Under The Dome, Week 16
On Monday, April 27, a week before the Joint Budget Committee is set to return to work, staff budget balancing recommendations will be released to the public. The coronavirus pandemic has brought much of the state and nation’s economy to a standstill. The slowdown presented challenges to businesses ordered to close and left an unprecedented number of people without work. State and local government budgets will feel the economic cliff in a significant way, and elected officials are now challenged to make sizable budget cuts. The projected shortfall to the state’s General Fund is estimated to be close to $3 billion. The General Fund typically receives a little more than $12 billion in revenue from income taxes and sales taxes, so a cut in the $3 billion range would near a 25% revenue reduction for the General Fund.
The Joint Budget Committee will use the revenue forecast to be released on May 12th to set the budget. One of the difficulties of a recession is governments face lower revenues concurrent with an increase in the demand of services. One model predicts that Medicaid caseload in Colorado could grow between 193,000 and 407,000 during this downturn. Some federal relief is expected, but an increase in Medicaid enrollment could also put pressure on the General Fund, as the state’s share of Medicaid is one of the largest expenses in the state budget and is non-discretionary.
As expected, the state’s unemployment program has seen a significant increase in demand. In the first 4 weeks of the COVID-19 crisis, 7.5% of the labor force in Colorado filed for unemployment benefits, compared to 13% of the national labor force. At this level, the Unemployment Insurance Trust Fund may have only 8 weeks until demand outstrips available dollars and the fund is insolvent. The General Fund could take a hit to backfill the UI Fund. Another option would be to raise contributions to the UI Trust Fund, putting pressure on employers who pay into the fund.
The Colorado Department of Transportation estimates it will be short $50 million in revenue from gas taxes alone over the next 3 years. The price of oil has plummeted and because people are working from home or out of a job, they are spending much less time behind the wheel. This year, CDOT is expecting cuts in the range of $100 million. Just as COVID-19 ramped up, the state was prepared to bring the second set of certificates of participation (COPs) to market. Selling this tranche of COPs would provide $500 million in funding for transportation projects, but COVID-19 has tied up financial markets and it would need to wait for the updated Revenue Forecast on May 12th. Revenue generated from this round of COPs was slated for five projects spread around the state in Pueblo, Moffat County, Grand Lake, Fremont County, and Westcliffe as well as continue funds for the I-25 GAP project. The impacts of COVID-19 on the budget go far beyond Medicaid, unemployment, and transportation. Other large portions of the budget such as K-12 education, higher education, human services, and capital projects will likely take a significant hit.
On Thursday, the Colorado Energy Office (CEO) released the 2020 Colorado EV Plan that sets a roadmap to electrify the transportation sector in the coming years. The plan is ambitious. It sets a goal to add just under 1 million light duty electric vehicles by the end of the decade. To achieve this goal will require a 50% annual growth rate in sales of EVs. The plan also contains goals for electric medium and heavy-duty vehicles, though this goal is less specific and more details will be fleshed out as the CEO and CDOT work with stakeholders to establish a plan for this class of vehicle. With more EVs on the road, the state will need more charging stations. By 2022 the Energy Office will conduct an analysis of what EV infrastructure will be necessary for the 2030 light duty electric vehicle goal. The 2020 EV Plan includes goals for state government to expand the number of agencies that have charging stations on site, to expand the state’s zero emission vehicle fleet to 375 vehicles by 2022, and to have all appropriate vehicles electric by 2030. The final goal is to develop a plan to fully electrify all light duty vehicles in the state. To support these goals, the plan outlines a number of actions including an extension or update to the existing mandate for model years after 2025 when the current rule expires, and the addition of an advanced clean truck rule, which is essentially a ZEV mandate for medium and heavy duty vehicles.
This week, General Assembly Democrats released a letter, written and organized by members of the Jewish, African American, Latinx, and LGBTQ Caucuses, addressing a rise in anti-Semitic, bigoted, and racist language during the recent weeks of the coronavirus pandemic. The letter is a commitment to make it through the COVID-19 crisis without devolving to hatred and divisiveness, and the signors urge Coloradans to add their names to the letter as well. The letter calls on everyone to embody values of understanding and compassion as we move through this crisis together.
Finally, a former Republican legislator from Steamboat Springs, Jack Taylor, passed away this week from COVID-19. He was a well-respected member of the legislature, both by colleagues and constituents, serving for 8 years in the House of Representatives and 8 years in the Senate. He left the legislature in 2008.
After a month of lockdown, Colorado is moving into a new phase of the response to the coronavirus outbreak. In recent press conferences, Governor Polis’s focus has shifted from rapidly responding to an emergency to ways to make this new way of living sustainable until the spread of the coronavirus fades. The statewide stay at home order expires on Sunday and Governor Polis will not be renewing the statewide order. Governor Polis is expected to release a new executive order for this next phase on April 27th, which he refers to as “Safer at Home.” In this next phase, Governor Polis has urged people to continue to stay at home as much as possible, especially older individuals and those with pre-existing conditions. The Governor urged that people should continue to wear masks in public. K-12 schools will remain closed until the end of the school year. For parts of the state that aren’t under stricter local stay at home orders, on April 27th retailers will be able to open for curbside pick-up. On May 1, retailers can open to in-store customers, and personal services such as hair salons, tattoo parlors, and dog grooming businesses can open if they follow social distancing guidelines and personal protective equipment requirements. On May 4, offices can open up to 50% staffing but Governor Polis suggested workers with pre-existing conditions and above age 65 be prioritized for the telecommuting options. In addition, dentists will open for dental procedures and hospitals will be allowed to conduct non-elective surgeries. However, Governor Polis did send a letter to hospitals this week, stating his administration would provide extensive guidance on conducting elective procedures while the pandemic continues and encouraging hospitals to wait to start elective procedures until receiving the guidance. The letter stressed the importance of ensuring that if a hospital does open up for elective surgeries that there are still enough hospital beds and personal protective equipment available for COVID patients and those working with COVID patients.
On Thursday, Governor Polis issued two executive orders extending previous executive orders for another 30 days. Executive Order 2020 042 extends the Order that gave executive branch agencies flexibility to extend license and registration renewals to delay the need for an in-person renewal process. Executive Order 2020 043 extends a previous order that allowed the Department of Corrections to take actions to prevent the spread of COVID-19 in corrections facilities. On Friday, Governor Polis announced he is going to sign another Executive Order that would create an advisory board to direct him and the Department of Public Health and Environment on what policies to implement in the Safer at Home phase to maximize social distancing at the local level. The Board will include members of local government, law enforcement, counties, the private sector, the Department of Public Safety, The Department of Public Health and Environment, the Department of Regulatory Agencies, and the Governor’s staff. Governor Polis issued guidance to local governments and telecommunications providers on how to ensure that internet is accessible for more Coloradans to engage in telecommuting work, online classes, and stay connected with others. Under the guidance, municipalities and counties should classify telecommunications businesses as “critical businesses” in any public health orders. Local governments and telecommunications firms are encouraged to work together during this time and the connectivity of schools, libraries, health care facilities, and courthouses should be prioritized. In addition, providers should prioritize rural areas in deploying broadband services. Local governments should expedite the permitting process for new construction of telecommunications infrastructure.
As the statewide stay at home order rolls off, many communities along the Front Range have decided to keep stricter stay at home orders in place. Denver Mayor Hancock has already extended the city’s stay at home order until May 8. Mayor Hancock announced the extension during a press conference and shared that while the city is flattening the curve, hospitalization rates, COVID cases, and other metrics showed that the city is not out of the woods yet. He said the city’s goal before opening is to ramp up testing to 1,000 per day and to conduct more contact tracing. A number of other jurisdictions including Jefferson County, Boulder County, and Summit County have stay at home orders still in place and plan to keep them until May 8th like the City of Denver. Some counties such as Larimer County will follow the guidance from Governor Polis on Safer at Home to be released on Monday. Officials from Tri-County Public Health, which oversees Adams, Arapahoe, and Douglas counties, have indicated that they will gradually reopen businesses and that strategies could look different in the 3 counties.
Weld County announced they will allow all businesses to open once the state order lifts. The County Commissioners released a Safer at Work document, outlining best practices for all businesses to follow during the reopening period. When asked about what the Governor would do if Weld County would open all businesses, he said this would be dangerous and the state would prevent Weld County from doing this. He said that their guidance provided for businesses was fine, but if the intent is to request a variance to open up certain businesses sooner, he said the state would consider that. Weld County has not submitted a variance request such as the ones Eagle County and Mesa County have. If counties go against the state Safer at Home guidance, which still leaves many businesses like restaurants, gyms, and large venues closed, Governor Polis said that counties could lose emergency funding. He also said that State licensed businesses could risk their licenses if they open against the Safer at Home guidance.
On Friday, President Trump signed into law an extension of the Payroll Protection Program (PPP). The Small Business Administration will begin accepting PPP loan applications at 10:30 ET on Monday, April 27. The deal to extend the PPP reached earlier this week includes an additional $310 billion for the program. The bill also included $60 billion for Economic Injury Disaster Loans. The previous $349 billion in PPP loans only lasted about two weeks and this extension of the program will likely go quickly.
- 12,258 cases
- 674 deaths
- 2,366 hospitalized
- 56 counties
- 56,789 people tested