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File photo: Todd Shepherd
If you are looking for an opportunity to pay higher taxes, this is your year.
Already on Colorado’s 2016 ballot is a single-payer health plan that would boost the state income tax rate to 14.63 percent, highest in the nation.
On its heels comes a planned initiative sponsored by the Colorado Contractors Association, which wants more money to build roads and mass transit projects.
Not by increasing the state gasoline tax, now 22 cents a gallon, but by increasing the state sales tax, now 2.9 percent, by up to three-quarters of a cent.
The final figure has yet to be determined, said Bill Ray, spokesman for the planned initiative. The organizers have until March 25 to propose their final ballot language.
They are working backwards from a goal of raising $500 million to $600 million more per year, which under the Taxpayer’s Bill of Rights (TABOR) has to be listed on the ballot question. They will consider the state’s current revenue stream and then figure out how much higher the tax rate must be to raise the money.
If taxes are a must, user-pay levies are generally considered the fairest. Those who drive their cars over the roads pay their taxes at the pump. Those who don’t drive don’t have to pay.
But earlier polling by the CCA determined that an increase in the gasoline tax would be “roundly rebuffed” by voters, said Ray.
Colorado Attorney General Cynthia Coffman issued a formal legal opinion today that says the Legislature can convert the state’s hospital provider fee into an enterprise fund as a way to boost available tax money for road improvements and education.
In an unusual move, Coffman’s opinion backs Democrat Gov. John Hickenlooper’s position rather than her Republican legislative leaders on the controversial issue.
The question posed was whether the General Assembly could establish an enterprise fund with the hospital provider fee revenues and have it be exempt from revenue limitations of the Taxpayers’ Bill of Rights (TABOR).
Coffman wrote in an opinion released today that there are three considerations that determine an entity’s status as a government-owned business, which is one of the requirements for establishing enterprise funds under statute. An enterprise fund has to:
“Today’s formal opinion concerning Colorado’s Hospital Provider Fee is a thoroughly researched legal analysis based on the language of the constitution and informed by Colorado court interpretations of TABOR,” Coffman said in a statement. “It answers a narrow legal question and outlines the minimum requirements under current law to create a ‘government-owned business’ under TABOR.” Continue reading
ANALYSIS
The good news is that the Colorado state-run hospital provider fee program brought in just less than $700 million last year.
The money, which was matched almost dollar-for-dollar by the federal government, is targeted to increase funding for hospital care for Medicaid and uninsured clients, improve care for clients serviced by public health insurance programs and reduce cost-shifting to private payers.
As a state program, the hospital provider fee (HPF) requires hospitals to pay in an amount that’s based on the number of overnight patient stays and how many outpatient services they were provided.
Even though revenue generated through the HPF program is a welcome addition to the cause of keeping Colorado healthy, it’s creating a controversy in the capital for other impacts it has and could have on the state.
Fee tips TABOR scales
Weighing in as high as it does, revenue from the HPF program adds a generous amount to the state’s revenue. And although that sounds like a good thing, the program is raising issues about how that amount will negatively impact other state spending.
At the base of the controversy is the fact that HPF funds are slated for a particular purpose, and yet they can substantially reduce the amount Colorado will have available for many other projects.
Background to the concern goes back to 1992. At that time, Colorado voters approved the Taxpayer’s Bill of Rights (TABOR), a constitutional amendment designed to keep growth in the hands of the people rather than in the hands of the government.
• What is it?
The hospital provider fee (HPF) requires hospitals to pay in an amount that’s based on the number of overnight patient stays and how many outpatient services they were provided. It raised almost $700 million in 2015.
• What is its current status?
Funds from the hospital provider fee currently count against spending limits imposed by the Taxpayer’s Bill of Rights. That status will force tax refunds, thereby mandating cuts in other programs.
• What is the proposal?
Gov. John Hickenlooper proposes reclassifying the hospital provider fee as an “enterprise,” thereby removing it from counting against TABOR spending limits.
• What are the arguments against this proposal?
Opponents argue that the hospital provider fee does not meet the definition of an “enterprise,” that tax refunds should go forward, and that the state pursue budgetary efficiencies and cost-cutting to pay for the refunds.
TABOR prohibits tax increases without a vote of the people and places strict limits on how much revenue the state can keep and how much it can spend. Under TABOR, state spending is only allowed to increase at the rate of population growth plus inflation.
If the state collects revenue that exceeds TABOR’s revenue limits, that amount must be refunded to taxpayers, according to the amendment.
At this point, the HPF is tipping the scales in favor of exceeding those limits.
It’s not that taxpayer refunds — estimated to be in the range of $25 to $125 per individual — would be a bad thing.
Those in favor of the reclassification, however, are looking at rerouting funds as a way of filling in gaps of the 2016 state budget. They see the result of that as being of a greater benefit to all.
The projects that would escape cuts and be allowed to continue moving forward include education, transportation and road maintenance.
Workaround and end-around?
In an attempt to balance the issues — HPF revenue, TABOR limits and the state budget — Democratic Gov. John Hickenlooper has set forth a legislative action that would reclassify how HPF is legally regarded.
The intent is to reduce the amount of budget woes the state will have to reconcile.
In response to the initiative, Republican Senate president Bill Cadman and other conservatives have taken the stance that the reclassification is unconstitutional and an effort to water down TABOR.
At this point, opposing parties are at a standstill. It’s been more than a month since Hickenlooper requested that Republican attorney general Cynthia Coffman decide about the constitutionality of reclassifying the billion-dollar hospital-fund program.
The current response from Coffman’s office is that the decision still is under review.
While the wait continues, other voices are weighing in on the subject.
On Feb. 11, legal counsels for two former governors released a legal brief that said reclassification of the HPF would be legally sound and fiscally responsible.
Jon Anderson and Trey Rogers, former counsels to Republican Gov. Bill Owens and Democratic Gov. Bill Ritter, completed the legal analysis at the request of a coalition called Fix The Glitch.
The coalition, a group of Colorado business organizations, is requesting that the Colorado General Assembly move forward on the reclassification.
“Regardless of our differing political views on the HPF, we are all strongly supportive of legislation that places HPF funds in an Enterprise Fund. The original law comingles HPF funds with general State revenue, inaccurately impacting revenue growth and creating significant unintended consequences that limit the state’s ability to meet core infrastructure investment priorities,” the group states.
The group’s petition said that HPF funds have begun “to crowd-out road and bridge funding. CDOT right now has more than $3 billion in backlogged road projects.”
Koch-funded opposition
On the other side of the controversy is the conservative political advocacy group initially funded by the Koch brothers — Americans for Prosperity.
Standing in opposition to making the HPF an enterprise, the group’s state director, Michael Fields, responded to Hickenlooper’s challenge for a better solution to close state budget gaps in January.
“With the state budget for next year adding up to an astounding $27 billion, the state should have more than enough money to take care of its core responsibilities.
“By cutting waste, finding efficiencies and re-examining priorities within the budget, we will be able to find more than enough money for important projects like fixing roads, building bridges and adequately funding our schools — without the need for Hickenlooper’s illegal plan to dismantle the Taxpayer’s Bill of Rights.”
The expected revenue from HPF in 2016 is $756 million, according to the economic outlook reported by the Governor’s Office of State Planning and Budgeting.
In contrast, the state fiscal year budget shortfall is $373 million.
In his 2015 State of the State Address, Hickenlooper said that our budget rules aren’t working.
“Coloradans know we’re not fully funding education. They’re fed up with traffic congestion, they’re fed up with potholes and they’re fed up with our inability to expand our highway system,” he said.
“Virtually every chamber of commerce and editorial board across the state … all agree that fixing the Hospital Provider Fee makes sense.”
TABOR practicality challenged
Changing the fee to an enterprise was actually laid out in the TABOR constitutional amendment, according to individuals and groups that see the change as a good one.
The TABOR Amendment defines an enterprise as “a government-owned business authorized to issue its own revenue bonds and receiving under 10 percent of annual revenue in grants from all Colorado state and local governments combined.”
Proponents of the reclassification argue that the action has already been used to the benefit of the state.
Current Colorado enterprises include the state lottery and Colorado Parks and Wildlife.
Keeping the money generated from the HPF out of state revenues would allow it still to be used in the way it was initially intended while keeping TABOR intact and money available to put into other state programs.
If the HPF stays as it is, and TABOR caps are reached, however, the overflow will by law go toward taxpayer refunds, and the budget will demand cuts.
“We have enterprises that run lotteries, and build bridges and manage state parks. The one we propose provides services to our health care system that it can’t provide on its own — and they want to pay us for them,” said Hickenlooper in his state of the state address.
“If we can’t make this very reasonable change — like many already allowed under TABOR — then what choice do we have but to re-examine TABOR?”
http://bizwest.com/health-care-vs-highways/
Feb 16, 2016, 5:23pm MST
Ed Sealover Reporter Denver Business Journal
A new bipartisan legal opinion regarding the constitutionality of a plan to boost Colorado transportation funding has failed to move Republicans in the state Legislature on the issue.
That makes it appear increasingly likely that House and Senate leaders will be unable to agree on a solution to what Gov. John Hickenlooper has called one of the most pressing problems in this session.
Colorado Senate President Bill Cadman points on Jan. 6, 2015 to an oversized copy of a… more
Ed Sealover | Denver Business Journal
The plan involves excluding the state’s hospital provider fee from revenue limits set by the Taxpayer Bill of Rights, or TABOR, as a way to create more room in the general fund for transportation and education spending.
Senate President Bill Cadman, R-Colorado Springs, said Tuesday that he gives no credence to an opinion issued last week by Jon Anderson and Trey Rogers, who served respectively as legal counsels for former Republican Gov. Bill Owens and former Democratic Gov. Bill Ritter.
The Anderson-Rogers opinion stated, in contrast to one issued in December by the nonpartisan Office of Legislative Legal Services (OLLS), that turning the hospital provider fee into an enterprise fund — thereby excluding it from TABOR’s terms — would be constitutional because the fee serves the business purpose of helping hospitals defray their cost of providing patient care.
Cadman, however, said that the only reason that the attorneys produced the opinion is because they were paid to do so, though he did not identify any groups that may have funded the effort. Continue reading
Colorado taxpayers can expect some modest tax refunds this year under the Taxpayer’s Bill of Rights due to budget surpluses, according to the Colorado Department of Revenue.
Depending on what adjusted gross income they report, single filers can expect to see TABOR refunds from $13 to $41. That lower figures is for a filer reporting $36,000 or less on line 25 of the Colorado 104 tax form, while the higher figure is for someone reporting more than $204,000 on that line.
Joint filers can expect to get double those amounts, from $26 at the lower income range to $82 at the higher range.
As Coloradans wait for an opinion from Republican Attorney General Cynthia Coffman over what’s become the biggest political debate in Colorado, two former executive branch lawyers are weighing in with their own conclusion.
At issue is whether it would be constitutional to reclassify a billion dollar hospital program so money generated from it will not push general fund revenue over mandated limits under the state’s Taxpayer’s Bill of Rights. Democratic Gov. John Hickenlooper and many Democrats in the legislature want a program called the hospital provider fee redesignated so there’s more money in the budget to fund roads, education and other programs.
In a legal review released today by former attorneys for past governors Bill Ritter, a Democrat, and Bill Owens, a Republican, they say the Hickenlooper plan would be “legally sound and fiscally responsible.”
The lawyers are Jon Anderson and Trey Rogers who worked for Owens and Ritter respectively. They did the legal analysis at the request of a coalition called Fix The Glitch, which is made up of business groups, higher education institutions, and other organizations whose interests stand to lose out.
Feb 11, 2016, 2:56pm MST Updated Feb 11, 2016, 3:53pm MST
Ed Sealover Reporter Denver Business Journal
Former legal counsels for the past two Colorado governors opined Thursday that the Legislature can turn the hospital provider fee into an enterprise fund and create more room in the general fund for transportation and education spending — a development that business leaders hope will convince some Republicans who may be sitting on the fence to back the move for such a change.
The release of the opinion came just hours after Gov. John Hickenlooper told a meeting of the Colorado Municipal League that if he can convince legislators to back his idea about turning the fee into an enterprise fund, he would like to use some of the newly freed revenue stream to sell bonds and raise $4 billion to $5 billion for immediate transportation solutions.
Colorado Gov. John Hickenlooper speaks to a Colorado Municipal League meeting on Feb. 11,… more
Ed Sealover | Denver Business Journal
Republican legislative leaders did not react immediately to either the opinion or to Hickenlooper’s bonding plan.
But Kelly Brough, president and CEO of the Denver Metro Chamber of Commerce, said that GOP leaders to whom she has spoken in favor of the enterprising plan have promised her to keep an open mind. And if the constitutionality of the enterprise plan was the tipping point for anyone to oppose the idea, she thinks the new arguments might be enough to push them the other way.
“For those for whom this truly is a legal issue, it could make a big difference,” Brough said. “Now we have two additional attorneys coming out and saying that they feel that the enterprise fund is legal.” Continue reading
Does your group or organization need a dynamic speaker and timely topic for your next meeting?
How about learning more on a subject that saves you money and stops the explosive growth of government spending?
You’ve heard of TABOR (The Taxpayers Bill Of Rights), haven’t you?
It’s been in the news quite a bit lately.
Why not use the TABOR Speakers Bureau for your next meeting?
We take the time to explain “what” TABOR is along with what it does—or doesn’t do, “how” it works, “why” it’s so important to Colorado, “when” Coloradans get TABOR refunds, and “how” it impacts you. Continue reading
