Colorado lawmakers are finalizing a state budget plan that boosts K-12, higher education and health care

Colorado’s state budget panel on Friday morning approved a spending plan for the next fiscal year that would invest heavily in state workers and medical services, eliminate Colorado’s K-12 funding shortfall and limit the increase in 3% university tuition for in-state students.

But it took a lot of cutting and some creative accounting maneuvers to get there.

Faced with a potential $170 million shortfall earlier in the week, lawmakers on the Joint Budget Committee dipped deep into several state cash pools in an effort to balance the budget, pulling money from a number of of programs to cover the spending gap.

The JBC also rejected several proposals by Gov. Jared Polis to expand social services, workplace housing and public safety programs in order to redirect money to its own priorities. Chief among them were Medicaid providers and higher education, two areas lawmakers insisted had been underfunded for too long.

The six-member budget panel backed a $132 million increase for higher education, which they said would be enough for colleges and universities to cap tuition increases at 3 percent for residents of Colorado and 4% for out-of-state students. Amid widespread nursing shortages, health care providers would receive an across-the-board 2 percent increase in states’ Medicaid reimbursement rate, down from the 2.5 percent increase the committee had previously approved . Lawmakers also approved a series of large increases specific to some specialties.

Governor Jared Polis presents his fiscal year 2022-2023 budget proposal to members of the Joint Budget Committee on December 3, 2021 at the Legislative Services Building in Denver. (Olivia Sun, The Colorado Sun)

State workers would get 3 percent across-the-board raises under the proposal, plus additional pay increases as government agencies implement a new pay plan under the states’ collective bargaining agreement.

The proposed 2024-25 spending plan, which would take effect July 1, now moves to the Colorado House, where it could be debated next week.

For months, Polis and top lawmakers had been warning that the state would face a tight budget year as federal stimulus funding dries up and economic growth slows. But state revenue forecasts released in March left the Joint Budget Committee with even less money to spend than expected.

That prompted an eleventh-hour scramble this week to close a $170 million spending gap in order to balance the budget without depleting the states’ $2.2 billion general fund reserve.

I feel good, JBC Chairwoman Shannon Bird, D-Westminster, told The Colorado Sun after the budget was completed around 2 a.m. Through budget balancing maneuvers, he said, we made sure that we actually increased the amount of money available to implement important programs for our constituents.

The budget is still subject to change; the spending plan must pass the House and Senate before Polis can sign it into law.

Here are some of the things that made it into the proposed spending plan and what didn’t:

General fund spending will increase by more than $1 billion

The JBC chose to use the economic forecast from the governor’s Office of State Planning and Budgeting for the second year in a row as the basis for the budget.

The decision gave lawmakers an additional $54 million to spend over the Colorado Legislative Council’s staff forecast, possibly a departure from typical JBC practice, which is to adopt the most conservative estimates to avoid midyear budget cuts. However, the governor’s office forecast was more conservative on economic growth, projecting slower growth in overall tax revenue.

The full size of the budget won’t be known until JBC staff analysts complete their calculations and lawmakers introduce the lengthy bill on Monday. But early numbers show general fund spending rising to more than $16 billion from $15.2 billion, even as tax collections are relatively flat.

General fund revenues, which are mostly made up of income and sales taxes, have grown more slowly than inflation in recent years after booming during the coronavirus pandemic. Overall tax receipts are forecast to fall 0.7% this budget year to $17.3 billion, before rising 1.7% in the 2024-25 fiscal year to $17.5 billion.

However, the state will be able to spend more next year due to the 5.8% growth in the states’ revenue cap. According to the Taxpayers’ Bill of Rights, state revenues can only increase based on the combined rate of inflation and population growth. Anything beyond that must be reimbursed to state taxpayers the following year.

The state will issue $3.6 billion in TABOR repayments this spring and expects to have a TABOR surplus of $2 billion in the current budget year. The surplus is expected to shrink to $1.3 billion by 2024-25, according to the proposed budget.

Property taxes, cash reserves fuel education spending

One of the pillars of the budget was a tax that the state does not even collect.

Years of increased local property tax collections allowed lawmakers to make good on their promises to fully fund K-12 education for the first time since the Great Recession, achieving a longtime goal of lawmakers d ‘both sides without increasing the general expenditure of funds on education to do so. .

Sen. Rachel Zenzinger, an Arvada Democrat who is a member of the JBC, said after the vote. It has taken many years of budget actions to get here.

Gov. Jared Polis, along with Sen. Rachel Zenzinger, signs HB 1164, which reduces property tax credits for school district millage rates on June 11, 2021 at the Boettcher Mansion in Denver. (Olivia Sun, The Colorado Sun)

Local property tax dollars covered more than 75 percent of the $526 million increase needed to close the K-12 funding shortfall, with the State Education Fund providing the remainder.

Lawmakers relied heavily on cash funds to balance the budget.

They repeatedly dipped into the State Education Fund for K-12 spending, authorizing $44 million to cover increases in so-called categorical programs, such as special education. They used $22 million to increase funding for state-sponsored charter schools, which receive fewer local tax dollars than other K-12 schools. And they added funding to a voter-approved school meal program that didn’t generate enough tax money to cover its cost.

To free up money for higher education, lawmakers transferred large sums of cash that had been earmarked for other programs, including $17.4 million in interest earnings from a maintenance fund and $10 million from dollars from a little-used grant program intended to help former college students or applicants. finish their degrees.

Lawmakers also adopted some budget-balancing recommendations from the governor’s office that they had previously criticized when Polis first proposed them in November.

The list included exempting certain unemployment insurance-related fees from the state TABOR cap and pulling $32 million in cash from states’ TABOR reserve, which is set aside for emergencies such as wildfire response . (The JBC voted to replenish the reserve using hard assets, such as a building and garage. Doing so is technically permissible, although such assets are difficult to convert into cash in a real emergency.)

The JBC approved more than $100 million in placeholders for several priorities, including housing, education and rural hospitals.

JBC rejects work housing and autism funding

Lawmakers didn’t fund everything they or Governor Polis wanted.

The JBC rejected a number of the governors’ priorities and dramatically scaled back others, including a request for $16 million in workforce housing for the Department of Corrections. The JBC approved just $360,000 to fund a housing project already underway in Buena Vista.

In a split vote, the JBC also rejected an administration plan that would have hired lawyers to prosecute federal gun crimes.

They declined to vote on a proposed bill to expand autism treatment coverage under the states’ Child Health Plan Plus program, citing financial constraints.

Sen. Barbara Kirkmeyer, R-Brighton who is a member of the JBC, was the lone vote against the committee’s decision to cap the states’ Medicaid provider fee increase at 2 percent from the 2.5 percent that the JBC had initially approved.

Colorado State Sen. Barbara Kirkmeyer before the first Republican primary debate for the 8th Congressional District seat, Thursday, Jan. 25, 2024, in Fort Lupton, Colo. (AP Photo/David Zalubowski)

Lawmakers worked late into the night to finish the proposal, meeting in small groups behind closed doors with legislative budget staff and the governor’s office to negotiate the final details.

But it was not immediately clear whether they concluded in time to draft the legislative package for its scheduled introduction to the House on Monday, a key deadline that, if missed, could derail the legislative calendar as the session heats up to his final stretch.

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