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The budget's settled, but debate coming on taxes, refunds

By: JAMES ANDERSON, Associated Press
April 19, 2016 Updated: April 19, 2016 at 7:38 pm
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photo - Colorado State Capitol
Colorado State Capitol  

DENVER — It's late in Colorado's legislative session, and next year's budget is settled. But the Democratic House speaker is reviving a debate on whether a Medicaid fee should count as state revenue that will trigger tax refunds in future budget years.

Speaker Dickey Lee Hullinghorst and other Democrats, including Gov. John Hickenlooper, want the fee set aside to avoid refunds under the Taxpayer's Bill of Rights, free millions of dollars for Colorado's underfunded roads and schools, and give momentum to pending ballot initiatives that would ease TABOR's grip on state finances.

It's a debate that some thought settled well before both chambers approved the $27 billion budget last week. Not so, said Hullinghorst, a Boulder Democrat.

"In this budget we managed to get by, but next year it will be twice as bad with cuts in education and higher education," she said. The House could debate her bill this week.

Hullinghorst said reclassifying the fee can provide at least five years' flexibility to spend more on schools and roads, and tackle TABOR and other constitutional restrictions on budget writers' room to maneuver.

TABOR requires refunds whenever total state income surpasses a cap that's based on inflation and population, not the economy's performance.

The hospital fee raises money — some $750 million — that is matched by the federal government. That doubled sum is sent back to those hospitals to care for the needy.

This year, budget writers cut the hospitals' contribution by $75 million to help balance the 2016-2017 budget and avoid TABOR's refund trigger.

A few Republicans agree with Hullinghorst. They've come under fire from Americans for Prosperity-Colorado, which blames ballooning Medicaid enrollment that now includes nearly one in four Coloradans.

"These elected officials want to hold those refunds hostage to pay for their own mistakes, particularly the irresponsible and costly decision in 2013 to expand Medicaid as part of Obamacare," Michael Fields, AFP-Colorado's director, wrote in a recent column.

The bill's Senate sponsor, Republican Larry Crowder of Alamosa, said hospital needs in his rural district outweigh politics. In the House, GOP Rep. J. Paul Brown of Ignacio called the fee a subsidy, not a tax.

"It keeps these hospitals going," Brown said. "I don't believe it's right to use a federal subsidy for a refund."

GOP leaders are adamant that TABOR stand. House Minority leader Brian DelGrosso of Loveland said the state can expect costly court challenges if the fee is removed from the overall revenue stream.

"We have to tighten our belts just like average Coloradoans have to do when the car breaks down," DelGrosso said. "That's how the state did it this year."

It did, but at a cost.

Colorado's K-12 schools received a negligible bump in per-pupil funding — and an $800 per-student IOU.

Public colleges got no increase and could raise tuition by at least 5 percent.

Colorado's aging and congested roads got $210 million from the general fund, down $40 million from the current fiscal year. Hullinghorst said her bill will free as much as $600 million for roads through 2020.

The bill faces tough odds in the GOP-controlled Senate, and the session ends May 12. It could lend momentum to pending ballot initiatives, designed to dismantle TABOR, in a state that soundly rejected K-12 spending hikes in 2013.

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House Bill 16-1420: http://bit.ly/213nQNc

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