2016 LEGISLATIVE DIGEST Second Regular Session of the 70th Colorado General Assembly January 13 – May 11, 2016 LITTLETON PUBLIC SCHOOLS Overview The Second Regular Session of the 70th Colorado General Assembly adjourned without compromise on key issues, such as establishing an enterprise for the hospital provider fee that would have provided additional funding for K12 and higher education. Legislators did agree on a state budget that slightly increased funding to K12 education, allocated more money to roads, and increased the general fund, while avoiding significant cuts to higher education and Medicaid services. Currently, there are unconfirmed rumblings that the legislature may have to return to duty over the summer for a Governor-initiated ‘special session’ to work out issues that were not resolved during the regular session. There have been rumors that the legislature may address the hospital provider fee issue during a special session, but this prediction is highly unlikely given that lawmakers’ political positions remain unchanged on the issue. At this point a special session seems unlikely but the possibility has not been officially ruled out. 2016 session highlights include: Hospital Provider Fee: Partisan divides predictably blocked the effort to generate additional state dollars by reclassifying the state’s Hospital Provider Fee as an enterprise. Citing an impending ‘budget cliff’, Democrats will likely introduce similar legislation again next session. Charter Schools: This session charter schools progressed their campaign to alleviate persistent capital challenges with the passage of HB16-1422, which grants charter schools with greater access to specific state funds and information about available vacant school district buildings. Conversely, the charter schools were not successful with their attempt to require that all school districts share their local mill levy funding equally per pupil with the district’s charter schools (SB16-188). Mill Levy Override Flexibility: Granting school districts greater flexibility with local revenue decisions, HB16-1354 allows districts to impose voter-approved mill levies for the sole purpose of cash funding school technology, capital construction, and facility maintenance needs. These funds are exempted from the current 25% cap (30% for rural districts) on local district override dollars. Student Data Privacy: The legislature found rare compromise on HB16-1423, a complex bill that establishes a statutory definition for student personally identifiable information and sets detailed requirements for the appropriate use of student data by school districts, software providers, and the Department of Education. Medical Marijuana in Schools: Districts must now allow the administration of medical marijuana on school property for students holding a valid medical marijuana recommendation. HB16-1373 requires school boards to adopt a policy that details the reasonable parameters for the administration by primary caregivers and the procedures for medical marijuana treatments occurring during the school day. School Safety: Established in response to the 1999 tragedy at Columbine High School, the Safe2Tell program is a state funded anonymous information sharing tool for students, parents, teachers, school administrators, and law enforcement officers concerned with their safety or the safety of others. This session the legislature expanded the Safe2Tell program requiring them to begin providing safety training to all elementary, middle, and high school students across Colorado (SB16-193). Elections: Criticism of the state’s caucus process in April prompted the late introduction of HB-1454, a defeated bill that would have created a presidential primary in Colorado and allowed unaffiliated voters to participate. 1 Table of Contents Budget – Page 3 Key Issues– Page 6 2016 Interim Committees – Page 9 Legislative Information – Page 10 Bills by Subject – Page 12 Appendix – Page 38 * Click on links for more information 2 State Budget HB16-1405 Fiscal Year 2016-17 Long Bill appropriates a total of $27,117,389,711 in state funds, including funding for new programs, expansion of existing programs, and reductions to or elimination of existing programs. Several departments saw sharp increases in General Fund appropriations, demonstrating a growing reliance on state dollars to fund core government functions. State budget totals include: Corrections – Increase of $2.9 million in total funds (increase of $0.8 million from General Fund) Education – Increase of $147.5 million in total funds (increase of $287.6 million from General Fund) Health Care Policy & Financing – Increase of $14.7 million total funds (increase of $155.4 million from General Fund) Higher Education – Increase of $214.9 million in total funds (increase of $12.9 million from General Fund) Human Services – Decrease of $27.9 million in total funds (increase of $12.5 million from General Fund) Judicial – Increase of $15.9 million in total funds (increase of $7.6 million from General Fund) Transportation – Increase of $32.3 million in total funds ($0 change from General Fund) Hospital Provider Fee (HPF) In November 2015 Governor John Hickenlooper (D) released his state budget proposal for the upcoming Fiscal Year 2016-17. His proposal included a recommendation that the General Assembly pass legislation during the 2016 session to reclassify the state’s Hospital Provider Fee as an enterprise. The move would exempt the HPF from the state’s TABOR limits, thereby generating about $370 million in FY16-17 to fund priority programs like transportation and education. Republican legislators, led by Senate President Bill Cadman, opposed this proposal and vowed to kill any attempts to reclassify the fee. In April 2016 the House Democrats introduced HB16-1420 and HB16-1450, establishing the enterprise and allocating the additional state revenues to K12 education, higher education institutions, the College Opportunity Fund, and transportation, respectively. The partisan debate was brought to an end a day before the session adjourned when the Republican-led Senate Finance Committee killed both bills. Democrats have renewed their support for the HPF proposal and will likely introduce similar legislation during the 2017 session. What is the Hospital Provider Fee? Pursuant to HB09-1293, the state collects a provider fee from hospitals. HPF revenue is matched with federal dollars and used to reimburse hospitals for uncompensated care and to expand Medicaid and Child Health Plan Plus programs. Under current law, HPF revenue is subject to the TABOR limit. What is an enterprise & why is it different from other taxes? TABOR defines an enterprise as "a government-owned business authorized to issue its own revenue bonds and receiving under 10% of annual revenue in grants from all Colorado state and local governments combined." TABOR limits the amount of money that can be spent or saved by the state government and all local governments within the state. However, revenue collected by enterprises is not subject to these constraints. When an existing government entity becomes an enterprise, its revenue is exempted from the state TABOR limit, and a corresponding downward adjustment is made to the level at which the TABOR limit is set. Does the Hospital Provider Fee qualify as an enterprise? Several conflicting formal opinions have issued recently on the legality of the HPF proposal. In December 2015 the Legislative Council released an opinion that although the legislature does have the authority to create an enterprise and to collect the HPF, the HPF does not satisfy the enterprise requirement of being a ‘government- 3 owned business’. Two months later the Colorado Attorney General Cynthia Coffman released an opinion that the term ‘government-owned business’ has, for purposes of TABOR, been broadly interpreted by the courts, and that organizing the HPF as a TABOR-exempt enterprise would not violate current law. The differing opinions served to fuel political debates on the issue and, ultimately, only a legal challenge to state statute actually creating the enterprise would definitively answer the HPF question. Failed 2016 Hospital Provider Fee Bills - HB16-1420 Colorado Healthcare Affordability & Sustainability Enterprise - HB16-1450 Allocate Additional Available State Revenues Looking Forward: State Budget & Tax Revenues TABOR See Appendix A – Page 38 Adopted in 1992, the Taxpayer’s Bill of Rights (TABOR) caps state spending in relation to growth in state revenues. Under TABOR both state and local governments cannot increase taxes without voter approval and cannot spend tax revenues collected under existing tax rates if revenues grow faster than the rate of inflation and population growth. In 2000 voters also passed Amendment 23, which currently guarantees that statewide per-pupil funding is required to increase by inflation. In FY 2014-15 the state distributed taxpayer refunds for the first time since FY 2004-05. The state’s revenue did not exceed the spending limit in FY 2015-16 but refunds are expected to resume in FY 2016-17 and increase in amount during the subsequent years. The legislature establishes how the excess revenues are refunded and, to date, 21 different refund mechanisms have been established. Current statute provides 3 different refund mechanisms: 1) the six-tier sales tax refund, 2) the earned income tax credit (EITC), and 3) the temporary income tax rate reduction. Voters receive refunds in the tax year following the fiscal year in