Top Colorado lawmakers on Thursday announced a major agreement to avert potentially catastrophic cuts to the state’s hospitals, capping off weeks of tense negotiation on the far-reaching package.
The measure would reverse a planned $528 million cut to hospitals, while boosting funding to roads and schools. It also would provide a tax break to small businesses, hike recreational marijuana taxes, increase Medicaid co-pays and lower the state’s spending cap by $200 million.
Despite concerns on both sides, top lawmakers said the bill has the votes to pass both chambers. Initially viewed as a longshot when it was introduced in March, the legislation now contains a dozen major provisions that touch virtually every top spending priority at the state Capitol.
Its passage could salvage what for many lawmakers has been a disappointing legislative session after a grand transportation compromise unraveled weeks earlier.
But even as the final deal included $1.9 billion for transportation, the centerpiece of the legislation remains the reclassification of a hospital provider fee program that helps reimburse hospitals for uncompensated care.
Democrats have sought for years to reclassify the fee because it counts towards the state’s constitutional spending limits, squeezing the funding available for other government services. Republican lawmakers blocked the effort the prior two sessions, but Senate President pro tem Jerry Sonnenberg, R-Sterling, this year felt compelled to make a deal in order to stave off deep hospital cuts that would have fallen on rural areas the hardest.
Both sides gave ground on spending, while Democrats agreed to a laundry list of conservative proposals.
“I think that there’s a lot that we had to do to get this through the (Republican-controlled) Senate,” said House Majority Leader KC Becker, D-Boulder. “Initially, we wanted a much simpler bill.”
The final obstacle was a provision to increase the cost of health care for patients with Medicaid, the government insurance program for lower-income residents.
Democrats initially balked at a GOP proposal to increase all co-pays to the federal maximum, but this week agreed to a deal that would double co-pays on prescription drugs from $1.25 to $2.50. The co-pays for urgent care and outpatient services also would increase, but the agreement would maintain existing exemptions for children and a number of women’s health services.
But even the reduced hike in co-pays will be a bitter pill to swallow for many Democrats.
“I think that really does hurt some people who are struggling,” said Rep. Chris Kennedy, a Lakewood Democrat. “There are a lot of things in this bill a lot of us have concerns about, but I think we’ve kept our eyes on the prize. I think we all know that converting the provider fee into an enterprise is a critical priority.”
Lawmakers on both sides said the change to the state spending limit was the most difficult agreement they reached — and some conservatives still aren’t on board.
“I’m probably a no vote,” said Senate Majority Leader Chris Holbert, R-Parker, who said he wanted to see a fiscal analysis before making his decision. “It is still potentially a growth of government.”
Reclassifying the hospital fee could have allowed the state budget to grow by as much as $550 million, Becker said. But Republicans for years have said the state should either send the question to voters or rein in spending by an equal amount in order to be faithful to the Taxpayer’s Bill of Rights.
“Claiming that we need more money as a state is just completely untrue,” said Rep. Justin Everett, R-Littleton. “The issue here is about politicians taking the easy way out and unnecessarily reclassifying funds, which is an affront to taxpayers.”
The two sides settled for a $200 million reduction in what the state can spend each year, but left room for state spending to increase by at least $350 million as the economy grows.
The additional money for rural schools and the tax break for businesses on personal property will essentially come from an increase in the recreational marijuana taxes to 15 percent — an issue that raised red flags. The schools money is partly contingent on growth in marijuana sales in future years.
“Philosophically, do I think we should be funding our educational system on the sale of marijuana? No, I think we can do better,” said Rep. Millie Hamner, a Dillon Democrat and top budget writer. “I think we need a reliable funding source, and I think people need to pay equitably for our public education. But I am also a fan of the bill passing so we can restore the cuts to the hospitals.”
Lieutenant Gov. Donna Lynne pointed to another part of the legislation that would require state agencies to propose 2 percent budget cuts next year. “I think that’s a big concern,” she said. “I think it’s a slippery slope it takes us down.”
The bill is scheduled for a Senate committee vote Friday, then would move to the Senate floor before it can head to the House for consideration.
“This is a major, major bill that the Republican group was always opposed to and to get it to this place, there had to be some give and take,” said Senate Minority Leader Lucia Guzman, D-Denver, one of the bill sponsors. “Some will think we gave in too much, but I feel good about it.”
