Pretend that your employer accidentally overpaid you, say $20 extra a month for a couple years. Neither of you notice until one day you get an email telling you about the mistake. The mistake has been fixed and your pay will be $20 less going forward. Also, you now owe your employer $240. Not a pleasant thing to consider.
Fresh on the heels of Governor Polis signing the state budget, we got similar bad news. Due to an accounting error
there’s a $67 million “oops” in the budget.
The mistake stretches all the way back to the hurried 2020 legislative session and a bill rushed through for Polis’ signature. SB20-215 created the
Health Insurance Affordability Enterprise, another of those government-run “businesses” which attaches a fee to many health insurance policies (any policy regulated by the state’s division of insurance).
These fees go to Governor Polis’ pet reinsurance programs as well as subsidies for low-income residents, including, incidentally, those here illegally. Like all enterprises, this revenue was not subject to the revenue limits the
Taxpayer’s Bill of Rights (TABOR) puts on the government.
So far a pretty standard example of how our legislature likes to meet its priorities, not by the consent of those that foot the bill, but by taking without asking first. The problem came in because someone, somewhere in the state government, screwed up. I can’t quite seem to find out the exact details, but someone goofed. Tax revenues from the state’s general fund were going to this enterprise, as they were supposed to by an earlier law and no one kept the money separate.
They should have been separate because the general fund dollars are decidedly not exempt from TABOR limits. The state was keeping money above TABOR limits pretty much since the start of this enterprise, shorting us on money we are owed. As I say above, the exact details of who knew and when are not too clear to me; I have seen different versions in different news stories. Some say that no one on the legislature’s Joint Budget Committee knew until after the budget was signed, the legislators being kept in the dark while the state controller and the attorney general were trying to see if they did indeed have to return the money.
If you have seen headlines on this problem, you may or may not have noted a discrepancy in the dollar amounts. Some articles say $67 million, some say $34. Both are right, but the semantics are important. The total owed is $67 million: $33 million for this year and $34 million for the past couple years of overpayments. If I return to my analogy from before, you could liken the $34 million to the $240 you’d owe your employer, the $33 million to the $20 loss on your current check, and the loss of that $20 per month in the future to the problem the state has in trying to figure out how to fund the enterprise fully going forward.
Going forward is pretty simple. Perhaps not pleasant, but simple. A bill is already working its way through the legislature to make sure that this problem doesn’t recur. Working in descending order, the next problem is how to pay the $34 million overcharge from this year. That one will likely get paid, at least in part, by not sending general fund revenue to the enterprise this year.
Lastly, the thorniest problem, the one that I think seems to be causing the most heartburn is how to pay taxpayers back the $33 million they’re owed from the last two years. I had to laugh when I read up on this issue because some Democrats, the same ones that howled about the irresponsibility of using the state’s reserves to help temporarily drop property taxes in the last special session, are now perfectly okay with
dipping into said reserves to pay taxpayers back. Funny how quickly reckless financial irresponsibility isn’t reckless anymore when the political need is big enough. Tapping reserves carries a couple problems, however. First, the legislature must enable this to happen because this size of a hit puts us below the statutory minimum, and somehow, at some point in the future, that loss would need to be made up.
Another route open to our legislature would be to reduce spending. They could simply not spend as much this session and put that money into refunds. You know, kind of like when you have to forego some spending you wanted due to unexpected bills.
I marvel at this whole story.
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