DENVER – Midway through the Colorado legislative session, lawmakers have left much of the heavy lifting for the second half.
At the start of the session in January, lawmakers said they were working on proposals to address conflicting constitutional amendments that impact the budget. They also suggested an agenda around affordable housing.
Neither of those items advanced in the first half of the session, though lawmakers say discussions have been ongoing and the measures are coming.
The most overshadowing issue facing the Legislature is a restructuring of the hospital provider fee. The fee – which is expected to generate $756 million in revenue next fiscal year – was established as a means to trigger larger federal health care contributions.
But it is entangled in the Taxpayer’s Bill Of Rights because the fee counts as revenue subject to taxpayer refunds.
Gov. John Hickenlooper, a Democrat, has proposed restructuring the fee as an enterprise fund or government-owned business. The proposal would take the revenue out of the TABOR calculation and lower refunds set aside in the general fund, thereby freeing money.
The governor is buoyed by a legal opinion from Republican Attorney General Cynthia Coffman, who said the restructuring would meet legal standards.
For the upcoming 2016-17 fiscal year, between $192 million and $212 million would be available by lowering refunds through restructuring the fee. The following fiscal year, estimates are between $341 million and $384 million.
Senate Republicans, however, aren’t convinced. At the very least, Senate President Bill Cadman of Colorado Springs wants to address the overall base of tax revenues that would be tied to a restructuring of the fee.
Removing the fee from the base – which determines TABOR cap triggers – might not reduce that base, which could impact how much the state can spend without needing voter approval, Cadman said. In the end, Cadman worries that the move would eliminate all taxpayer refunds for several years to come.
“We’re willing to talk and that’s all I can commit to,” Cadman said of negotiations. “Until we see some willingness to acknowledge and address some structural funding reforms, it would be impossible to overcome the hurdle of that.”
Democratic House Speaker Dickey Lee Hullinghorst of Boulder said discussions around lowering the base are off the table.
“That would actually be a worse situation than we are in now, if we reset the base,” Hullinghorst said. “There would be no good reason to do that.
“We should be investing our additional revenues in Colorado’s future, but without the hospital provider fee transfer to make it an enterprise, our 2016-17 budget will look pretty much like we’re back in recession.”
The other looming issue, affordable housing, is also caught up in stakeholder discussions. Tied to the issue is construction-defect reform, largely defined by an effort to curb lawsuits so developers are encouraged to build.
Previous legislative attempts have failed, so stakeholders this year have taken their time before unveiling legislation.
“I’m fairly confident that that’s one that we may be able to handle,” Hullinghorst said of defect reform. “We need to address this.”
Democrats are examining legislation that would extend tax credits to developers for building affordable housing. Another bill would allow prospective homeowners to save money tax free for a down payment or closing costs.
On the Republican side, Senate Majority Leader Mark Scheffel of Parker has been leading discussions. He said another idea could include creating a pilot program to restructure where and how defect cases are heard. One idea is to take the cases out of the traditional court process and instead create a specialty court or administrative process.
“It’s a big deal,” Scheffel said of the effort. “We’re watching the clock, but we’re being methodical.”
pmarcus@durangoherald.com
