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Approp Report Template PART II.Dotx STAFF BUDGET BRIEFING FY 2018-19 DEPARTMENT OF LOCAL AFFAIRS JBC WORKING DOCUMENT - SUBJECT TO CHANGE STAFF RECOMMENDATION DOES NOT REPRESENT COMMITTEE DECISION PREPARED BY: CAROLYN KAMPMAN, JBC STAFF NOVEMBER 30, 2017 JOINT BUDGET COMMITTEE STAFF 200 E. 14TH AVENUE, 3RD FLOOR · DENVER · COLORADO · 80203 TELEPHONE: (303) 866-2061 · TDD: (303) 866-3472 https://leg.colorado.gov/agencies/joint-budget-committee CONTENTS Department Overview ...................................................................................................................................... 1 Department Budget: Recent Appropriations ................................................................................................ 1 Department Budget: Graphic Overview ....................................................................................................... 2 General Factors Driving the Budget ............................................................................................................... 4 Summary: FY 2017-18 Appropriation & FY 2018-19 Request ................................................................. 6 ISSUES Repeal Local Government Marijuana Impact Grant Program ...................................................... 9 Moffat Tunnel Improvement District ............................................................................................. 14 Evaluation of Fort Lyon Program ................................................................................................... 20 APPENDICES A. Numbers Pages .............................................................................................................................. 31 B. Recent Legislation Affecting Department Budget ................................................................... 48 C. Update on Long Bill Footnotes and Requests for Information ............................................. 52 D. Department Annual Performance Report ................................................................................ 65 30-Nov-2017 i Local Affairs - brf DEPARTMENT OF LOCAL AFFAIRS DEPARTMENT OVERVIEW The Department of Local Affairs (DOLA) is responsible for building community and local government capacity by providing training, technical, and financial assistance to localities. The Department’s budget is comprised of four sections: The Executive Director's Office provides leadership and support, including strategic planning, policy management, accounting, budgeting, purchasing, human resources administration, and public information. The Division of Property Taxation operates under the leadership of the Property Tax Administrator, who is appointed by the State Board of Equalization. This division: (1) administers property tax laws, including issuing appraisal standards and training county assessors; (2) grants exemptions from taxation for eligible entities; and (3) values multi-county companies doing business in Colorado, including railroads, pipelines, and other public utilities. The Board of Assessment Appeals is a quasi- judicial body that hears individual taxpayer appeals concerning the valuation of real and personal property, property tax abatements, and property tax exemptions. The Division of Housing administers state and federal affordable housing programs, and regulates the manufacture of factory-built residential and commercial buildings. The Division of Local Government provides technical assistance and information to local government officials. This division also makes state and federal financial resources available to support community infrastructure and services through statutory formula distributions and grants, including: making state grants and distributions to communities that are socially or economically impacted by mineral extraction and limited gaming activities; distributing Conservation Trust Fund money (derived from lottery proceeds) for parks, recreation, and open space; administering the federal Community Services Block Grant and the Community Development Block Grant; making state grants to communities that are impacted by marijuana-related activities; and distributing the state contribution for certain volunteer firefighter benefits. DEPARTMENT BUDGET: RECENT APPROPRIATIONS FUNDING SOURCE FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-192 General Fund1 $24,626,224 $25,487,580 $32,086,084 $31,905,283 Cash Funds 209,312,306 194,098,487 181,821,729 186,009,984 Reappropriated Funds 10,487,107 10,915,745 11,319,391 11,363,249 Federal Funds 76,876,045 75,085,768 80,705,121 80,883,411 TOTAL FUNDS $321,301,682 $305,587,580 $305,932,325 $310,161,927 Full Time Equiv. Staff 172.5 173.9 179.2 178.6 1 Includes General Fund Exempt. 2 Requested appropriation. 30-Nov-2017 1 Local Affairs - brf DEPARTMENT BUDGET: GRAPHIC OVERVIEW All charts are based on the FY 2017-18 appropriation. 30-Nov-2017 2 Local Affairs - brf All charts are based on the FY 2017-18 appropriation. 30-Nov-2017 3 Local Affairs - brf GENERAL FACTORS DRIVING THE BUDGET DEDICATED CASH FUND SOURCES The Department awards grants and oversees direct distributions to local governments for various programs with dedicated cash fund revenue sources. The FY 2017-18 appropriation for the Department reflects $154.9 million cash funds for these programs, about half of the Department’s overall budget. These amounts are shown for informational purposes only, and actual expenditures may differ significantly from the amounts shown in the annual Long Bill. These sources include the following: Local Government Mineral and Energy Impact Grants and Disbursements – state severance tax and federal mineral lease revenues that are distributed to local governments affected by mineral extraction activities through statutory formulas and grants; Conservation Trust Fund Disbursements – state lottery proceeds distributed to local entities on a formula basis for parks, recreation, and open space purposes; and Limited Gaming Impact Grants – limited gaming tax revenues distributed to communities impacted by gaming activities. MAJOR CONSTITUTIONALLY OR STATUTORILY DEDICATED CASH FUND REVENUES ADMINISTERED BY THE DEPARTMENT OF LOCAL AFFAIRS ($ MILLIONS) FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18 REVENUE SOURCE ACTUAL ACTUAL ACTUAL ACTUAL ESTIMATE1 Severance Tax $127.1 $140.1 $43.9 $34.5 $75.2 Federal Mineral Lease 72.3 59.6 39.9 46.1 40.4 Conservation Trust Fund 52.1 51.2 57.4 53.4 50.0 Limited Gaming Fund 5.0 5.0 5.0 5.0 5.0 TOTALS $256.5 $255.9 $146.2 $139.0 $170.6 1 Severance tax and federal mineral lease revenue estimates are based on the September 2017 revenue forecast from the Office of State Planning and Budgeting. Please note that for the first four months of FY 2017-18, the Department of Revenue reports severance tax refunds totaling $46.9 million, resulting in a net revenue reduction of $6.5 million. Thus, staff anticipates that the December 2017 forecast of severance tax collections will decrease significantly. As reflected in the table, severance tax and federal mineral lease revenues are volatile. Oil, gas, and mineral prices and production volumes dictate annual revenue, and these are difficult to project. Further, funds received in one year are not always awarded in the same year and, once awarded, may be expended over multiple years. Because of this, the informational amount included in the Long Bill for Local Government Mineral and Energy Impact Grants and Disbursements is not typically adjusted from year to year. However, in light of actual and projected revenue declines, this figure was reduced from $150.0 million to $100.0 million from FY 2015-16 to FY 2017-18. FEDERAL FUNDS Federal funds comprise about one quarter ($80.7 million) of the Department of Local Affairs’ FY 2017-18 appropriation. Most of the Department's federally-funded programs do not require state matching funds and are provided at the discretion of federal authorities. Annual expenditures from some of the major ongoing federal grants administered by this department are summarized in the following table. 30-Nov-2017 4 Local Affairs - brf ANNUAL EXPENDITURES FROM MAJOR ONGOING FEDERAL GRANTS ADMINISTERED BY DEPARTMENT OF LOCAL AFFAIRS ($ MILLIONS) FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18 ACTUAL ACTUAL ACTUAL APPROP.2 Federal Department of Housing and Urban Development (HUD) rental subsidies $44.6 $49.4 $52.2 $50.5 HUD affordable housing development1 6.2 5.0 3.7 12.0 Health and Human Services Community Services Block Grant 6.1 6.3 5.5 6.0 HUD Community Development Block Grant1 14.0 8.3 9.6 5.2 HUD Emergency Shelter and Homeless Prevention Programs 1.6 1.5 1.7 1.8 1 The portion of the Community Development Block Grant (CDBG) that is used for affordable housing development in the appropriation year is included in the affordable housing development amount, rather than the CDBG amount. However, actual expenditures reflect the Department’s practice of expending all CDBG funds in the CDBG line item. In addition, the CDBG amount does not include CDBG-DR (disaster recovery) amounts that are not reflected in the Long Bill. DISCRETIONARY APPROPRIATIONS OF STATE FUNDS Appropriations to the Department of Local Affairs from the General Fund and the Marijuana Tax Cash Fund (MTCF) have increased in recent years to support a number of new initiatives, including the following: An appropriation of $15.3 million from the MTCF provides construction funding, rental assistance, and supportive services for individuals with behavioral health disorders, individuals who are transitioning from the criminal or juvenile justice
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