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Tax, debt and spending bills clear first hurdle with a little help from some Republicans

DENVER — Two highly controversial bills that some would normally tag as “tax and spend” measures by Democrats have made it out of their initial committees in the Senate — thanks to a little help from a handful of Republicans.

Those Republicans, who ran their elections on fiscally conservative, taxpayer-protective platforms, have frustrated some within their own party.

“I feel cheated,” said Gregory Golyansky, president of the Colorado Union of Taxpayers (CUT). “Not just as CUT president, but also as a taxpayer. They got elected on a certain promise, and they’re going back on that promise.”

The two bills SB17-267 and HB17-1242, tout bi-partisan support, but have a long way to go for final passage, and any changes could derail the success of either or both.

Senate Bill 267, sponsored by Republican Jerry Sonnenberg, who represents a big chunk of northeast Colorado, is known as the Sustainability of Rural Colorado Act. It seeks to pump about $400 million into rural school districts, $300 million into rural communities for road projects and inject millions more — possibly even hundreds of millions — into rural hospitals by way of Medicaid and the Hospital Provider Fee — which is one of the more controversial portions of the bill.

The fee is assessed on all hospitals, which pays a varied amount for every night someone sleeps in a hospital bed.  The fee is collected through a charge added to patients’ hospital bills, though the law creating the fee bars hospitals from showing it on the bill as a line item, leading some to call it a bed tax. The revenue is then used to reimburse hospitals to sustain and expand Medicaid programs and for the Colorado Indigent Care Program.

For the past two years, Democrats have tried to convert the fee, which currently goes into a segregated cash fund, to an enterprise fund. Because it generates about $700 million a year in revenue, it causes the state to hit its revenue cap under the Taxpayer’s Bill of Rights (TABOR). For the past couple of years, taxpayers have received refunds because of the excess.

If it were converted, it would no longer fall under TABOR. Instead, a 13-member board appointed by the Governor, would control what is equal to about 10 percent of the state’s total expenditures. The conversion would free up space under the cap, allowing the state to collect more and spend more.

It was the issue both Lois Court, (D-Denver) and Owen Hill, (R-El-Paso) said could change their votes later in the process.

To get conservative support, sponsors had to lower the TABOR cap, something Court, who said the whole purpose of the move was for legislators to have more money to spend, wasn’t happy with, adding she was voting yes only to further the conversation. Hill said it was the deal-breaker, adding if the bill morphs into something that resembles the attempts from the past two years, he will withdraw his support.

He supported the bill, in part he said, to stop subjecting the fee “to the annual whims of our state government,” adding it causes the budget to be balanced on the backs of hospitals.

“I think it unfairly inserts government into private enterprise by us have to constantly change that funding amount,” Hill said. “In my mind, separating out the hospital provider fee and removing it from those annual fluctuations in our state budget … is the fiscally responsible thing to do.”

Jack Tate, (R-Arapahoe), said he was encouraged that there was a good level of investment in transportation infrastructure without raising taxes.

“And going forward with another round of capital projects from future tax flows coming into the highway users tax fund rather than have those cash flows absorbed into the administrative bureaucracy,” Tate said.

The bill passed the Finance Committee on a 4-1 vote, with Republican Chairman Tim Neville, who represents parts of Boulder, Denver, Gilpin and Jefferson counties, the lone no vote.

In addition to the provider fee, Neville did not support the bill’s plan to use Certificates of Participation (COPs) to fund capital expenditures.

COPs are a funding mechanism that allows government subdivisions to “lease” property from a third-party who has bonded the construction. At the end of the bond term, if the entity has leased the property the entire length, the third party turns over the deed.

“We’re putting a for sale sign on the state of Colorado and its facilities,” Neville said. “If we ever run into a problem paying that bill, I’m not sure who’s going to wind up owning those facilities. This is basically a creative way to avoid going to the taxpayers and asking them what we should be asking them. Do you want to increase tax or do you want to increase debt? … And putting 13 gubernatorial appointees in charge of 10 percent of the state’s spending is not the answer.”

Neville said overall the bill highlights the failure of the legislature, pointing out that the budget has grown by $9 billion since he took office several years ago.

“Medicaid expansion has a lot to do with that, but it’s more than that, it’s a lack of prioritization,” Neville said. “In fact, it’s more than that, it’s a failure to prioritize some things that are extremely important and the lack of discipline to not fund new programs on top of that.  We have met the enemy, and it is us as a legislature. We’ve spent billions on transit while we’ve allowed our roads and bridges to sink into disrepair. I wish I could say this was a good solution to those problems or even a good bandage, however, it is not.”

That bill now goes to appropriations.

House Bill 1242, which would ask for a sales tax increase to bond $3.5 billion in road and bridges infrastructure, started off on the wrong foot with many Republican lawmakers feeling blindside by Senate President Kevin Grantham, a Republican representing parts of Clear Creek, El Paso, Fremont, Park and Teller counties.

Although it narrowly made it through the Senate Transportation Committee on a 3-2 vote, it’s headed for Finance where some predict it will die or be even more unrecognizable after amendments.

Its success in Transportation came via the one needed committee vote belonging to the co-sponsor Randy Baumgardner, a Republican representing parts of Garfield, Grand, Jackson, Moffat, Rio Blanco, Routt, Summit counties.

“I put my soul into the last three or four years trying to get transportation funded in the state of Colorado,” Baumgardner said during testimony.  “This is so far the best avenue we have found where we can come to some kind of consensus to make this work.”

Perhaps more telling was the silence of the opposition, neither Sen. John Cooke, (R-Greeley) or Sen. Ray Scott, (R-Grand Junction) said anything about the bill, despite a dozen amendments that included lowering the sales tax increase to one-half of 1 percent. They simply voted no.

With just two Republican nods needed to pass the bills on the Senate floor, Baumgardner and Grantham are poised to make that happen on 1242, while Sonnenberg, Tate and Hill are behind 267.

Golyansky said he was surprised by their choices, but is most disappointed in Baumgardner, who CUT named its Taxpayer Champion in 2014.

“I always thought of him as on our side,” Golyansky said. “The world we live in today, Donald Trump got elected because people are angry and want politicians to keep their words. It will catch up to them. Maybe not tomorrow but it will catch up to them.”

More telling Golyansky said is the fact three of the five (Grantham, Baumgardner and Hill) did not just sign to uphold CUT’s pledges, but are also in their final term of office.

“They obviously have no more political ambitions,” Golyansky said.

That is not true at least for Hill, who earlier this month announced his intent to challenge U.S. Rep. Doug Lamborn in the primary for the 5th Congressional District.

Hill told Colorado Politics that “We are not getting the representation we need, we are not getting the leadership we need.”

Grantham said during testimony, however, that to get a transportation bill done with the current make up of state government, it was going to take compromise among the two chambers.

“This is an ongoing thing, we’ve all talked about for years,” he said.  “And I’m sure  that it is not going to go away regardless of the fate of this bill.  We’ll have to find a solution one way or another. Ultimately it’s the voters decision if they want to put more money to this out of their pockets; they get to say yes or no, and I’m ok with them telling us yes or no.”

 

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