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Legislative Year: 2018 Change

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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

The legislative session has passed the halfway point of its 120-day run, and lawmakers are finally starting to focus on the issues that everyone expected would be the big ones in 2017.

Bills on top issues like transportation funding, construction defects and marijuana regulation have been introduced recently and are starting to wend their way through committee hearings and floor debate.

And lawmakers will get their attention forcefully focused on the 2017-18 budget Friday, when new quarterly state revenue forecasts will be unveiled. Those are not expected to show a pretty picture.

Recent mid-session analyses by the Capitol press corps have highlighted how little of substance lawmakers got done during their first 60 days. That’s nothing new – procrastination is a proud legislative tradition, and some key bills won’t be decided – or killed – until the session’s final few days.

Here’s a quick review of what lawmakers will be fussing over between now and May 10.

Transportation – Everybody at the Capitol likes to bemoan traffic congestion and potholed roads – and they’ve doing so for years without coming up with any solutions.

So it was considered something of a breakthrough this session when GOP Senate President Kevin Grantham and Democratic House Speaker Crisanta Duran recently unveiled House Bill 17-1242, which would send a transportation funding plan to voters for consideration.

The measure would increase state sales taxes by about six-tenths of a cent for 20 years, raising revenue to pay off $3.5 billion in bonds for highway and other transportation projects.

Grantham may have taken the lead, but he doesn’t have all Republicans following him. Conservative GOP members don’t want to raise taxes – period – and they aren’t mollified by the bill’s plan to trim some motor vehicle fees.

Another member of the Senate GOP leadership, Sen. Jerry Sonnenberg, is even talking about introducing an alternative plan that would take transportation money from existing state revenues.

While a lot of Republicans advocate a “revenue neutral” transportation funding plan, none of them have yet said publicly what they’d cut to pay for roads. The biggest chunks of the state budget pay for education and health care, already facing possible budget cuts for other reasons.

Construction defects – This issue sounds dull, but it’s been a legislative obsession for several sessions.

The problem is that there’s been very little condominium construction in Colorado for several years. Builders say that’s because current law makes it too easy for condo owners to sue over allegedly shoddy construction and the resulting high insurance costs make condo construction economically unattractive.

Fixing the law is being pitched as a way to provide more affordable housing, given that condos typically are less expensive than single-family homes, whose prices have been skyrocketing.

This session lawmakers have proposed a package of bills addressing different pieces of the issue. Single omnibus bills have bogged down and failed in past years.

The centerpiece may be Senate Bill 17-156, which would steer owner-builder disputes toward arbitration rather than the courts, a change that makes some Democrats nervous.

Marijuana regulation – Cracking down on the marijuana “grey market” is a top priority for Gov. John Hickenlooper. Two measures, House Bills 17-1220 and 17-1221, propose to do that. The first would limit to 16 the number of marijuana plants that could be grown at home. The second would tap marijuana taxes for grants to help local police departments enforce marijuana laws.

Although the measures have moved quickly through the House, some lawmakers worry that medical marijuana patients and caregivers need more protection than the first measure currently provides. Look for more negotiations and changes before this issue is settled.

The biggest cloud hanging over the session is the state budget. For months the potential gap between projected state needs and available state revenues has been projected at $500 million or higher.

Lawmakers will get a better idea of that gap Friday when state economists issue their last formal revenue forecasts before the 2017 session ends. If the gap is as big or bigger than previously forecast, the Joint Budget Committee will have some tough decisions to make before the March 27 deadline for introduction of the 2017-18 budget bill.

Some 484 bills have been introduced as of March 13. Nearly 30 have been signed by the governor, and more than 90 have been killed.

For more analysis of where lawmakers have been and where they’re going, check out these media outlets are saying:

-- Todd Engdahl

The 2017 Colorado legislature convened Wednesday morning with the usual hopeful speeches and hands-across-the-aisle goodwill – plus some partisan bills. All that ceremony kicked off a session that faces big issues lawmakers have wrestled with before.

Balancing the budget, finding more money for roads and bridges and reaching compromise on construction defects law are pegged as this session’s top issues.

The budget – Lawmakers face a difference of about $500 million between what they’ll be allowed to spend in 2017-18 and the full cost of various demands such as TABOR refunds, K-12 spending, possible transfers to transportation and construction projects and Medicaid program requirements. Gov. John Hickenlooper has proposed various ways to close that gap, including assorted fund transfers and other accounting moves and an increase in the “negative factor” – the gap between full and actual school funding.

Hickenlooper and some Democrats would still like to change the definition of the Hospital Provider Fee so that its revenues don’t count against the ceiling that triggers taxpayer refunds under TABOR. But Senate Republican leadership seems still firmly opposed to that idea.

Republicans have long questioned the costs of Medicaid, which have risen with expansion of eligibility in recent years. Efforts to trim costs likely will be met by resistance from House Democrats and Hickenlooper. Some Republicans hope changes by the Trump administration and the Republican Congress will give states more flexibility to control Medicaid costs. But those may not happen in time for the 2017 session to take any action.

Transportation – Republicans have been pushing for financing highway improvements with bonds that would be repaid from existing highway revenues. Hickenlooper and Democrats have stopped such efforts, arguing that it’s foolish to shortchange highway maintenance by using that money to repay bonds. In opening day speeches leaders of both parties said they’re working on a plan that everyone can support.

Construction and affordable housing – The 2017 session will take a fresh look at “construction defects.” That’s the shorthand phrase for the problem of condominium developers being exposed to lawsuits from owners for bad construction. Developers say current law makes it too costly to build condos because of high liability insurance rates. They argue that changes in the law would spark more condo development. They argue that building more condos would expand affordable housing options for people who can’t afford single-family homes and are burdened by skyrocketing rents. A bipartisan bill introduced Wednesday would address insurance costs for builders.

Education – No surprise, the K-12 debate will be all about money. School districts will oppose an increase in the negative factor, but that will be hard to avoid. It’s possible that lawmakers will propose property tax reforms to increase local contributions to school budgets – something that ultimately would require voter approval. Some legislators also would like to somehow incorporate individual district mill levy override revenues into overall school funding. And a group of superintendents is working on possible changes in the state school finance formula.

Other education issues up for debate could include changes to ninth grade testing, funding for charter schools, regulation relief for small rural districts, teacher licensing and evaluation, discipline of preschool students and district and school accountability.

Energy development – Senate Republicans, anxious to help stimulate the oil and gas and coal industries, have created a special committee to study the issue. Democrats remain committed to encouraging renewable energy development. It remains to be seen whether any significant legislation will emerge.

Expect bills on a wide variety of other topics, including the Public Employees’ Retirement Association, marijuana regulation (Hickenlooper wants to crack down on the “gray market,”) elections and ballot measures, gun control, reproductive rights, union membership, combating opioid abuse, TABOR reform and easing the perceived regulatory burden on small business. Expect a high mortality rate, given that many of these bills will be partisan.

Republicans continue to control the Senate with an 18-17 majority, while Democrats have increased their House majority to 37-28. Split control traditionally means major legislation absolutely requires agreement and a high mortality rate for clearly partisan and ideological bills.

Almost all of the top positions in each chamber are in new hands. Republican Sen. Kevin Grantham of Canon City is Senate president, with Sen. Chris Holbert of Parker as majority leader. Democratic Sen. Lucia Guzman of Denver continues as minority leader.

The top House leadership posts all have new occupants. Democratic Rep. Crisanta Duran is speaker, with Rep. KC Becker of Boulder as majority leader. House Republican leadership has taken on a more conservative tone, with Rep. Patrick Neville of Castle Rock as minority leader.

Twenty-one of the General Assembly’s 100 members enter the Capitol without prior legislative experience. Two senators are brand-new, and eight other new senators previously served in the House. Two House members are returning after spending a few terms out of the chamber.

-- Todd Engdahl

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