Under The Dome, Week 17
The Joint Budget Committee begins work on Monday in a two week sprint to rewrite the state budget ahead of the full General Assembly returning on May 18. The Executive Committee of Legislative Council will also meet ahead of the full reconvening. Joint Rule 44 gives leadership the power to set the agenda for the remaining session. At this point, leadership has indicated that a bill needs to be “fast, friendly, and free” or directly related to the COVID-19 crisis.
Before the coronavirus hit and shut down many parts of the economy, the JBC had nearly finished the budget for the upcoming fiscal year. But in the past 7 weeks, the outlook for the state budget went from a somewhat tight budget year to significant cuts needed from every executive branch department. On Monday, the Joint Budget Committee staff released documents containing their recommendations for budget reductions in each state agency. No actions have been taken yet, but these documents will guide the discussions at the JBC meetings for the next two weeks. Recommendations for reductions to the budgets for K-12 education, higher education, Medicaid, CDPHE, and all other executive branch departments include adjustments to the prior fiscal year spending, reverting excess reserves in Cash Funds to the General Fund, denying most requests for new spending, and delaying implementation of bills passed in 2019. For example, staff now recommends that the capital construction budget, the money the state allocates for constructing and maintaining state owned buildings, be limited only to a $2.5 million emergency maintenance fund. Initially the Joint Budget Committee approved an across the board 3% salary increase, but now staff recommends that the Committee reverse course and keep salaries flat. Reductions in salaries may be necessary in order to balance the budget. While the federal coronavirus relief package provided some aid to states, the federal funds from the CARES Act cannot be used to generally backfill revenue losses, only for unexpected expenses incurred due to the coronavirus pandemic.
Under the Families First Coronavirus Relief Act the state will receive a higher federal match rate for Medicaid for January 2020 through June 2020, if the state doesn’t change eligibility or increase premiums. Other recommendations in the Department of Health Care Policy and Financing are to reduce provider rate increases previously given preliminary approval, suspend the implementation of a new substance use disorder benefit, stop the second year of the reinsurance program, and suspend automatic rate increases for nursing homes. In the last recession, the General Assembly suspended the Senior Homestead Exemption, a property tax exemption for certain seniors and disabled veterans, and again this option is on the table to balance the budget during this economic downturn. Suspending this tax exemption would save the legislature $162 million per year and staff recommends suspending the Senior Homestead Exemption for 3 years. Some of the recommendations from staff require additional legislation, so there will be many more budget orbital bills than usual running in tandem with the Long Bill this year. All of the initial recommended budget reductions in staff documents add up to approximately $1 billion, and most predict that General Fund revenue will be around $3 billion lower than expected when the forecast is delivered on May 12, which means additional cuts are coming soon.
In light of a challenging budget year, any legislation that costs money will likely not pass. Given the cost of a paid family leave program is very significant, the legislative sponsors of the FAMLI bill announced on Thursday that they planned to support a series of ballot initiatives to accomplish the same goal and withdraw their current legislative proposal. The 3 ballot initiatives, #283, #247, and #248 brought by Colorado Families First, have been challenged at the Colorado Supreme Court. Today, the Colorado Supreme Court allowed initiatives #247 and #248 to move forward. Initiative #247 would provide the most generous benefit with 16 weeks of leave and a maximum of 26 weeks, there would be no small business exemption, employers would pay 75% of the premium at 1.04% of the employee’s wage, and private plans would not be allowed. Initiative #248 would provide 12 weeks of leave with 16 weeks maximum, no small businesses would be exempted, employers and employees split the 0.88% wage premium equally, and some private plans would be allowed. Initiative #283 would also provide 12 weeks of leave up to a 16 week maximum, small businesses under 10 employees would be exempt from paying the employer premium, employers and employees would split a 0.9% wage premium equally, and some private plants would be allowed. We believe Colorado Families will ultimately go forward with #283, nothing final at this time. The abandoned bill proposed to mandate that employers provide a FAMLI benefit and then allow employers to buy insurance on the private market.
Ultimately, Colorado Families First will pursue signature gathering for one of the three initiatives. The group has indicated they intend to go with the third initiative, #283 that is still hung up in the Colorado Supreme Court, but the group has pulled petitions for all three. The campaign will need to gather enough valid signatures to make it on the 2020 ballot, which could prove a particularly difficult task in the time of the coronavirus. One way advocates expect to collect signatures is by sending text messages alerting people when they will be in their neighborhood gathering signatures. In a press conference Friday, Governor Polis was asked whether or not he would issue an executive order to extend deadlines or alter signature gathering requirements for ballot initiatives. He did not say definitively, but stated that they are examining what is possible under the constitution and are working on ways to honor the rights of people to place initiatives on the ballot.
The federal Paycheck Protection Program started back up on Monday with $320 billion in forgivable loans to distribute. The first round of PPP loans ran out in a matter of weeks, and the second round is likely to go quickly too. The PPP loans, administered through the Small Business Administration, are meant to incentivize small businesses to keep employees on the payroll. If they keep paying most of their employees, the business does not need to repay the loan. After a number of large businesses received loans from the initial round of PPP, the second round contains some guidelines to ensure that more small businesses in need receive the funds. Colorado community banks have done very well in the race to get funds to Colorado businesses and manage the evolving SBA guidelines.
Governor Polis announced this week that Colorado would join California, Oregon, Washington, and Nevada in the Western States Pact, to work together to coordinate the safe reopening of their economies. This pact is an agreement to ensure that as social distancing and stay at home measures are lifted, certain protections to prevent spread of COVID and testing measures are in place. This week Colorado’s stay at home order was lifted and starting Monday, the Safer at Home order took effect. A number of metro counties decided to remain under a Stay at Home order until May 8. Under Safer at Home, non-critical retail, barbershops, and salons begin to open today if they have implemented a list of social distancing and cleaning protocols. Monday, May 4, offices will be able to open at 50% in person capacity. Restaurants, bars, gyms, and large venues remain closed and masks are required to be worn in public. Local governments can apply for reprieve from the state rules if the number of COVID-19 cases in their community has decreased for the past two weeks. So far, Eagle County and Mesa County have variances approved by the state. Notably, Mesa County’s variance allows the county to develop rules to open gyms, restaurants, and places of worship under precautions.
Late Thursday, Governor Polis renewed a number of executive orders and issued 3 new executive orders. He extended the orders that provide flexibility for telehealth services. Colorado’s Office of eHealth Innovation has worked to expand telehealth access to Coloradans. The Innovation Response Team (IRT) Telemedicine effort, is a leadership team set up by the Office to drive telemedicine technology, policy, and communications with the goal to ensure access and use of telemedicine for both patients and health providers. The Governor also extended executive orders that: allow for remote notarization, provide flexibility to obtain a marriage license, close ski areas, limit evictions, foreclosures, and utility shut offs for non-payment, and suspend statutes related to the issuance of state licenses.
A new executive order reduces spending by $228.7 million in the current fiscal year in order to maintain the required statutory reserve. The lengthy document lists reductions of specific line items across executive branch agencies. The reductions don’t rely on furloughs or layoffs of state employees, but instead decrease spending for travel, not filling additional staff positions, delaying projects, halting unexpended grant dollars, and downward revisions due to lower utilization of services. Another new executive order gives unaffiliated and independent candidates more time to petition onto the general election ballot. The deadline for these candidates to circulate petitions is extended until July 27, 2020. The order makes no changes for party candidates. Assemblies were held in March and April to decide primary candidates for state offices for the primary election on June 30. The final executive order from Thursday increases state payments to nursing homes and other residential facilities. Some nursing homes across the state have become COVID-19 hotspots.
On Friday, Governor Polis gave a short press conference. He discussed steps the state has taken to increase capacity of the unemployment program to take calls and process claims. He also read a proclamation for Mental Health Awareness Month. The Behavioral Health Task Force, charged with reimagining and redesigning the state’s behavioral health system, had a deadline of June to issue a final report to the Governor and General Assembly, but the deadline is now extended to September. Also, the Task Force will consider COVID-19 implications for behavioral health. He announced that Help Colorado Now has issued the third round of grants, distributing $3.6 million to 166 groups. In his remarks he did not talk about the executive orders from Thursday, but many of the questions focused on the executive order that reduced state agency budgets for FY2019-20. He responded that the reductions in Medicaid are mostly related to reductions in utilization as people are going into the hospital less frequently. Families, businesses, and local governments are all tightening their belts and the state is no exemption. In response to a question about if ski areas will be able to open in June, Governor Polis said that in order to open, ski areas will have to have snow, they will have to have strict safety precautions, and their local government will have to be supportive.