DCBA, Day 55 of the Legislative Recess
The Joint Budget Committee met this week to balance the state budget for the upcoming fiscal year 2020-21. It has been an emotional week for members and staff as they discuss potential cuts to programs. Each day was filled with tough decisions and more bad news. Members have had to defund many programs that they helped create through legislation passed in prior sessions. Throughout the meetings, other legislators hopped on the webinar line and advocated for not defunding items that they cared about. In many of these cases, when the budget reduction would zero out the program, the JBC went ahead with budget reductions, but opted to leave line items in the budget so that the door is open to fund the programs in the future.
The JBC reviewed budget reductions for many of the departments with a large share of the General Fund, including the Department of Education, Department of Higher Education, Department of Health Care Policy and Financing, but many big-ticket items in these and other departments will wait until next week. JBC members asked questions of departments and impacted agencies and delayed other decisions until they see the revenue forecast on May 12. The Department of Higher Education saw around $100 million in budget cuts this week. Higher education institutions, which had previously been expecting a 7% increase in state funding, saw that potential increase zeroed out on Thursday. The Department of Education saw close to $70 million in reductions. Budget increases proposed in November were the first areas to be cut. To save money in the General Fund, which is expected to take a significant hit next year, the JBC made decisions to transfer portions of cash funds with high reserves, make reversions to the General Fund where possible, refinance General Fund expenditures by using other fund sources, terminate programs that haven’t yet fully gotten off the ground, delay the implementation of other programs, and reprioritize tobacco revenue. Early in the week, Senator Rankin, one of the two Republicans on the Joint Budget Committee, said that he would not vote for any cash fund transfers to the General Fund if fees are the fund source. Cash funds that originated as General Fund transfers have typically gotten unanimous support. At least 50 bills are expected to run alongside the budget, to implement the statutory changes required to implement the budget adjustments. On Monday, the JBC decided to move forward on a proposal to reallocate $17.5 million in tobacco tax revenue to the state Medicaid program. This will require both a resolution and a bill. The resolution, declaring a state fiscal emergency, would have to pass the House and Senate by a two thirds majority and be signed by the Governor. Then a bill would spell out how the General Assembly would temporarily allocate Amendment 35 tobacco tax revenue.
Declaring a state fiscal emergency also opens the door to furloughing state employees. However, the JBC staff has not specifically recommended a furlough policy, but a pension contribution swap instead. Both state employees, and the state agencies they work for, pay into the Public Employee Retirement Association (PERA). Staff recommends lowering the state’s portion of the contribution by 2.5% and increasing employee contributions by the same amount. This would result in savings equivalent to a 6.5 day furlough. Even if the General Assembly does not opt for a furlough, Governor Polis would still have that ability. In the last recession a furlough was implemented by then-Governor Ritter. In 2018, the legislature initiated a direct payment to PERA in an effort to shore up the pension’s unfunded liability. Temporarily removing this payment would save $225 million per year in the state budget. The JBC didn’t take action on any of the recommendations for PERA this week but did decide to roll back salary increases for state employees. The JBC rescinded a previously approved 3% across the board increase for state employee salaries, so as it stands employee pay would be the same as the previous year.
The Joint Budget Committee voted to drastically limit funding for state building capital construction and controlled maintenance, saving $201 million in state funds. About $2 million was left for emergency maintenance for the state architect to handle unexpected maintenance emergencies on state buildings throughout the year. A select number of critical projects which did not require state general funds will be allowed to proceed.
Throughout the week, members have brought up the potential use of federal funds for certain budget items, but it’s not yet clear exactly how the CARES Act dollars can be used. One of the clearest ways that federal dollars will flow to the state is through a higher federal matching rate for Medicaid. Typically, the state receives a 50% match, but the federal Families First Coronavirus Relief Act increased the rate by 6.2% to 56.2%. The state will receive more for Medicaid, a large non-discretionary expense in the budget, from January 1, 2020 until the end of the last quarter during which there is a disaster declared by the Secretary of Health and Human Services. JBC staff expects this disaster emergency to expire sometime in the last quarter of 2020 and that the state will receive the higher federal match for the rest of the calendar year. Direction remains murky on the proper uses of the $1.6 billion in CARES Act funding that the state recently received. The funding is limited to use for unexpected expenses due to the coronavirus and states cannot use it to backfill items already in the budget. Additional federal guidance released by the Treasury this week is undergoing legal analysis and executive and legislative staff are working to sort out how the funds can be spent.
The JBC will meet on Saturday to continue budget balancing work for the Department of Human Services. Next Tuesday, the Joint Budget Committee will hear revenue forecasts for the General Fund, State Education Fund, Marijuana Tax Cash Fund, Limited Gaming Revenue, Severance Tax Revenue, and other key revenue sources. The rest of the week will be dedicated to acting on delayed items and likely revisiting previous decisions to make additional cuts. The JBC will discuss school finance after the revenue forecast. Portions of the conversation on Thursday gave a preview for what to expect. The impacts of the coronavirus on the economy have left many people out of work. Because of household incomes dropping, more at-risk students are expected next year, one more factor that would increase costs to the state for school finance.
On Monday, the Executive Committee, top leadership in both chambers of the General Assembly, will meet to discuss logistics for how the chambers will operate under social distancing in the session currently slated to begin on May 18. The committee will consider guidelines for bills that will be allowed to moved forward and sort out logistics for opening the building to the public. They will consider how they will govern public hearings, monitor access to the building, and enforce social distancing requirements.
- 18,371 cases
- 3,557 hospitalized
- 59 counties
- 92,267 hospitalized
- 944 deaths
Many metro area counties Stay at Home orders are set to expire today including Denver, Arapahoe, Adams, Jefferson, and Boulder counties. In anticipation of transitioning to the Safer at Home state executive order, Denver Mayor Hancock issued a public health order requiring anyone going into a business or not able to have 6’ distance from others to wear a face mask. Denver’s public health order went into effect on Wednesday this week.
Governor Polis continues to update the public weekly on the state’s response to coronavirus. Most of the recent updates have focused on asking Coloradans to continue social distancing and wearing masks and providing an update on what he is doing to ramp up testing and get more personal protective equipment to the state. The number of executive orders coming out of the Governor’s Office has slowed, and most of the recent orders extend existing orders for another month. One executive order extended the filing deadline for state sales tax and state-collected local government sales taxes until May 20. Another executive order this week extended the disaster emergency declaration for an additional 30 days and allows more emergency spending authority from the Disaster Emergency Fund. The JBC will receive a briefing on emergency spending to date next week.
This week Governor Polis announced two new initiatives his administration is working on. One is called Can Do Colorado and it’s a website that provides best practices and support for businesses to continue to maximize telecommuting. Telecommuting will allow more people to stay at home and allow vulnerable populations to continue working. Connect to Care Jobs is a new initiative to connect people looking for work with jobs in residential care facilities. Residential care facilities are still hiring and many people are out of work, and this initiative provides an opportunity to connect the people looking for jobs where there is a need for additional staff.