Democrats in Colorado’s state House are moving forward with an ambitious plan to hold onto hundreds of millions of dollars the state would otherwise have to send back to taxpayers.
Revenues are growing fast enough that the state will soon start sending out tax refunds as required by the Taxpayers Bills of Rights. But budget writers warn those refunds will make it a tough financial situation that much harder. K-12 schools and Medicaid are expected to consume most of the new money Colorado brings in over the next few years, leaving little left over for other areas, like higher education and transportation.
House Speaker Dickie Lee Hullinghorst believes she’s found a way around that squeeze. She wants to reclassify a major fee paid by hospitals in a way that makes it exempt from TABOR limits. That change would lower the total revenue amount covered by TABOR enough keep the state from having to pay refunds for years, giving lawmakers hundreds of millions more dollars to direct to state services.
The fee change wouldn't take place until July 1, 2016, which means the state would likely have to pay two years of TABOR refunds first, including permanently triggering the state's Earned Income Tax Credit.
With only days left in the session, Hullinghorst acknowledges there’s not a lot of time to consider the proposal, but says it’s been developing behind the scenes for a while.
"If we don’t do it now, we’re going to have a lot of problems, and I’d rather do it now," Hullinghorst said.
Republicans have long opposed the hospital provider fee and consider this new proposal an end-run around TABOR. Rep. Gordon Klingenschmitt, R-Colorado Springs, argues it should be put to a public vote.
"I would support this if you honored at least that much and gave the people the choice as our constitution requires," he said.
Gov. John Hickenlooper first floated the plan in a letter to lawmakers two weeks ago, but it’s very unlikely to prevail in the Republican-led Senate.