“Fake Choices”–Inside The Absurdities of Colorado’s Budget

Erica Meltzer at the Denverite has an excellent overview of the debate underway this week over the state of Colorado’s $26.8 billion budget. As everyone who studies Colorado politics quickly comes to understand, the annual budget process in our state is a struggle in good times and bad–a question of insufficient revenues for the basic functions of government is hard economic times, but also constitutional constraints on revenues and spending growth that throttles the ability of the government to do its job when times are good:

Colorado lawmakers used deep cuts to hospital funding — $528 million when federal matching dollars are included — to balance the $26.8 billion state budget that was introduced in the Senate Monday. This outcome was the result of years of inability to reckon with some fundamental contradictions in Colorado’s budget process, and it endangers the financial stability of as many as a dozen hospitals around the state, with some facing possible closure, according to the Colorado Hospital Association.

In response to the impact on hospitals, particularly in rural areas, and to the push to place a sales tax increase for transportation on the November ballot, Republican state Sen. Jerry Sonnenberg has introduced a bill to do something Democrats have wanted and most Republicans have resisted for several years now — changing the hospital provider fee, the source of this contested hospital funding, into an enterprise fund separate from the rest of the budget.

Reclassifying the hospital provider fee as an enterprise would allow Colorado to collect and distribute this money without pushing the state over the revenue limits imposed by the Taxpayer’s Bill of Rights. But this fix to a vexing problem comes at a price: a $670 million reduction in that revenue limit. Every department would be asked to submit budgets for the 2018-19 fiscal year that are 2 percent smaller than their budgets for 2017-18. More significantly, future budgets would grow from this smaller base.

Split control of the Colorado legislature means that nothing can pass without the support of Republicans in the Colorado Senate. Even if there are a few moderate Republican Senators who support making changes to the 1992 Taxpayer Bill of Rights to ease the law’s constraints on spending, those moderates generally have no chance to even vote on a bill that GOP Senate leadership doesn’t support.

That hard fact is why we have Democrats signing on to this compromise bill with Sen. Jerry Sonnenberg, which makes a concession toward hospitals looking at big cuts that Democrats have been hoping for, and reclassifies the hospital provider fee get it out from under TABOR’s revenue limit–but with a heavy cost to award TABOR its pound of proverbial flesh. It’s a compromise that sucks, but is as good as anyone is likely to get this legislative session.

Tim Hoover, a spokesman for the Colorado Fiscal Institute, declined to comment on Sonnenberg’s bill, but he called the overall state budget situation “tragic” and unnecessary. Just last week, a Senate committee killed a Republican-sponsored bill that would have asked voters to change the formula that determines the revenue cap so that it would grow with the state’s economy and rising incomes, rather than just population and inflation. If it had passed, it could have meant an extra $133 million to work with in next year’s budget and more going forward.

“You don’t need to make these kinds of fake choices, between whether you have nice schools or nice roads,” he said. “It’s a fake choice because we have a law that creates a fake surplus and forces tax rebates when there isn’t enough money to do the things that we all agree we should do. It creates these dilemmas: Do you fund long-term care for the elderly or do you fix roads? Do you fund more transit or do you try to keep tuition affordable? We can afford to do all those things if we just fix our tax code.” [Pols emphasis]

It seems to us that the contradiction of the state struggling for money even in economic boom times might at some point be enough to persuade a majority of Colorado voters to take more than token action to sort it all out. The combination of Colorado’s constitutional checks, balances, and chokeholds, from the single-subject rule to Amendment 71, makes that a tall order. But nothing’s impossible.

It’s just not going to happen this year.

7 Community Comments, Facebook Comments

  1. Conserv. Head Banger says:

    I don't know Sonnenberg's motives. But it seems that he is trying to do something right.

    • It's the best horrible bargain the Colorado budget is going to get this year. Rep. Becker explained in some detail this year's exceptional budget conflicts, and there will be no overall "good" budget solutions given our state's TABOR restrictions. The fact that throwing away $250m in matching Federal hospital funds was the "preferred" option for Democrats says something about just how bad it's become.

      I'm hoping that Sen. Sonnenberg was driven by the problems rural hospitals in his own district would face if the hospital provider fee wasn't re-organized out of TABOR.

    • mamajama55mamajama55 says:

      I'm glad Sonnenberg can do something right – he's protecting rural hospitals and services.

      Now, if he would just withdraw his sponsorship from Dave Williams' ludicrous and unconstitutional anti-immigrant bill, that would be swell.

      I would guess that Sonnenberg will be a "no" vote on the Ralph Carr "Protect Colorado Residents from Federal Overreach" bill, if it ever makes it to the Senate.

      Also, Sonnenberg never returns my constituent calls or emails. I suppose he figures his liberal constituents aren't going to vote for him anyway, so he could give a damn what we think. Arrogant bastard.

      • Conserv. Head Banger says:

        I thought the Carr family had asked for removal of his name from the Salazar bill.

        Regarding Sonnenberg, several years ago I testified against one of his anti-public lands bill down at the Capitol. I was surprised a week or two later to get a nice card from him thanking me for taking time to come down (even if I testified against his bill, which he didn't mention). Sonnenberg is the only state legislator who has done that to/for me.

        Williams’ bill makes a fair amount of sense. There needs to be a national consensus on immigration; which means I oppose both Trump’s illegal E.O.s as well as the concept of “sanctuary cities.”  

  2. Phil V says:

    No way, this is a TERRIBLE deal. 

    This bill would be a disaster for the overall state budget. Yes, you have removed the hospital fees, so they no longer count toward TABOR. In exchange the Republicans get three terrible measures, any one of which is bad enough on its own but combined should make this bill DOA.

    First, permanently lower the TABOR cap. This is of course to off-set the hospital fees no longer counting toward it, but it’s absurd that the fees counted toward it in the first place since the state does not keep the money. I suppose if this was all that the bill was, I could grudgingly support it with an eye toward 2018, retaking the Senate, and putting a version of 1187 before the voters.

    But instead the Republicans also get a boondoggle in the making: a sweetheart $700 million guaranteed profit for an unnamed “private entity” in exchange for $1.3 billion to fix our roads. Except of course we aren’t really getting $1.3 billion because we have to pay the money back, plus interest, so we are actually losing $700 million via adding a $100 million dollar hole into the budget every year for 20 years. Think this year was fun? Try next year when we’ve already spent $100 million to line some extremely wealthy bank or developer’s pockets. And why is this even part of the bill? So the Republicans can say they “did something” about our roads while killing the sales tax increase compromise working its way through the House.

    Finally, we get a 2% mandatory slash in all state agency budgets for next year. This is appalling bad policy, uniform cuts are always a terrible idea, combined with a real callousness that will slowly expose itself as these agencies are forced to comply. How many jobs will be lost because of these cuts? What about DYC? State police? CDOT? And then in 2019 when the agencies are “allowed” to submit new requests, do you think we’re just going to be able to jump right back up to where they were before?

    The bottom line is that Republicans are finally feeling the very real effects of their ridiculousness over hospital fees but instead of forcing them to either own it or fix it, this bill is a lifeline to dramatically reshape the state’s budget very much for the worse. Instead, the House should pass a simple fix and send it to the Senate. I’m not saying that they will agree to just a simple fix, but our starting position cannot be this monstrosity. I cannot imagine that Speaker Duran is pleased with a bill clearly designed to destroy her sales tax compromise and blow up the budget bill at the same time.

    • JohnInDenver says:

      2% Percentage budget cuts means that, in real terms, the state is losing 3-5% — because of inflation. It involves spreading pain — no matter what. With the requirements in the Constitution to increase K-12 education, the cuts ultimately will be greater in other parts of the state government.

      If governing by percentage is the preference, I think we should start with cutting the functions of government by 2%, too. Which legislators become redundant as we go from 100 to 98? With 64 counties, we'll totally eliminate one and a half. Prison sentences' lengths will be cut by 2%. CDOT, responsible for more than 9,000 miles of road, will need to determine which 180 miles will be abandoned. Those who invested in Colorado bonds will get 2% less.

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