Despite a dramatic back-and-forth Monday over a plan to free money for critical state services, legislative leaders say they are close to a compromise.
The proposal would create a 20-year bond program to direct $1.8 billion towards critical infrastructure, including roads and highways. The first iteration of the legislation started with a $1.35 billion bond program.
Lawmakers have just days left in the legislative session to strike a deal and advance a bill to the governor.
An agreement has been reached on the state spending limit portion of the bill, which would be lowered by $200 million, thereby triggering taxpayer rebates faster. It had been the largest sticking point in the debate.
Sen. Jerry Sonnenberg, R-Sterling, who has been leading talks for Republicans, started by asking that the base be lowered by $670 million. Negotiations then brought that number down to $335 million, which still wasn’t enough for Democrats. But Sonnenberg on Monday announced the $200 million offer.
The sticking point now is over Medicaid reform. Republicans said the deal that was reached with Democrats included a requirement that co-pays for Medicaid patients be set at the maximum level set by the federal government. Democrats, however, said that was never part of the deal.
As Sonnenberg on Monday was announcing that a deal was reached, he was told that Democrats were not supporting the proposal, causing him to backtrack.
“We had a deal and now they are backing out,” Sonnenberg told Colorado Politics on Monday morning.
But House Democratic Leader KC Becker of Boulder said Democrats were never aware that that was going to remain a part of the compromise.
“I don’t even know what they’re getting at there,” Becker told reporters Monday afternoon.
“There was never a deal on Medicaid co-pays. If they’re putting it on the table now … we’ve never had a real discussion on this … I don’t know if we can find common ground, it is that new of an issue and that much of a surprise for me.”
Senate Bill 267 would require that at least 25 percent of the money go toward projects in rural Colorado, with county populations of 50,000 or less.
The legislation, which has bipartisan sponsorship despite the partisan wrangling, would reclassify a fee on hospital-bed occupancy as an enterprise fund to get out from under the state spending cap, while also lowering the spending cap base to protect taxpayer rebates.
Democrats have been wary of the proposal, as they are worried that lowering the spending cap base would trigger taxpayer rebates faster, leading to significant budget cuts in the future.
The issue hit a tipping point this year as state budget writers proposed a $264 million reduction of the Hospital Provider Fee to eliminate surplus taxpayer rebates and free money for spending on other budget issues. The fee is assessed on hospitals to force a match of larger federal health care dollars. With the federal match, hospitals in Colorado stand to lose about $528 million.
Some hospitals have said they would close. The Colorado Hospital Association on Monday afternoon held a news conference urging lawmakers to take action on Senate Bill 267.
The measure also would address schools, with $30 million allocated to rural districts over three years, and another $33 million would be added to other state education needs.
The legislation also would address some side issues, including a credit for businesses paying taxes on business equipment.
Lawmakers have proposed paying for the school funding and business tax credit by raising marijuana taxes.
“A lot of people think that marijuana taxes are just a budget solver for the entire state of Colorado. A lot of people in Colorado who are involved in small businesses think that the business personal property tax is really cumbersome and confusing. So, I think this is a good marriage,” Becker said.
Senate Bill 267 also would encourage state agencies to reduce budgets by 2 percent.
And it would aim at avoiding a cut to the Senior Homestead Exemption because of budget woes that might be triggered by a lower spending restriction. Seniors are able to reduce property taxes by exempting 50 percent of the first $200,000 in market value.
The bill would secure up to $150 million per year over 20 years for the bond program. Bonds would be issued over four years, rather than all at once. The original bill proposed securing up to $100 million per year for bonding.
The measure would rely on the state being allowed to borrow money to undertake large projects in order to fulfill its financial obligations. It would utilize certificates of participation, where the state would make lease payments for assets to free money.
Another $200 million would be made available for capital construction to improve state buildings. The first version started with $150 million.
“We have agreement on all the major elements …” Becker said. “We don’t have to solve everything in this bill.”