DENVER – A drafting error in Senate Bill 17-267 will cost several special taxing districts millions of dollars in revenue including the Regional Transportation District (RTD), which projects a $500,000 per month loss.
A member of the RTD Finance Committee says in the short term, it will almost certainly result in cuts to services.
“It’s just like a household budget,” said Natalie Menten, RTD District M regional director. “First comes your mortgage. We will be scrambling for the next 10 days to adjust our current budget. And then we will have to address it in the strategic budget.”
A pre-committee teleconference is scheduled for Tuesday, where Menten and two others will come up with a short list of possible cuts to take to the full RTD Finance Committee on the 17th.
The cuts could have a serious impact on already existing problems within RTD, including the troubled A-line and planned expansions.
An RTD tax (1 percent) is included in the total amount (4.75 percent) of Denver City Sales taxes levied on marijuana sales. Additionally, RTD has previously received a portion of special sales taxes from the state’s collection of sales tax on marijuana. However, in SB 267, RTD and others were erroneously not included in the provisions that changed how marijuana sales taxes were apportioned.
Complete Colorado obtained an email that was sent Friday to RTD board members and leadership from RTD attorney Rolf Asphaug.
In the email, Asphaug says RTD along with several other special districts, including the Scientific and Cultural Facilities District (SCFD), were notified on June 29 that due to a drafting error in SB 267 their ability to collect the 2.9 percent sales tax on retail marijuana sales would be impacted, effective July 1.
“None of the special districts impacted by the bill, including RTD and SCFD, had been advised of a potential impact or had been asked for a fiscal note,” Asphaug said in the email. “The impact of the state marijuana sales tax exemption created in SB 267 was presumed by the bill sponsors, the Governor’s Office, Legislative Council and all parties that worked on the legislation to have been made whole by a corresponding increase in the rate of special sales tax collected on retail marijuana; however, the above special districts were not included in the bill’s special sales tax increase provisions.”
Supporters of SB 267, also known as the Sustainability for Rural Colorado Act, touted bipartisanship, but opponents were frustrated with both fellow party members and their belief that the bill is unconstitutional.
The bill, which included more than 70 pages of strike below text and was rushed to passage in the waning days of the 2017 legislative session made several changes to revenue collection as well as directed more than $1 billion to rural highways. In summary, the bill:
- Reverses funding reductions to certain hospitals.
- Moves the Hospital Provider Fee (HPF) to an enterprise fund.
- Creates a business personal property tax credit for small business.
- Provides extra money for rural schools.
- Requires all state agencies to submit a plan for a 2 percent budget reduction.
- Protects senior homestead exemption.
- Puts $2 billion into Certificates of Participation (COPs) for capital construction and transportation.
COPs allow the state to mortgage existing buildings and then lease them back from a third party on a year-to-year basis until the mortgage is paid off. Opponents to COPs believe this type of debt financing skirts the intent of the Taxpayer’s Bill of Rights (TABOR), which requires voters to approve tax increases or new debt.
If the state can’t, or won’t, budget the payment for the debt, the state loses the building.
Menten said RTD is capped out in debt, some of which came with the use of COPs.
“It’s a good reason why tax increases and debt measures like this should go to the voters where they get vetted in public,” Menten said.
Menten said although she thinks RTD’s budget, which is just over $1.3 billion – nearly the same as the entire Colorado Department of Transportation — is too big, with the budget already in place, they will have to make cuts.
“This will affect those who depend on RTD public transit the most,” Menten said.
The HPF, which is assessed on all hospitals, is a varied amount for every night someone sleeps in a hospital bed. 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 more than $800 million a year in revenue, it causes the state to hit its revenue cap under 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.
The main sponsor on the bill, Sen. Jerry Sonnenberg, a Republican who represents much of northeastern Colorado, did not immediately return requests for interview. Complete Colorado will update the story once Sonnenberg calls back.
There are many questions that need sorted out, such as where does the marijuana revenue go? However, Menten doesn’t see how anything can be done about it until the next session, and even then she questions whether anything can be done.
“I don’t know that they could do anything between now and the earliest date they resume session,” Menten said. “And now they may not have the votes needed, especially with this egg on their face.”
According to the email from Asphaug several offices are working on the matter.
“RTD’s lawyers, the Governor’s Office of State Planning and Budgeting (OSPB), the Colorado Attorney General’s office, our lobbyists BBMK, and others are working to address this issue as quickly and effectively as possible,” the email reads. “We are reviewing all available options.”
Menten said its situations like this that remind her why she votes against using lobbyists at RTD.
“We have these public-funded lobbyists that represent RTD, they use tax-payer money to keep up with that circus, and then they don’t even do it,” Menten said.