Whatever plans Colorado lawmakers had for the first week of October, they are ruined now.
All 100 legislators return to the Capitol for a special session Monday. Gov. John Hickenlooper called them back to fix a bill-drafting error that has blocked marijuana dollars from organizations like the Regional Transportation District and the Scientific and Cultural Facilities District.
Not everyone is thrilled about it. Republican Senate President Kevin Grantham said the problem could have waited until the official legislative start in January. Hickenlooper told Colorado Matters that the special districts can’t afford the delay.
What went wrong?
At the bitter end of the 2017 legislative session, state lawmakers signed off one of their biggest financial compromises in years. The bill shifted a fee hospitals pay so it would not count toward the state limit on budget growth mandated by the Taxpayer’s Bill of Rights.
The compromise also collapsed two taxes on retail marijuana into a single special tax. Instead of a 2.9 percent sales tax and an additional 10 percent tax, retail marijuana would be subject to a single 15 percent state tax.
The move had some unintended consequences.
Lawmakers only meant to remove the statewide sales tax on marijuana. An exemption allowed cities and counties to continue to levy sales taxes on retail cannabis. But drafters neglected to exempt special districts — like RTD.
Policy analysts at the Colorado Department of Revenue discovered the error. They checked their interpretation with the Attorney General’s Office, which confirmed it late last June.
A few days later, on July 1, districts started missing out on marijuana sales tax money. Cannabis buyers have been the unexpected winners with a slightly smaller tax rate at the dispensary register.
What’s the real impact?
RTD has taken the biggest hit. The transportation district collected a 1 percent tax on retail marijuana sales within its boundaries — totaling about $600,000 a month. It could lose around $3 million if lawmakers wait until January to fix error.
There’s been no service impact yet, but RTD Spokesperson Scott Reed said “the longer this stays out there, the more impact it could potentially have for riders.”
The Denver Zoo and the Denver Art Museum could also feel the impact. Those institutions, along with many others, receive funding from SCFD, which is missing out on about $50,000 a month due to the drafting error.
Other impacts include rural transit and housing authorities.
One irony is the lost revenue for the Montezuma County Hospital District. Lawmakers passed SB267 to shore up financing for rural hospitals. Thanks to the error, hospitals in one of Colorado’s poorer counties is losing about $7,200 each month in sales taxes.
That money was meant to finance a new a new inpatient wing, offices and an EMS building for the Southwest Memorial Hospital in Cortez. Representatives for the district say losses would total $1.2 million without a fix and severely limit the hospital improvement project.
How do special sessions work?
The governor has the power to issue “the call” to convene a special session on extraordinary occasions and to decide the date and time when it begins. The governor also sets the agenda for the issues lawmakers consider.
In his proclamation, Gov. Hickenlooper wrote the tax fix would be the narrow focus of the session. Each lawmaker can introduce a single bill over the course of the session. When they vote on the bill, lawmakers also decide if the measure fits within the governor’s agenda.
State Rep. Patrick Neville, the House Minority Leader, said his fellow Republicans won’t likely push that boundary with unrelated bills. Efforts to revise or repeal SB267 — which drew plenty of Republican ire — are more likely, he said.
If the session stays focused – as Democratic leaders hope – lawmakers could be driving home Wednesday night. If the scope expands, they may have to stay longer. And lawmakers, not the governor, decide when the legislature disbands.
Why are some against the special session?
Senate President Kevin Grantham has been the most vocal opponent. He said the governor’s decision risks reigniting anger over the original bill, which passed despite dissent from Republicans upset to see an increase in the state cap on discretionary spending.
Minority Leader Neville also has constitutional concerns with the fix. Under TABOR, voters must approve any tax increases.
“Since the governor signed the bill into to law, those taxes do not exist,” Neville explained. “To bring them back would require a vote of the people.”
Democrats contend the State Supreme Court has already ruled lawmakers can adjust certain tax policies without voter approval.
Another objection to the special session has been the cost. Each day of a legislative session costs taxpayers about $25,000. Since any bill needs three days to pass, the minimum bill comes to around $75,000. Republicans leaders don’t think taxpayers should have to foot the bill for a legislative mistake.
As of Friday morning, it appears taxpayers won't have to. Gov. Hickenlooper told Colorado Politics he had brokered a deal with special districts to have them pay the cost of the session.
Do lawmakers need to pass a “clean fix”?
Absolutely not. Democrats are expected to back Hickenlooper’s narrow focus on the drafting error, but to pass anything they need at least one Republican vote in the Senate.
GOP lawmakers have already made noise about raising other issues. On Twitter, Rep. Jon Becker, one of the sponsors of SB267, said he would not support the fix without something in return.
— Jon Becker (@RepJBecker) September 15, 2017
Democratic Majority Leader KC Becker, who worked with Rep. Becker on the bill, is insisting on a clean fix.
— KC Becker (@kcbecker) September 15, 2017
Such internet exchanges have happened at a comfortable distance. When the special session begins on Oct. 2, those disputes will be up close and personal in the statehouse chambers.