actually about (as the average Coloradoan understands usury is bad), they aren't terribly effective.

Mark discussed the argument of let the market decide, but while he supports the free market, he doesn't see the present system as a balanced market because across all the stores 98% of the loans are at the maximum allowed. And that's not a competitive market. On that topic, I then asked if weren't these loans similar to the mortgage loans made to people that couldn't afford them? And as most Republicans blamed those mortgages for the great recession, shouldn't they be opposed to usurious payday loans to the poor just as they are opposed to mortgages to the poor? He said that particular argument had not come up, but that it was similar.

On to what else. He's very satisfied with the job they have done with the budget. There were almost no amendments on the long bill, in large part because there is no money. But he thinks the JBC has done a really good job on the budget.

He also talked about improving the criminal justice center, looking for the best way to handle sentencing, etc. He gave strong props to Governor Ritter for his efforts on this. We also have a decrease in the corrections population this year for the first time in a long time – which saves us some bucks.

Finally Mark talked about looking at work on constitutional reform, calling out Senator Heath's bill as one of the best approaches they have coming up on this.

So what do we get with Representative Ferrandino? First off he has the skills and takes the time to truly understand the issues. But even more valuable, he then knows how to phrase these same issues in a way that is easy to understand, yet gets across the crux of the issue. This is very valuable in the political process because it is a powerful way to sell his proposals. Second, he clearly is focused on accomplishing what is best for the people in Colorado. I never heard him say a single word about political constraints on what he is trying to accomplish.

We're lucky to have him in the legislature.

And a pox on any legislator who votes against payday lending reform. If the Denver Credit Union can offer payday loans today at reasonable rates, the rest of the industry can do so too. And while the state should not step up to right every wrong, it should protect our weakest and poorest from the most egregious exploitation.

Podcast: MarkFerrandino Interview

Sales Tax Law – The Good, the Bad, and the Ugly (mostly very bad)

I'm the founder and primary stockholder of a software company in Boulder. When the legislature first proposed taxing software I supported the measure as I felt we software companies should not get a free ride. When the bill was first passed, I contacted the Department of Revenue asking what we needed to do, so we could comply for sales in Colorado. And with that first attempted contact I started down a road that taught me the incredible frustration and expense of working with governmental taxing authorities. It has also opened my eyes to the incredible job killer we have in the combination of high overhead taxes, unworkable taxing regulations, unresponsive taxing authorities, & a sales tax structure beyond the wildest dreams of Rube Goldberg.

This post discusses sales from the perspective of a business. I have a separate post discussing the use tax.

Let's start with a question I asked both the State and City of Boulder Revenue departments:

Q: We have a customer that has a large presence in Boulder. We sold to a group in New Jersey, to be used in Poland, and paid for out of Chicago. But the Boulder facility may (they aren't sure) use the system with our software, but probably running on servers in New Jersey.

Colorado: If the software is sold for multiple points of use, the purchaser is liable to remit the tax, not the vendor. The purchaser should give the vendor a multiple points of use exemption certificate. Tax should be apportioned on the purchase price on the basis of the location of the users that are licensed to use the product at the time of purchase. If those locations are not know, the purchaser should use its best business judgment to identify the number of expected users in Colorado based on the facts as they exist at the time of the sale.

Boulder: A delivery or download address must be established to determine where taxation should occur. If it is not clear, Boulder would tax the use of the software here unless proof could be provided that a legally imposed tax was charged and paid somewhere else.

We sell software to a large chunk of the fortune 1000. In many cases the software is used in a large number of their offices worldwide, including Boulder. But the use in Colorado is a tiny percentage of the total use. Requiring companies to audit use so that Boulder and Colorado could receive their percentage of the sales tax would be prohibitively expensive. What companies will do in that case is instruct their purchasing departments that they cannot buy from Colorado companies – which would devastate the software industry in this state.

Keep in mind, this is the law today. If either the State or Boulder decides to enforce this against a company, that company will see their sales drop to zero. And when that company is put out of business, all of those jobs are gone. And these jobs will be destroyed for no advantage because this tax will never be calculated – the expense of doing so is too disproportionate.

Problem to business: Potential sales stopper. Significant uncertainty facing any Colorado company selling enterprise software.

Problem to state: Driving companies out of business increases unemployment and decreases tax revenue.

Next, there are several questions where the State & Boulder would differ on if it was taxable. In Colorado we have 89 Home Rule Cities as well as the state. Determining what tax level for an address can be automated (there are programs available). Filing with each jurisdiction is a moderate cost (in time finding out what we need to do, filling out the forms, etc). But determining if a jurisdiction considers a specific type of sale taxable – that is a significant effort & expense and has to be done on a per jurisdiction basis.

Problem to business: Giant sales blocker, because we need to contact the appropriate taxing authorities for any sale in the state, and then wait to get an answer. Significant uncertainty if we are told to ask our tax accountant as the appropriate authorities may not agree with him.

Next was the reaction of the state Department of Revenue to the questions being asked. As we dove in to specifics the Department of Revenue declined to answer as they might constitute legal advice. Now I understand if they give us an answer with the caveat that our accountant might disagree. But if the answers from the State sound reasonable, and my accountant doesn't have a compelling reason why we could save a lot by taking another approach – we'll go with what the State suggests.

Keep in mind, our goal is not to pay the smallest possible amount to the state, it's to first minimize uncertainty and second to minimize total costs (and fighting a tax issue is expensive in time, mind-share, and dollars). Getting specific answers from the state, and thereby paying a bit more in tax – well worth it. What is really bothersome about this is that we approached this relationship trying to be cooperative but the revenue departments insist on a relationship that is antagonistic. Encouraging us to use a tax expert, when a tax expert has a self interest in finding savings that can then lead to disputes – that is fundamentally antagonistic.

I want to note that Boulder at first was very cooperative in answering questions. Their answers was if it existed, they would try to tax it, but they were very cooperative in answering. However once I mentioned that I was going to blog the answers they then required all questions go to Patrick "No Answers" Von Keyserling who does a great impersonation of a brick wall.

Problem to business: Injects uncertainty in every sale. Increases costs.

Problem to State: Increases cost of collecting (tax disputes), reduces taxes collected.

Next comes the issue of getting timely answers. The City of Boulder did great on this measure. But for the State of Colorado the process was:

1. Send an email, get a reply telling me I need to send a letter.
2. Print the email, add a cover letter, mail it.
3. Call 5 times asking for a response.
4. Get a call back, that person asks me to email the questions in.

We have sales of $50,000.00 that can go from hello to sold in a day (rare it's that fast, but it happens). When the total is 50K the government is understandably very interested in getting their taxes. But the use tends to be complex in terms of where the software goes and where the person putting it there is. Sometimes it's a question of is it software or a service. A 3 week delay endangers the sale. And it makes a company value our product less because of the additional overhead of buying from a company in Colorado.

Problem to business: Sales blocker, increased cost.

Problem to State: Reduced tax revenue (due to sales lost because of this delay).

Here's the giant problem with the above. If the economy was doing great then the State making companies less efficient, costing many some business, and driving a few out of business would be no big deal (except to the people that had their money and dreams invested in the companies the State destroyed). But the economy is in the toilet and the true unemployment/underemployment rate is around 18%. We need more jobs. We need to help companies, not hurt them.

Or to put it in terms of pure self-interest to the state, the more companies can concentrate on selling more product, the greater the tax revenue (both from the sales and from taxes from additional employees) and the less the State expenses (fewer people unemployed). Although that does raise the question, does the State fundamentally have a self-interest in the economy improving?

What's my take on this? First off, sales tax is a cost prohibitive way to raise revenue in an economy where more and more of what is sold is bits instead of atoms. We have a growing chunk of the economy where the cost to determine what is taxable will be a substantial proportion of the tax collected. A system this disproportionate is very harmful to the economy of our state. Medium term the only workable solution is to eliminate sales tax except for a few specifics like gas and cigarettes and increase revenue from income and property tax.

I want to stress, I am not proposing lower total taxes, I am proposing we eliminate sales tax and increase property & income tax to make up the difference.

Short term we need to do a couple of things:

1. Get all the major Home Rule cities together and come up with a way to have a central authority that collects all sales tax for online sales. And more importantly, provides a single voice that determines what is taxable. If the 8 largest cities agree on a system the rest will join in. And if Podunkville holds out – who cares, we won't sell to that one city. (Doing this will also encourage out of state companies to collect sales tax – like Amazon.)
2. Get the Departments of Revenue to take a collaborative approach to working with companies. Yes they will occasionally render an opinion that leaves some money on the table. But they'll also make that up and then some with cases where a company pays a bit more because it's the safe decision.
3. Get the Departments of Revenue to answer quickly. I think for the state that means replacing Roxy "not doing anything" Huber with someone competent (Boulder has some good people – steal one of them away). It's inexcusable that the software sales tax law went in to effect and the DoR did not have answers to some very basic questions.
4. Make very clear reasonable rules for when software and other digital products are taxed. The smaller issue is does a transaction count as a product. The big question is where is the taxing authority. And these rules have to be workable and proportionate. If software is delivered out of state and will be on a server where people across the country, including in Colorado, are using it – it should not be taxable.
5. Ask the Department of Revenue to not screw my company over just because I pointed out their Director is doing a lousy job. (Granted this is self-interest, but it would put everyone there out of a job, not just me.)

The above 4 steps can increase jobs in Colorado and increase tax revenue for the State. Implementing the above means instead of wasting time & money on guessing what to do on taxes, I can put it toward additional salespeople. And additional sales has a wonderful multiplier that lets me then hire more people.

In addition, drastically reducing the overhead of collecting taxes will significantly reduce the opposition you get from business over taxes. A business looks at the total cost, not just the amount paid to the government. If that total cost is reduced, opposition drops.

So my question to Governor Ritter, the Legislature, the City of Boulder (and other home rule cities) – are you willing to do the above to increase jobs? (Note to the Republican members of the Legislature – "taxes bad" is not solving this problem.)

Note: I presented some of the above to the Boulder City Council recently and they asked for it in written form. No answer yet but this was real recent so I am hopeful they will, at a minimum, bring sanity to when to tax a transaction. I asked to speak to Roxy Huber who is the Director of the State Department of Revenue to get her take on the above. I was told that she was too busy to talk to anyone, and that she's not doing anything (it was a very bizarre conversation). I asked Evan Dreyer if I could speak to Governor Ritter on this and so far no reply. So I tried to get their side on this.

The Insanity of the Colorado Use Tax Law

It seemed like an easy & fair way to increase tax revenue – enforce the existing use tax law. Sounded good to me at first too. Unfortunately, when you dive in to it – OMG it's a fucking nightmare. If the state and localities actually try enforcing this my guess is we'll see a revolt that makes TABOR look tame in comparison. (Note: this post ties in to a post I did on sales tax.)

Ok, first up is the expense of determining the tax. We had not paid this at my company because we did not know it was due (and yes, ignorance is no excuse). The statue of limitations on this is three years so we went back and determined what we owed for the last three years. We took a random month from each year (the first one we picked for 2009 had nothing so we picked another month). We then multiplied each by 12, and then added in the late fees due on each. (We added in the late fees without being asked because that's cheaper than waiting to see if we'll be assessed them, and then going through the effort to pay that.)

So the total taxes we owed for three years? City of Boulder $184.34 and State of Colorado $205.00 (plus $50.00 for a sales tax license). Total direct cost to determine what is owed? $360.00. That's right – the cost to determine the tax owed is essentially identical to the tax itself. The word disproportionate seems inadequate to describe this.

But small potatoes yes? Actually the estimate I heard is that enforcing this on business will bring in 18 million. So that means the total cost to business will be on the order of 36 million – 18 million in tax and 18 million in overhead. What if that 18 million in overhead went instead to hiring people in new jobs? Let's say 50K/employee – that's 360 jobs. Not gigantic – unless you're one of those 360 people.

The problem here is not the additional 18 million going to the state – it's the 18 million of overhead required to determine the amount. And the business property tax falls in this same category, where the cost of determining the amount due can match the tax paid. Taxes with this level of overhead are brain-dead.

And the state expects individuals to do this? Not gonna happen – no way, no how. People are not going to spend a couple of hours to figure out they owe an additional $20.00. And getting companies like Amazon to report it only partially solves the problem, because there are gifts, items used out of state, etc.

Ok, next is my favorite (and by favorite I mean do these people even think) Q & A.

Q: My parents in Hawaii order gifts for us from Amazon delivered in Colorado. Is use tax due on those presents sent here to Colorado? And is the tax owed by me or by my parents as they purchased it? And if it's my parents, does the state have nexus with them?

Colorado: Use tax is due on items shipped into Colorado, whether the buyer is in Colorado or not. In the example cited, we believe the parents do have sufficient nexus in Colorado and are required to file a use tax return.

Boulder: These are excellent questions for you to discuss with your tax advisor

State of Colorado – if you claim nexus on a gift sent be residents of another state – is there anything you won't claim nexus on? I'm sure you would like this to be true but wishing doesn't make it so (if it did, all little girls would have a pony). In addition, how on earth are you going to go after residents of other states to pay use tax?

City of Boulder – really? Are you serious. You want every resident who receives gifts from out of state to talk to a tax advisor? Just because you have a medical marijuana license does not mean it's ok to partake at work.

And then we get the winner – use tax due on items for which a lesser tax was paid. This says that if you paid less than the tax due in Boulder elsewhere, and then bring the goods to Boulder to use, you owe the difference. For example, you buy something in Longmont (2.275% tax) on your way home to Boulder (3.41% tax) to use in Boulder. You owe a use tax of 0.41% on that purchase. That's right, buy a washer at the Longmont Home Depot for $0.04, take it home to Boulder to use, and you owe the City of Boulder $0.000164.

So first off, I think it's safe to say 99% of Colorado residents owe use tax. Even those that have never made a purchase online.

Second I think it's safe to say 100% of Colorado residents will tell the department of revenue where to stick it if they try to enforce collecting this tax. I think it's safe to say most businesses aren't going to track this lesser tax part – the expense of doing so would be way above the actual amount owed.

Can we please bring some sanity to our use tax laws? Because collecting them is not going to happen in a lot of cases. And in the remaining cases the overhead is ridiculous. Short term – how about setting it that if a person or business owes under $1,000.00/year in use tax, nothing is due.

Medium term – if we're going to have a sales tax, then let's make it a single amount across the state. The state collects it and apportions it out, based on location to the city (if there is one), county, and itself. This eliminates the lesser tax issue. It also will increase the number of online companies that will collect tax for the state of Colorado.

And what we will have to do eventually is eliminate the sales tax and increase the income and property tax. We are on a fast road where the economy is bits instead of atoms. And a sales tax on bits is, by definition, problematic. The sooner we do this, the better for the State of Colorado.

In the meantime, yes I bought a $0.04 washer in Longmont. Yes I brought it to Boulder to use. And no I didn't pay the $0.000164 use tax due. And I'm not going to! City of Boulder Department of Revenue – your move :)

Boulder County Dem Assembly

9:05 – Got my credentials, found the gym, and got connected. Things are operating pretty smoothly (for the Democratic Party – the GOP would be aghast at the disorganization). They have us sitting by precinct (go mighty 161) but I'm not sure why.

Coming in there are a ton of yard signs out for Jake Williams & Matt Jones (the one competitive race here). And both had about 6 or 7 people out front. I'm not in that house district so I miss out on that one.

Jared Polis had about 10 yard signs out – I think that speaks really well of him. He's got a walk but he is still putting in an effort to say he has to earn our vote. (And the signs are recycled from last year – the election date at the bottom is scribbled out.)

Outside there was one giant Bennet sign and no Romanoff signs. Inside about equal on signs. The big difference was walking in there were 6 Bennet supporters singing a Bennet support song with giant smiles and they were all bouncing up and down with energy. Definitely a giant plus. A bit after them were 3 Romanoff supporters looking very serious. In terms of people actively walking around pushing issues, it's mostly Bennet & Amendment 53(?).

9:13 – Suddenly quiet. Pledge of Allegiance. Very emotional.

9:16 – Bunch of stuff about the platform. Pretty much pro-forma (which it has to be in a group this large).

9:17 – Bunch of stuff about what we are doing. This is a much smaller and quieter group than 2 years ago. I figured with Bennet/Romanoff it would be as boisterous as before.

9:20 - Wow, we're now into the speeches. The Boulder County Dem party is incredibly efficient – kudos. Rollie Heath now speaking for Bennet. Starts with both are superb candidates. Speaking of Bennet's efforts on healthcare, the good job he did at DPS. Not a single negative word about Romanoff.

9:22 – Claire Levy – talking about how Bennet hit the ground running and has visited every part of the state (both true).

9:23 – Someone else speaking for Bennet. Again positive but nothing specific for Bennet. Clearly the Bennet supporters are Democrats first and Bennet supporters second – which is really good as both are great candidates.

9:25 – Pat Waak is here! I love her. Great rah-rah speech for all of us. Special congrats for Stan Garnett for stepping up to run. Ends with let's do what's best for Colorado and elect Democrats across the board (damn straight!)

9:28 – Some committee report about something. The report (whatever it was) is approved by acclamation. (For all we know we voted to all be shot in an hour.)

People – turn off your cell phones!!! (Not people reading this, the people at the assembly).

9:30 – We just elected all precinct leaders by acclimation. Weird – no Romanoff speech yet.

9:31 – Bernie Beuscher speaking. He's the first Democratic Sec of State in 45 years (wow). He's giving Boulder a nice thank you and then is going in to his bio. Talking about making it easier to vote (big applause). Bernie is really good – he gives a speech that sounds pretty non-partisan and yet it's a strong argument for Bernie. Talking about how the state Dems have done a phenomenal job both taking care of our money (go Cary Kennedy!) and coming up with a budget that gets us through the recession (go Ritter & legislature).

This is interesting – I think Bernie will provide help to a lot of Dems in this state in his campaigning. Because he lays out a strong argument for Democrats in office. Very good.

9:37 – Stan Garnet introduced – giant applause. Says he's running for AG and gets another giant round of applause. Stan does good in this type of venue – very comfortable up there, walks slowly back and forth and looks at the audience. He's got good stage presence. He's speaking about how he will use the AG office for the people of Colorado and not for certain powerful interest groups. He's now asking for people to step up and help. Closing giant round of applause – he's got enthusiasm here. www.GarnettForAG.com – check it out.

9:42 – Stan is now nominating Joe Pelle for Sherriff. I guess these "nominations" for offices that are a lock are good, but it's hard to get excited over them. With that said, Joe is a really good Sherriff.

9:44 – Joe Pelle speaking – short part for himself, then talking about why we should support Stan Garnett. Well done.

9:45 – Joe Pelle placed on the ballot by acclimation.

9:45 – State Board of Education statewide candidate (did not catch her name). Mostly talking about what they are doing on the board and what she wants to continue working on.

9:48 – Jared Polis introduced and he's getting a rock star reception. "We have a choice to return to the failed republican policies… or move forward with…" Jared is on fire – he is selling what we Dems bring to the table and is doing it really well. Brings up passing HCR and gets a giant round of applause. Replacing (note did not say eliminate) the failed policies of NCLB. Also talked about addressing immigration.

Now going in to speaking for Betsy Markey – "the fighting 4^th Congressional District." Talking about the tremendous impact and difference that Betsy has made (boy is that true!). Then discusses getting Betsy in this time, then with redistricting we can make her seat safe (I think Betsy can hold it without redistricting – but hey, every little bit helps).

9:55 – Brandon Shaffer speaking for Hick. Said he is not going to read the speech he was given (Hick's campaign staff must love that). Instead he's discussing Hick's background – when he was fired how he went and opened a brew pub – the giant leap of faith Hick took with his first brew pub. (I appreciate having someone who knows what the start-up life is like as Governor – because that's where new jobs come from.)

Now talking about how Hick comes across as a "first rate average guy." And that this is what voters want – someone like them. That may be true for most voters, personally I want someone so good at the job that I am nothing in comparison. But if it sells, go with it.

10:01 – Joe Neguse – not having to run again for 2 years. So he's just saying thank you and throwing us some red meat. He's a good speaker – I'm guessing we'll see him moving up the political ladder. He's now making a very persuasive argument that this November will be good for us Dems, because of the great political courage and successes we have had over the last couple of months. I agree.

10:05 – SD15(16?) candidate speaking (didn't catch her name). Listing out her qualifications. Her words aren't bad but her presentation is very pedantic. We now have Brandon Shaffer and the Rollie Heath up speaking for her. I'd guess that it's a very competitive seat.

10:10 – now the nomination & acclimation for Cindy Domenico to be re-elected to Boulder County Commissioner. She does a decent job but it sure would be nice if there was an actual choice for these Boulder County seats.

10:13 – And Cindy is on the ballot by acclamation.

10:14 – Another slam dunk – Bob Hullinghorst as County Treasurer. Nomination speech, speech by Bob, on the ballot by acclamation.

10:20 – And another slam dunk – Jerry Roberts as County Assessor. Same story…

10:23 – And another - Hillary "takes forever to count" Hall for County Clerk. Getting a great line of B.S. about what a "great" job Hillary is doing. They have done studies that show the less competent someone is, the more competent they think they are. The reasoning is that because the person does not know enough to accurately judge their skills, their incompetence includes their judgment of their skills. So I do think Hillary is sincere in believing that she is doing a good job. Anyways put on the ballot be acclamation (though I was tempted to yell out no).

10:27 – "Now we actually have a race here" [for County Surveyor]. County Commissioners Perlman & Domenico are speaking for Emery so I'd say the fix is in and he's got it. Emery is speaking and he's a terrible public speaker and didn't say anything about why he should be elected – but he did ask for our support.

10:31 – Rickard is not here for medical reasons. Has someone reading a speech from him. The guy reading the speech has zero presentation skills but the words written by Rickard are good – a listing of why he can do the job well. Great line "I read emails, I return phone calls."

10:34 – 3^rd candidate Greenberg – being nominated by his wife (that's sweet). Major advocate for green building. Listing out his skills and background.

Now when we vote – do we put an X in the square of the candidate we don't want :) ?

10:39 – Contribution ask – ok people, pay up!

10:41 – Listing what the Ritter administration and Democratic administration has done they include that they have "cut taxes for 30,000 small businesses." Well speaking for my small business our tax hit went up a bit (which was fine) but the effort we had to put in to pay that tax was way out of proportion. So now the Dems have not lowered taxes for many small businesses. And what they have done is significantly increase the overhead of determining those additional taxes. So I call bullshit on this claim.

10:44 – We're ahead of schedule and so get a 10 minute recess! I dibs the swing set!!

10:57 – Our 10 minute break is now over. It's going to take a couple of minutes for people to drift back in. The rumor is that Andrew Romanoff spoke first at another Assembly and is on his way here. I think it's commendable of the candidates who try to speak in person at as many assemblies as possible.

Ok, here's an idea – when handing out pens for people to mark their ballots, look at the stickers on their shirt. If it's a Romanoff sticker, give them a pen with disappearing ink. Do I have good ideas or what? Funny note (that led to that idea), I borrowed a pen from the person next to me – she was upset when she found out it was so I could mark my ballot for Bennet.

11:13 – They are trying again to restart the meeting. So our 10 minute break was 29 minutes…

11:15 – Asking for a nomination for County Coroner. What happens if there are no nominations? (I offered to nominate the Romanoff supporter next to me - she wanted to know how well it paid.)

11:17 – This is weird. They are going to have the Senate undecided's speak, then Bennet again (that got a number of boo's), then Romanoff. Announces Romanoff has arrived and the place went nuts. Giant response.

11:18 – The guy talking for the undecided's is speaking. He says that he is glad we are having a primary (good point). Speaking about why we need a Democratic Senator. Second undecided speaking, again speaking to the advantages of having Bennet & Romanoff learn from their primary. Hey guys – you're right but they are running close enough that you can make a decision now and the primary will continue.

11:22 – Now we have an undecided who's spending his time talking about publically funded election and why he should be an undecided sent to the state convention. Hey buddy, the idea here is to speak to the vote for undecided, not to elect you specifically.

11:23 – Brandon Shaffer & Rollie Heath again. Giving them a 2^ndspeaking slot just feels wrong – it's unfair. (And I'm a Bennet supporter.) Shaffer is pissing people off – he just said a reason to vote for Bennet is that he is married and has children – very low blow Brandon.

11:26 – The Boulder County person is speaking about how it is his screw-up that has the Bennet group speaking twice so blame him, not the Bennet team. I don't think he realizes that the booing was because of what Brandon said, not because it was the 2^nd time.

11:27 – Some Bennet employee is talking. Talking about how Bennet is fighting for the things we need. Very strong statement but awfully general.

11:29 – Rollie Heath did a very short classy speech. He handled it well. If this had been the only speech for Bennet the 2nd time they would have been better off.

11:29 – Announcing Romanoff and the crowd erupts. Half the audience on their feet screaming, waving signs, etc. Romanoff easily has more enthusiasm than everyone else put together. Introduced by Paul Weissmann.

11:31 – Romanoff is speaking. Starts with "no matter who wins, we are all one family. I will support the winner of this race even if it is not me." Says the Democratic primary "is like cats fighting – it sounds like they're fighting but they're actually just making more cats." Going in to the fact that this decision is for the people of Colorado, not that interest groups and contributors – and he is doing it in a very positive way.

Now talking about being a party activist and what his activism has done to bring a Democratic majority to this state. Again doing it in a way that has everyone cheering and is positive. Going through the work he has done for the state and gets a giant cheer for "trying to de-Bruce our constitution." Speaking to the work accomplished to improve education spending.

"I am not satisfied yet with the pace of progress in Washington." He's speaking to the glacial pace of the U.S. Senate – which is a very legit point. He's giving a persuasive argument that he will be someone who will not accept the existing system and will make the Democratic Party use their majority to actually effect change quicker.

Closing with a serious passionate speech about the effort he will put in. And use it to improve education, fix the economy, and end our dependency on foreign oil. "Can a single Senator do this on his own? No. But we can." "Not just trolling for dollars on Wall St, but listening to Main St."

11:41 – Speech done – OMG it was good. If this is the new Andrew Romanoff then the Bennet campaign needs to start worrying. Money matters, but so does how the candidate sells himself. Andrew Romanoff was pitch perfect.

11:42 – Getting the how to vote instructions. Smart Romanoff move – they have volunteers walking around offering campaign contribution envelopes.

12:07 – Called back to order and Brandon Shaffer asked for a minute. He said that a lot of people took "one of his remarks" in a way that he did not mean them. He then gave his cell number and email address out for anyone who wanted to talk to him. He then said he was very sorry and did not mean it the way it was taken. Very well done on his part.

12:10 – Motion to adopt the platform, so moved, seconded, … Oh great – someone asking if we can add something to the platform. People the time to do this was back when they were working their way through this. The Assembly has too many people, and no one has time to research the issue. Ugh.

12:13 – Nice speech from someone saying that there is a very open process for the platform – and please consider if something is so critical that it can't wait for the next round. Decent applause for that.

12:14 – Oh brother, we now have 4 or 5 people proposing different issues to add to the platform. What a waste of time… It's not like this platform will have any impact anywhere. Now we are getting out into nutso land – the last was nationalizing public utilities. Oh yeah, that's a winner.

12:20 – Motion to close debate – had maybe 25 people against it. So 10 minutes wasted because 25 people decided that they were suddenly interested in the platform. Now we vote on it. About 15 people against the platform. Good it's passed, now it can be forgotten.

12:22 – Vote counting still going on. It looks like Hillary Hall is not involved in the counting so it should be complete soon.

12:26 – Called up 6 people who needed to fix their ballots (I assume they weren't signed). One of the 6 – Claire Levy. That got a good round of laughter.

12:38 – Results Bennet 309, uncomitted 29, Romanoff 364. Boulder flipped to Romanoff! Uncommitted did not meet the threshold so they have to vote for Bennet or Romanoff to go to state. Time to make a decision for them.

So why did Boulder flip from Bennet to Romanoff? This put Romanoff ahead by 20% and that's major. Romanoff made a great speech but most people came here with their minds made up. So my guess is that Romanoff got all their people here, including alternates, while Bennet did not. I do know one Bennet alternate that was here and did not get credentials because his precinct had everyone show – so I don't know what is going on with that. Does precinct trump who you're pledged to?

12:48 – Bennet has arrived! Lots of screaming for him. Because the vote is complete and Bennet is our sitting Senator, they are giving him a couple of minutes. Thank you to everyone because it was due to everyone's efforts that healthcare is now the law of the land. When he goes back to D.C. next week, the first order of business is the reform of Wall St. This election is about will we leave more to our children & grandchildren – or will we be the first generation to leave them less. Thank you everyone.

It was a good speech – Bennet is not a barn-burner. But he is getting better. This was smooth, clear, and had people applauding it.

12:56 - Ok for surveyor we have Greenberg 54%, Emery 41%, Rickard 4.8%. Greenberg did come first and Ricket did not make the ballot. Interesting as Emory has all the usual suspects supporting him.

1:03 – Now at the HD13 Assembly – Claire Levy. Everyone is quietly sitting around looking at each other.

1:08 Claire Levy speech. Speaking about how she appreciates having the backing to be one of the most liberal representatives down in the legislature. Listing the work done by the Democrats in the legislature. Threw red meat to this crowd saying we will get rid of CSAP. (Why are people against holding teachers accountable in practice – everyone is in favor of doing that in theory, but then they oppose actually doing it.) Discussing work to force health insurance companies to cover people properly, make the policies understandable, and to remove the items in policies that made being female a pre-existing condition (good one).

Now she's throwing red meat giving them the best of quotes from the Republicans in the legislature. You have to admit the GOP legislators make this so easy.

1:16 – We're now electing people to a couple of party committees.

1:20 – Now electing people to the HD13 Assembly. This is a 5 minute Assembly where you go up to Nederland in a couple of weeks to spend 5 minutes to put Claire Levy on the ballot. I'm always surprised that people volunteer for this. But we got 55.

1:28 – Now the CD-2 and CD-4 Assembly delegate selection. Again a very boring job. They're trying to fill all the slots – begging is so unseemly :)

1:32 – Now SD-16. I'm not in that one. For this one they don't yet know where it is or when – but they need 34 volunteers – they got 22.

1:37 – Now the big enchilada – state Assembly. 49 for Romanoff and 42 for Bennet. Asked how many wanted to go for Romanoff – 56 want it. They are working out who to send really inefficiently – going through alphabetically to get all of them and asking for a couple to volunteer to be alternates. Meanwhile us Bennet supporters sit and wait…

1:54 – Need 42 for Bennet, 43 volunteered. They asked for one to be an alternate and 2 volunteered. So we're good to go. And I'm going to state as a Bennet volunteer!

Also say this guy over in the cafeteria where both sides were giving away food. He looks sort-of familiar.

Will the City of Boulder drive software companies out?

I spoke at the City Council meeting last night and this is the follow-up email I just sent to the City Council.

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Thank you for your time tonight. Here's the email KC requested. (I thought of emailing first but think this is important enough that I should have spoken first.)

We sell our software worldwide and our customers include a large number of very large companies. These companies all have a footprint in Boulder. And in many cases, they way they use our software, some of the people using the system that our software has been incorporated into may work in Boulder.

Let me give you a specific example. We have sold our software to a project team at Roche in Poland. They incorporate our software into a system they have that they then push up to a server. The group in Poland has no idea if the factory in Boulder is one of the users of the program. And they have no way to find out. And if they could find out, the answer would almost certainly be 0 or a very small percentage.

I have been working to determine when we owe sales tax and have received the following two answers from James Anderson (who by the way has been very fast to respond).

Q: We have a customer that has a large presence in Boulder. We sold to a group in New Jersey, to be used in Poland, and paid for out of Chicago. But the Boulder facility may (they aren't sure) use the system with our software, but probably running on servers in New Jersey.  

A: Same as #7 [see attachment] above.  A delivery or download address must be established to determine where taxation should occur.  If it is not clear, Boulder would tax the use of the software here unless proof could be provided that a legally imposed tax was charged and paid somewhere else.

 Here's my concern, the fact that the software may be used in Boulder, when clearly the vast majority of usage is elsewhere, is sufficient in James' opinion to require Roche to perform an audit of world-wide use. The software was clearly delivered to a location outside of Boulder (Poland). Its initial use was outside of Boulder (Poland). It is running on servers outside of Boulder (New Jersey). The vast majority of use, possibly 100%, is outside of Boulder. Yet because my company is in Boulder and our customer has a footprint in Boulder, they could be required to perform an audit – which would be expensive and a PITA for them.

If Boulder actively takes this approach it will force software companies out of the city. Companies will not buy where they are required to then audit usage patterns to pay local sales tax. Our software is much more efficient than our competitors – but it's not that much better to be worth expensive and time consuming usage audits.

And Boulder will not get any real revenue from this because the total amount will initially be small and will quickly go to zero as companies leave town (or go bankrupt). I don't want to move my company out of Boulder. (In fact, our plan was, in 18 months when our present lease ends, to move to office space on the Pearl St. Mall.)

I suggest you establish a policy/rule that software that is delivered and first used outside the City of Boulder will not be subject to sales tax – even if no tax was paid at that location. And stress that software systems set up for use across a region where use in Boulder is clearly under 10% of the total is not subject to tax.

I am happy to answer any questions.

Thanks – dave

Ps An additional issue you face here is that software, unlike a physical good, does not reside at a single specific location in many uses. Nor is it clear in some cases where the "program" is running as it can be spread across multiple servers in multiple locations with part of the computation then occurring on the end user's system.