In the painful task of balancing next year’s state budget, Governor Jared Polis is asking lawmakers to slow spending on Medicaid and to privatize Pinnacol Assurance, the quasi-governmental agency that serves as the state’s workers compensation insurer of last resort.
Polis presented his ideas to the legislature’s Joint Budget Committee on Wednesday, the group tasked with writing the budget and getting it passed through the legislature. Polis' proposal is just a starting point, and lawmakers in both parties appeared lukewarm to many of its main ideas, and in some cases outright opposed to them.
For his part, Polis emphasized that the budget must be balanced and the state faces hard decisions. According to figures from non-partisan legislative staff, Colorado is expected to face a nearly $850 million shortfall for the next fiscal year.
The governor noted that the rising cost of Medicaid continues to be one of the biggest budgetary challenges, and said without bringing that down, it will continue to crowd out other critical parts of the state budget.
“We don't think that that's the right direction for the state. We think highways and roads are important. We think public safety is important. We think agriculture's important, all the other great things that the state does, which is why we want to make sure that any item that grows faster than other items is one that you look at with the magnifying glass,” said Polis.
Polis proposed increasing Medicaid funding next fiscal year by around $300,000, or 5.6 percent, a rate of increase that he said is not sustainable long-term. He disputed the idea that that would be a cut, noting the program’s budget would be its largest ever.
Republican Sen. Barbara Kirkmeyer from Weld county, disagreed, and said the governor’s proposal is only about half of how much state analysts say Colorado will need to spend next year to maintain its current level of services.
“We should have been increasing Medicaid by 12 percent, approximately, a little bit under that. And instead we're doing something less than 6 percent. That's a decrease.”
Kirkmeyer, who is running for governor next year, said she’s especially worried about health care deserts in rural areas, where there aren’t enough providers for maternal care.
Under the proposal Democratic Sen. Judy Amabile of Boulder worried that Medicaid cuts could make it harder for Colorado’s most vulnerable residents, including those with severe disabilities. Polis’ budget proposes reducing Medicaid provider rates for some services.
“I just wonder what the long-term consequences are of the decisions that we're making today that will restrict the kind of care that our most vulnerable populations are getting, and whether we are going to be driving more people into institutional settings, which are a lot more expensive than having people receive care in a less restrictive setting.”
The ongoing debate over what to do with workman’s comp
For the second year in a row, Polis urged lawmakers to spin off Pinnacol Assurance, which provides workers’ compensation coverage to around 49,000 businesses in the state. The governor noted that more than a half dozen states have taken steps to privatize their workers’ compensation systems in recent decades.
His budget requires Pinnacol to pay the state $400 million, which he proposes spending in various areas, including funding a tax credit for senior homeowners.
Democratic Rep. Emily Sirota said that including the spin-off in the budget proposal as if it were a done deal — especially when the committee rejected the idea last year — left her feeling “frustrated and a bit anxious.”
Sirota said the budget committee has heard from people that have significant legal concerns about selling Pinnacol.
“I take a lot of issue with balancing our budget to a thing that… the legislature is not even sure it would do. And so we're proposing to balance the budget on the backs of workers and businesses, for the long term. For this thing that hasn't even been realized yet.”
Kirkmeyer took an even sharper aim at the governor’s overall proposal.
“I definitely don't think this budget is serious. I'm just extremely disappointed,” she said. “It's a retreat from our basic responsibilities, things that we are supposed to be doing as a government. And again, let's just be honest, this is not balanced.”
Gov. Polis took issue with that characterization, reiterating that the budget his office has crafted balances out.
“There is no hole in the budget. It is a balanced budget.”
He said if lawmakers don’t want to privatize Pinnacol Assurance, they’ll have to find the money somewhere else. “It's a choice, a budget choice. Senior Homestead (Property Tax) Exemption can be suspended for a year. It has been in the past. We do not advocate for that. “
