Fiscal crunch on the cutting edge
Education escapes reductions that include hospitals, other programs
Colorado lawmakers introduced a $26.8 billion state budget bill Monday that offers a modest increase in state employee salaries and education spending at the expense of cuts to hospitals and other programs. The spending measure for the fiscal year that begins July 1 represents a 4 percent increase from the current budget and came together after significant consternation about how to address the state’s fiscal crunch.
The state Senate will hold the first votes on Senate Bill 254 and related budget measures Wednesday, and the attention will be on who gets the $10.6 billion in discretionary spending.
Here is a look at what the Colorado state budget could mean to you: If you are an average taxpayer …
The total budget package is listed at $28.3 billion, but the number includes double-counted dollars shifted between state agencies and excludes an additional $183 million in spending on state construction projects. So the total spending is closer to $26.8 billion.
Unlike Congress, Colorado lawmakers are required to present a balanced budget, and the Joint Budget Committee — composed of three Democrats and three Republicans — scrambled to close a roughly $400 million budget hole when revenues didn’t match spending priorities.
One maneuver eliminated the need for TABOR refunds in 2018. The Taxpayer’s Bill of Rights limits state spending growth and requires excess revenue to go back to taxpayers.
For 2018, the refund was projected to range from $23 to $526 for single filers.
One reason the state exceeded the revenue limit is a fee paid by Colorado hospitals. So budget writers lowered the fees, which brought the state under the TABOR cap and eliminated the need for refunds.
But the move would hurt hospitals because the fees would have been matched with federal dollars and returned to cover the cost of uncompensated care.
For progressives, it’s another hard budget year with millions in spending priorities left unaddressed. The proposed budget falls short of school funding targets, and cuts money from transportation and hospitals in order to make ends meet.
For many Democratic lawmakers, the potential cuts to hospitals are a particularly difficult pill to swallow. And state Sen. Matt Jones, the top Senate Democrat on environmental issues, complained that the budget doesn’t do enough to keep tabs on polluters, such as the oil and gas industry. On Monday, he said the state has too few inspectors to monitor an industry that’s seen a recent resurgence fueled by rising gas prices.
The good news for Democrats
— the budget bill won’t be their last crack at boosting revenue to the state. A bipartisan transportation package moving through the House would raise $702 million in sales taxes for roads, and another bipartisan bill that dropped Monday would dramatically change how hospitals are funded.
Republican lawmakers are once again dismayed by the increase in spending and even more frustrated about the ballooning costs of Medicaid, a state-federal program to provide health insurance to lower-income residents that would increase $634 million.
But Senate GOP leader Chris Holbert said fiscal conservatives can take solace in the fact that the budget is balanced. And he pointed to a number of items Republicans blocked from the budget bill.
Among the items excluded: money for a student health survey that conservatives believe violates children’s privacy, and dollars for data collection on the new Aid-in-Dying measure overwhelming approved by the voters in November.
State workers under the spending plan can expect at least a small boost in pay — though it would be less than the 2.5 percent bump that Democratic Gov. John Hickenlooper requested. Most state employees would receive a 1.75 percent pay hike plus potential 0.75 percent merit raises.
Others would get more. Colorado State Patrol troopers would see a potential 7 percent hike. And the state’s judges would get a 5.7 percent increase. The increase in judicial pay also would boost pay for future state lawmakers and statewide elected officials, beginning in 2019.
Colorado’s traffic congestion and crumbling roads are a top priority this legislative session. And lawmakers are working to craft a ballot question for voters about a statewide sales tax hike for transportation.
But money for roads didn’t escape the budget ax. The state would spend $79 million on priority road projects for the next two years, rather than the $158 million initial earmark. The spending would increase to $160 million in fiscal year 2018-19.
Tuition costs are on the rise again. The budget would allow tuition hikes ranging from 5 percent to 7.7 percent for Colorado residents and unlimited increases for nonresidents and graduate students. Not all colleges would hit the caps. For instance, the University of Colorado at Boulder is projecting a 4.9 percent increase for freshmen, with no increases for current students.
Elsewhere in the budget, lawmakers want to address the cost of textbooks. The bill would set aside $25,000 to create a council to study how to increase the use of open educational resources, such as free research materials in the public domain, as an alternative to expensive textbooks.
The budget calls for additional investments into K-12 education, increasing per student funding by about $185. But the money the state plans to send to school districts across the state will still fall short of the state’s obligations.
As a result, the negative factor — the amount the state has underfunded schools compared with its requirements under the School Finance Act — is expected to grow by as much as $50 million to about $880 million.
Absent a major change to how schools are funded, that gap is only likely to grow in the coming years. The complicated interplay between TABOR and a lesserknown constitutional provision known as the Gallagher Amendment is expected to trigger ongoing cuts to residential property tax rates, cutting even more funding to school districts that the state is required to backfill.
The state’s film producers and crew members may not see as much action in the future. The $3 million in film incentives used to lure movies and television shows to the state would be eliminated from the budget, the victim of an ideological dispute about their value. The state’s film office suggests this could significantly hurt the industry.
The sales taxes you pay on recreational pot wouldn’t go up, as Hickenlooper proposed this year. But they wouldn’t go down, either.
Current law calls for marijuana sales taxes to dip to 8 percent from 10 percent on July 1, but the budget proposal would keep the tax at today’s higher level — a move some consider a de facto tax hike. It’s arguably the only tax hike in the 2018 budget — barring discussions to come on transportation funding.
Hickenlooper, meanwhile, had suggested hiking it even further to 12 percent to free up an extra $110 million for schools.
The senior homestead exemption isn’t going anywhere. Hickenlooper’s budget proposed cutting the property tax credit for homeowners over age 65 in half as a way to free up $68 million for schools. The shift would have allowed seniors to claim a tax break on the first $100,000 in their home value — instead of the first $200,000 allowed currently — but the JBC rejected the governor’s proposal, in the face of bipartisan opposition.
Standley Lake High School students gather on the second floor in the atrium of the state Capitol for a group photo during a field trip Monday, when lawmakers introduced a $26.8 billion state budget bill. The state Senate will hold the first votes on Senate Bill 254 and related budget measures Wednesday, and the attention will be on who gets $10.6 billion in discretionary spending. Unlike Congress, Colorado lawmakers are required to present a balanced budget. Helen H. Richardson, The Denver Post