The big issue this year for the Colorado General Assembly will be balancing the 2016-2017 budget. There are several factors, issues created by laws and constitutional amendments passed by either the Legislature or by citizen’s initiative, which play into this process.
The first issue to be addressed is adjusting the current year budget, which is anticipated to have a $160.3 million shortfall. The governor proposes to pay for this by reducing the required budget reserve of 6.5 percent. The reserve reduction must be paid back in 2016-2017.
For 2016-2017, the governor anticipates new revenue of $457.2 million compared to the primary costs of $830 million, leaving a $373 million budget shortfall. The primary cost drivers are $301 million for K-12 education, which includes enrollment and inflation as required by Amendment 23, $289 million for the TABOR refunds, $160 million to backfill the 2015-2016 reserve, and $80 million for new Medicaid clients.
The governor is proposing to pay for the shortfall by reducing Hospital Provider Fee revenue by $100 million, which would also reduce the TABOR refunds by $100 million; by increasing the “negative factor,” what we owe K-12 education, by $50 million; by allowing the State Education Fund balance to drop from $342.7 million to $102.8 million; by reducing higher education spending by $20 million; by reducing Medicaid provider rates by 1 percent (excluding primary care physicians); and by reducing controlled maintenance spending for buildings owned by the state by $10 million.
Also, transfers of money to transportation may be reduced. As you can see, many of these proposals are robbing Peter to pay Paul.
The Democratic-controlled Legislature expanded the eligibility for Medicaid in 2014 without regard to how it would be paid for. It is estimated that in the next year, Medicaid enrollment will rise by 4.7 percent, bringing the total case load to 1.35 million people, which means that 1 in 4 Coloradoans will be on Medicaid. It is estimated that, when fully implemented, the total cost for the expansion will be $1 billion per year.
There is no extra money to pay for the Medicaid expansion, and therefore, the money will come out of other departments as noted in the governor’s proposed budget. Health care costs have replaced K-12 education as the top spending line item in Colorado’s total budget.
It has been proposed that the Hospital Provider Fee be made an enterprise, thereby taking income out of the General Fund and reducing the requirement for the TABOR refund. Since the Hospital Provider Fee was not initially designated as an enterprise, to do so now without adjusting the spending base would require a vote of the people. This would not help in this year’s budget.
Colorado’s budget woes are pretty simple, but not easy to resolve. Our income has not kept up with our spending. We have a spending problem. Every state department must go through every line of its budget and find cost savings. Medicaid spending must be addressed. The Joint Budget Committee and Legislature must prioritize the key functions of state government.
J. Paul Brown represents House District 59 in Colorado’s General Assembly. The district encompasses La Plata, Archuleta, San Juan, Ouray and Hinsdale counties and part of Gunnison County. Reach him at jpaul.brown.house@state.co.us.
