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