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Legislative Year: 2018 Change

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The 2017 legislative session may have made history as the one that cleared several logjams at once – all with one big bill. 

Whether the passage of Senate Bill 17-267 becomes a template for future compromises or will turn out to be a one-off remains to be seen. But it’s somewhat unexpected success is a testimony to what can get done when Democrats team up with moderate and some conservative Republicans.  

SB17-267, or course, is the bill with the big umbrella title of  “Concerning the Sustainability of Rural Colorado.” That umbrella ultimately covered these main provisions: 

  • Reclassification of the Hospital Provider Fee so that it won’t count against the state’s annual revenue limit, plus a compromise upward adjustment of that limit. The change saves hospitals, especially rural ones, from cuts that would have happened otherwise. 
  • Various other Medicaid changes, including increased client copays for some services. 
  • A lease-purchase program under which state buildings will be “sold” and those proceeds used for highway projects and building maintenance and construction. Part of the transportation money is earmarked for rural counties. The bill creates and permanent commitment on the state’s General Fund to help pay leases.
  • An increase in marijuana tax rates, with revenues split between the General fund and schools. 
  • A one-time $30 million boost to rural school districts.
  • Tax credits to offset business personal property taxes.

The bill is the latest in a long series of “creative” solutions the legislature has used to deal with the conflicting constraints in the state constitution, including Referendum C, declaring state colleges to be enterprises, the FASTER vehicle fees, creation of the negative factor in K-12 funding and the original Hospital Provider Fee. None of those were permanent fixes, and even lawmakers who voted for SB17-267 agreed that it won’t be either.

While the bill provides some increases for transportation, other measures that proposed larger amounts of funding failed, primarily because of GOP opposition to proposed tax increases that would have required voter approval. Both parties and Gov. John Hickenlooper think more money is needed for transportation, but everyone is happy that there was a little movement.

Other issues

Progress was made in a more traditional way on another long-unresolved issue, contractor liability for construction defects in condominium projects. Rather than attempting to pass one big bill, various narrower measures were introduced. Most were defeated, but a significant bill to set new requirements for how condo owners can sue did pass.

On other matters, lawmakers passed bills to give charter schools more access to local district revenues, set rules for how unaffiliated voters can vote in party primaries, modernize state open records law and start reforming the youth corrections system. Some modest measures to address the opioid epidemic became law.

Since the voters legalized marijuana, bills to tweak pot laws have become a staple of every legislative session. This year was no exception, and lawmakers also attempted to go on a spending spree of marijuana tax revenues until reined in by the Joint Budget Committee. A high-profile bill to create rules for marijuana clubs (amended out of the bill early) and further define “public consumption” died at the very end of the session.

One notable failure was a bill to reauthorize and redefine the mission of the Colorado Energy Office. That died on the last day after the Democratic House and Republican Senate couldn’t reach agreement.

As usual in a divided legislature, ideological “statement” bills didn’t fare well, including Republican measures on social issues like abortion and Democratic bills on energy conservation and economic security.

The budget

Bipartisan cooperation and creative thinking are more deeply embedded in the Joint Budget Committee than the legislature has a whole, and this year’s panel displayed those skills in crafting the 2017-18 budget package.

The budget includes $28.3 billion from all funds, a 4.2 percent increase, and $10.6 billion from the General Fund, a 6.7 percent increase. The committee managed to avoid some of the more uncomfortable cuts proposed in the governor’s original request.

The committee was able to make modest increases in state employee pay and rates for providers of various medical and social services.

State workers will receive a 1.75 percent across-the-board increase plus a .75 percent increase in funds for merit pay. An overall increase in community provider rates was approved, equal to 60 percent of the state employee pay raise. Some providers will receive additional increases. Additional staffing was approved for youth services.

But the budget requires shifting some severance tax revenues and highway funds to the General Fund.

Two big issues, the Hospital Provider Fee and the K-12 Negative Factor, were moving targets. The committee proposed to cut 2017-18 Hospital Provider Fee collections by $264 million, thereby eliminating the need to pay TABOR refunds. The revenue cut for hospitals would be more than $500 million, given the loss of matching federal funds. That plan became a big impetus for passing SB17-267.

The committee originally proposed a Negative Factor of $906 million but was able to trim that to $881 million before sending the budget package to the full legislature. But updated estimates of local district revenues, which came after the budget passed, enabled lawmakers to hold the Negative Factor to $828 million, the same as in 2016-17.

By the numbers

There were 681 bills introduced during the 2017 session, with 270 of those postponed indefinitely, defeated on floor votes or allowed to die on the calendar when lawmakers adjourned May 10.

See the list of all bills – with votes – here, and the list of dead bills here.

For perspective, there were 686 bills introduced in 2016, of which 288 didn’t make it.

-- Todd Engdahl

The big bills came together Wednesday after lawmakers convened for the last day of the 2017 session. As far behind as legislators always seem to be at a session's final days, they somehow always pull things together - although a couple of issues weren't resolved.

Here’s a quick recap of where things stand on top issues. For more details, check the links here to full stories from the Capitol press corps.

Hospital Provider Fee – The House gave final 49-16 approval to SB17-267, which would do everything from preventing cuts to rural hospitals to easing some business taxes. The bill passed the Senate 25-10 earlier. Because their were no House amendments, the bill goes directly to the governor. This was the big bill of the session, and its passage represents a remarkable compromise. It's also mind-bendingly complicated.

Energy policy – A measure to renew and shake up the Colorado Energy Office ate up a lot of Senate time Monday. But SB17-301 passed the Senate 21-14 Tuesday, sending it to the House, where it was significantly amended later in the day. The House and Senate struggled into the evening Wednesday over the bill. It died when they couldn't agree, as does the energy office.

School finance and charters – A running battle over whether to include special funding provisions for charters in the annual school finance measure, SB17-296, started in the Senate Monday morning and raged through a House committee and on the House floor until nearly midnight. After the dust settled, the finance bill passed the House without the charter provisions. HB17-1375, introduced late Monday afternoon, got preliminary approval late in the evening. It proposes a compromise method for school districts to share tax override revenues with charters. The House passed the charter bill by a wide margin Tuesday morning, and the Senate passed it 31-4 wihtout amendments on Wednesday morning. This is a done deal.

The school finance bill passed the House 52-13 Wedneday morning, and the Senate accepted House amendments and re-passed the bill 35-0. Relax - your district will have funding next school year, even if it's not as much as district administrators might like.

Primary elections – SB17-305 passed the Senate 31-4 Monday. This is the bill that puts into effect the 2016 ballot measure that allows unaffiliated voters to cast ballots in party primaries. Amendments cooled some of the controversy over this bill, and the House passed the bill 65-0 Tuesday evening.  

-- Todd Engdahl, updated 9 p.m.

The Wednesday end of this year’s legislative session is in sight, and legislators have some busy days and perhaps a few long evenings ahead of them before adjournment comes.

As usual, the legislature left a lot of big issues until the end. But significant progress was made last week on some centerpiece bills. So it looks like lawmakers will manage to pull it all together, something they almost always seem to do despite the obstacles.

The 2017-18 budget has been passed, the complicated fix for the hospital provider fee seems to be a done deal and legislators may even agree on the vexing issue of how school districts should share extra revenues with charter schools.

Get more detail on what’s at stake in the final days in this Denver Post article.

And read on for review the way things stood on Friday.

As if they don’t have enough on their plates in the session’s final days, lawmakers were presented with a big new energy bill Friday.

House Bill 17-1372 would require energy companies to disclose locations of subsurface facilities and share development plans with affected local governments. It’s in response to the recent fatal house explosion in Firestone.

Even though the final gavel will fall May 10, Colorado lawmakers were already behind on deciding most of this year’s toughest issues – transportation funding, school finance, marijuana regulation and liquor laws.

Legislators are natural-born procrastinators, and there’s an end-of-session logjam every year. But many Capitol observers think things are messier this year, partly because seemingly unrelated issues are intertwined in single bills.

Let’s get the accomplishments out of the way first, because it’s a shorter list.

The budget – Everyone at the Capitol breathed a sigh of relief Wednesday when the Senate voted 33-1 to pass SB17-254, the state budget for 2017-18. The House approved the bill earlier, but the votes came weeks after the deadline for passing the budget. That’s a key accomplishment because the state constitution requires passage of a balanced annual budget. But the overall budget situation remains unsettled because other related bills remain in play – see below for details

Construction defects – The legislature has been stalemated for years on the issue of how condominium owners can sue developers for shoddy construction. Real estate interests feel current law makes it too easy to sue, resulting in expensive liability insurance rates for developers. Proponents of reform argue that has led developers to build apartments instead and that more condos are needed to help ease the state’s affordable housing crisis. HB17-1279 changes the process for condo owner lawsuits in a way that backers believe will reduce litigation. It passed the Senate 33-0 Thursday.

A big complicated bill

The broader budgetary issues that remain unresolved include transportation funding, school support and assistance for rural hospitals.

All of those issues are crammed together in a single measure, SB17-267, which carries the broad title of “Sustainability of Rural Colorado. (Legislative procedures generally require that a bill cover only a “single subject,” although that’s a rule subject to flexible interpretations.)

The “rural” parts of the bill include some earmarked funding for small school districts and rural highways. The centerpiece of the bill is reclassification of the Hospital Provider Fee so its revenues won’t count against the annual state revenue cap. The fee plus the federal matching funding it attracts are used to reimburse hospitals – rural and otherwise – for the costs of treating poor and uninsured patients. Bills already passed this session would reduce fee revenues, threatening payments to rural hospitals.

The bill also includes funding to pay off transportation bonds.

And supporters want to include a fistful of other, tenuously related provisions in the bill, including use of marijuana tax revenues for schools, higher co-pays by Medicaid patients, a cut in the business personal property tax and adjustment of the state revenue ceiling.  The bill has been the focus of prolonged negotiations, but it appeared Thursday that the deal was coming together. The Senate gave initial approval to the bill early Friday afternoon, with no amendments and surprisingly short discussion.

Meanwhile, a separate – and clean – transportation funding bill was introduced just a few days ago and already has passed two Senate committees. SB17-303 is somewhat similar to a measure killed earlier in the session in that the new bill would require voter approval of a tax increase.

The annual school funding measure, SB17-296, is also messy, given that the Senate Education Committee added controversial amendments that propose to grab marijuana revenues previously earmarked for other, non-education programs and also to require that school districts uniformly share their tax override revenues with charter schools.

Those provisions were stripped by one vote on the Senate floor during a debate that was interrupted several times to settle parliamentary disputes.

GOP Sen. Owen Hill, who's pushing charter revenue sharing, said he'd pursue that issue in the House, separate from school funding. Those sharing provisions are in a separate measure, SB17-061. It passed the Senate but has been bottled up by Democratic House leadership – hence the move to put the language in the finance bill.

Other big bills that are moving slowly include a measure to reform the Division of Youth Corrections, a proposed big reorganization of the state energy office and three marijuana bills that deal with pot tax rates, licenses for marijuana research and restrictions on public consumption.

Before the energy bill surfaced, the winner of the Johnny-come-lately award was HB17-1370, which was introduced Monday night and had its first House committee hearing Wednesday morning. It was killed in another committee Friday morning.

The bill would have opened the door for Wal-Mart, Target and large independent liquor stores to gain additional liquor licenses but was opposed by various other factions of the fractious booze industry. A similar bill was killed earlier in the session. Legislation expanding licenses for the big grocery chains was passed in 2016.

Still time for ceremony: Despite the pile of bills hanging over their heads, lawmakers spent several hours over the last 10 days speechifying on purely ceremonial resolutions covering such issues as Holocaust Awareness Week, Gold Star families, the importance of honeybees, children of fallen service members, workers who died on the job, autism awareness, motorcycle safety, the 50th anniversary of the Vietnam War, the Armenian genocide, space exploration, second chances for convicts and a scenic highway near Grand Junction that’s beloved by cyclists.

By the numbers: More than 680 bills have been introduced during the 2017 session – about 50 of them in the last two and a half weeks, well past deadlines for new bill introductions. Legislative deadlines of all kinds are routinely ignored by leadership. 

Update: Last month we detailed legislators’ marijuana tax spending spree, which threatened to overspend the state pot fund by $8 million. The Joint Budget Committee, when reconciling House and Senate amendments to the 2017-18 budget bill, erased that deficit by trimming some marijuana spending proposed by the two houses and flat-out rejecting other proposals.

-- Todd Engdahl, updated May 7, 6:30 p.m.

Colorado legislators this session are close to overspending the Marijuana Tax Cash Fund, the state account that holds the revenues from the various taxes on cannabis products.

State fiscal analysts estimate that fund will have a net $117.7 million available for spending in the 2017-18 budget year. But marijuana appropriations proposed in the main state budget plus spending proposed in other bills that haven’t yet passed totals $8.6 million more than will be available.

It ultimately will be up to the Joint Budget Committee and the two appropriations committees to exercise some discipline and prevent the marijuana cash fund from being drained. Some bills are going to die.

Debating the annual state budget is a frustrating exercise from the 94 lawmakers who aren’t members of the Joint Budget Committee. That’s because the budget panel is required to submit a budget package that balances the general fund, the main state account that’s filled primarily by income and sales taxes.

If a lawmaker wants to direct more general fund to a particular program, he or she has to persuade colleagues to trim general fund money from another agency.

So the annual budget gets changed very little as it moves through the House and Senate, usually ending up in much the same form that the JBC proposed in the first place.

The marijuana account is classified as a “cash fund,” meaning it isn’t subject to the same balancing requirements as general fund money. (There are scores of other cash funds scattered across state balance sheets, most of which have specific revenue sources and are supposed to have earmarked uses.)

Frustrated by their inability to tap the general fund for favorite projects, lawmakers often try to raid cash funds. That what’s happened with the marijuana fund this year, in a big way.

A law passed after recreational marijuana was legalized limits tax revenue spending to programs “such as drug use prevention and treatment, protecting the state's youth, and ensuring the public peace, health, and safety.” (That last item means marijuana regulation and law enforcement.)

Lawmakers have used that broad definition to fund a lot of programs, including the Department of Revenue, school health services, drug education, marijuana research and mental health and substance abuse programs of all kinds.

As the 2017-18 budget bill emerged from the JBC, it already contained $79 million in proposed spending from the marijuana fund, much of that continuation and expansion funding for programs that previously had tapped the fund. (Some $61 million is being spent from the fund in the current 2016-17 budget.)

This year’s budget measure, SB17-254, gained another $32 million in marijuana-supported funding as it moved through the Senate and House. Those add-ons included $16.3 million for homeless housing and $8 million in spending on mental health programs.

A separate measure, House Bill 17-1221, would grab another $6 million for grants to local police departments to help them enforce marijuana laws. (That bill has passed both chambers but hasn’t yet been sent to the governor.)

The spending proposed in the budget bill combined with the enforcement measure would leave only $793,462 in the marijuana fund.

But wait – there’s more.

A handful of other bills propose an additional $9.4 million in spending from the marijuana fund, creating the $8.6 million potential hole.

A sidelight to the marijuana spending spree is the fact that one marijuana tax rate is supposed to drop next year. Among several marijuana taxes is what’s called the special sales tax, and it is scheduled to drop from 10 percent to 8 percent on July 1.

The budget committee has drafted a bill that would keep the tax at 10 percent, but that hasn’t been introduced yet.

The marijuana fund problem is just one small element in a big budget stalemate created by lawmaker disagreements over the Hospital Provider Fee, use of mineral tax revenues and school funding.

The House has delayed action on two related budget bills, the provider fee bill is still sitting in a Senate committee and the annual school finance bill, necessary to set district-by-district allocations for 2017-18, hasn’t even been introduced.

Both houses have passed the main budget bill, although it hasn’t yet been sent back to the JBC for resolution of differences between the two chambers.


-- Todd Engdahl

This year’s version of the “long bill,” the proposed 2017-18 state budget, will be debated in the Senate this week, moving to the House the week after.

The Joint Budget Committee wrapped up months of work on March 23 with a budget plan that made significant cuts to funding for hospitals and raised the K-12 negative factor while taking money from severance tax, highway and other special funds to balance the proposed General Fund budget. It did approve modest increases in state employee pay and rates for providers of various medical and social services.

In a key decision, the committee voted to cut 2017-18 Hospital Provider Fee collections by $264 million, thereby eliminating the need to pay TABOR refunds out the General Fund. The Hickenlooper administration had proposed a $195 million cut. The revenue loss to hospitals would be more than $500 million, given the loss of matching federal funds.

“This is a really tough decision for us,” said vice chair Rep. Millie Hamner, D-Dillon. “That’s going to have a very negative effect on hospitals.” She noted that other lawmakers “are working really hard” on a possible reclassification of the fee, which could remove it as a factor in calculation of the annual TABOR revenue ceiling.

The committee voted late on the evening of March 22 to set next year’s K-12 negative factor at $906 million, up from this year’s $831 million. But the next morning, after JBC staff recalculated what the committee needed to do to balance the budget, members were able to reduce the proposed negative factor to $881 million.

The committee also was able to pull back its original plan to take money from the Marijuana Tax Cash Fund to bulk up the General Fund. But members did agree to propose a bill that would set the rate for special marijuana sales taxes at 10 percent. Current law calls for the tax rate to drop to 8 percent next July 1.

While the committee’s budget plan calls for shifting some severance tax revenues and highway funds to the general fund, members didn’t consider reducing the senior homestead property tax exemption, as had been proposed by the Hickenlooper administration.

Modest winners in the budget plan include state employees, who would receive a 1.75 percent across-the-board increase plus a .75 percent increase in funds for merit pay.

An overall increase in community provider rates was approved, equal to 60 percent of the state employee pay raise. Community providers include organizations that provide medical, community corrections and health and other care services through contracts with the state. Some providers will receive additional increases.

Some elements of the proposed budget, particularly the size of the negative factor, are likely to be challenged during legislative deliberations. But the budget essentially is a zero-sum document, given the requirement that it be balanced, along with other constitutional limitations.

So if lawmakers want to change the size of the negative factor or make other alterationss, they’ll have cut spending elsewhere in the budget to compensate, or find new revenue sources like additional transfers from various special funds.

-- Todd Engdahl

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