March 28, 2017 02:23 PM UTC

"Fake Choices"--Inside The Absurdities of Colorado's Budget

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• by: Colorado Pols

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.