ON EDGE OF A NEW SESSION
PERA reform, tough transportation decisions and a looming election cast a shadow over lawmakers
Colorado lawmakers return to the Capitol this week for a 2018 legislative session that’s threatening to derail before it even starts.
A cloud of political controversies and steep policy challenges is making this year’s term one of the most unpredictable and uneasy in recent memory.
The Republicans who control the Senate and the Democrats who lead the House are entering the session with divergent policy agendas. On two of the most consequential and difficult issues — overhauling of the state pension fund and improving the state’s roads — neither side sees eye to eye on solutions, let alone whether it’s a priority.
The backdrop for the 120-day term, which begins Wednesday, is likewise poisonous. An October special session ended in partisan fingerpointing, and it’s an election year in which some lawmakers are even competing against each oth-
er for statewide office.
Moreover, scandal plagued the offseason. An outside consultant is studying a culture at the Capitol that some believe tolerates sexual harassment after complaints were filed against four lawmakers for alleged bad behavior. A new lawmaker takes a seat after apologizing for making numerous comments viewed as racist. Others faced questions about alleged ethics violations. Another was arrested at Denver International Airport for bringing a loaded handgun through security. And a Democrat in the narrowly divided Senate changed her party affiliation to independent.
The tumultuous atmosphere left lawmakers little opportunity to build on a much-touted 2017 session or to foster better connections in a building where relationships are political currency.
“I’m thinking when you put all that into the
formula of starting the session on Jan. 10, who knows what is going to happen?” said state Sen. Rhonda Fields, D-aurora, reflecting concerns from more than a dozen other lawmakers and lobbyists interviewed ahead of the session. “I’m feeling anxious because I don’t really know what to expect.”
The uncertainty — and split political chambers — is prompting a number of interest groups to bypass the legislature and pursue ballot initiatives to boost school funding, add more money for highways and overhaul health care.
Still, other top lawmakers are expressing optimism, and termlimited Democratic Gov. John Hickenlooper, who is entering his final session, wants to see meaningful policy changes. In prior election years, lawmakers still found room to agree and send more than 600 bills to the governor and tackle big issues. And a year ago, more than 60 percent of the legislation introduced made it to the governor’s desk, according to legislative leaders.
“I’m very optimistic. I’m not skeptical,” said Senate Majority Leader Chris Holbert, R-parker.
PERA an early test
Perhaps no one issue illustrates the unpredictability of 2018 better than the looming fight over PERA, the $44 billion Public Employees’ Retirement Association.
The state pension system has given glowing reports about its financial health to lawmakers and its members for years, touting the success of the last overhaul to stabilize the fund in 2010. But PERA’S latest financial reports — which factor in more conservative investment returns and longer life expectancies — now tell a dramatically different story. PERA is not projected to run out of money, but it’s funded ratio, 58.1 percent, is even worse than it posted during the recession.
So far, top officials have put forward three major proposals, one each from the Democratic governor, the PERA board of directors and the Republican state treasurer, Walker Stapleton, who is running for governor. But no one’s quite sure what direction state lawmakers will take.
None of the three plans is easy to swallow. Each requires steep tradeoffs and more money from taxpayers, public employees or retirees to close the $32 billion gap in unfunded benefits owed. The lead legislative negotiators in each party are not committing to any specifics, and some prominent Democrats, including Senate Minority Leader Lucia Guzman, are now suggesting the situation is not urgent enough to compel a fix this year.
Mike Feeley, a former top Democratic lawmaker, said he expects the pension overhaul to “consume a lot of time.” And he suggested the discussion will prove more difficult with the passing of Greg Smith, PERA’S former director who died in December.
“He was one of the best thinkers on public pensions, and that leaves a big gap,” said Feeley, who is now a lobbyist at Brownstein Hyatt Farber Schreck, one of the top firms at the statehouse.
In the Gop-led Senate, Republican Sen. Jack Tate is working on a proposal that he says will be within the “same orbit” as the three public proposals — meaning some combination of higher contributions into the fund, coupled with cuts to cost-of-living raises for retirees and other tweaks to how benefits are accrued.
In the House, Majority Leader KC Becker, D-boulder, says she’s in discussions with Tate, but is stopping short of endorsing specific policies until the Senate passes a bill her chamber can consider.
“People don’t realize the trouble that PERA is in,” Becker said. “And we have a job to do at the legislature in educating other legislators, and in finding the right set of knobs to turn, and understanding how much to turn those knobs.
“That is a math problem,” she continued, “but it’s also a political problem and a policy problem.”
Indeed, getting a package through both chambers will be a tall order. Conservatives for years have tried to shield taxpayers from higher employer contributions. But the only way to do that is to cut retirement benefits or take a bigger bite out of the paychecks of public workers — a key Democratic constituency.
Meanwhile, Stapleton, who proposed an aggressive approach that immediately drew rebuke from public sector retirees, is looking to present a compromise proposal with Hickenlooper.
As introduced, both plans would prevent taxpayer contribution rates from rising above current levels, but Stapleton’s would eliminate cost-of-living raises until the pension was in better financial shape.
“A proposal that comes jointly from the governor’s office and our office will be in a very strong position to be considered by the legislature, and that’s ultimately what we want to do,” Stapleton said, adding that he and the governor already agree on one key point: “Taxpayers have done enough to fix this system.”
Hickenlooper, however, played down the suggestion, saying the two haven’t talked. “I don’t think anyone has the golden nugget of what the perfect solution is,” the governor said.
Either way, this year’s effort is a far cry from what happened in 2010, when lawmakers entered the session with a bipartisan bill to introduce on day one.
“It’s going to be harder to win over unanimous support in my caucus based on the particulars of a reform plan, and I think it might be harder for the other caucus to come to a sense that we need to do something,” said Tate, of Centennial.
Transportation tough topic
Unlike prior sessions, state lawmakers are starting with an optimistic budget outlook projecting between $196 million and $340 million in new dollars — an unexpected windfall from federal tax reform. State Sen. Lois Court, a veteran lawmaker and Denver Democrat, said it’s “a blessing and a curse.”
“The blessing is we do have extra money, and the curse is everyone in the legislature has an idea of how to spend it,” she said. Even though it’s easier than years where budget cuts are on the table, Court said it’s still difficult because lawmakers need to decide “which real people do we prioritize over other real people.”
A year ago, the top Republican and Democratic lawmaker agreed to make transportation spending a top priority. But the $1.9 billion in borrowing earmarked for roads didn’t go far enough for Republican lawmakers and top business leaders who want to see taxpayer dollars dedicated to closing a deficit for road building.
Holbert, the Senate’s top Republican, said his caucus wants to use the state’s budget growth to put $300 million a year toward transportation. How it would work and the dollar figure are negotiable, he said. But already Republicans suggest Hickenlooper’s proposed $150 million earmark for roads is not enough.
“We are trying to have a respectful bicameral, bipartisan conversation and not play politics with this critical important issue,” he said.
House Democrats, though, aren’t ready to commit to a dollar amount, citing numerous unmet needs, such as education and affordable housing. And unlike Republicans, transportation doesn’t crack the top of their legislative agenda, which is focused instead on helping the middle class with pocketbook issues, such as child care costs and consumer financial protections.
Becker acknowledged it will be “a tough year for a variety of reasons. … But I think that there still continues to be a commitment to solve our problems. We’re going to do the best we can.”