This story by Faith Miller appeared on Colorado Newsline on March 30, 2022.
Over the past few weeks, state lawmakers who serve on the powerful Joint Budget Committee put the final touches on a nearly $36 billion budget, known as the “long bill,” for fiscal year 2022-2023. They’ve been meeting for months to consider requests from department heads and craft a budget package that makes good use of continued growth in the state’s revenue from sales and income taxes, while balancing risks from inflation and the war in Ukraine.
“It’s been a roller coaster of a two years,” Rep. Julie McCluskie, the Dillon Democrat who chairs the Joint Budget Committee, told reporters Tuesday. She referred to the $3 billion in cuts that lawmakers were forced to make in 2020 at the onset of the pandemic. But the state’s general fund recovered unexpectedly quickly in the two years following public health orders that left millions of people out of work and sparked an economic recession — even as COVID-19 took the lives of 12,972 Coloradans, and counting.
This week, members of the House of Representatives will hold debate on the long bill before it heads to the Senate next week. Members of both parties can propose their own amendments, requesting to shift funding or increase amounts for some programs, but the Joint Budget Committee has the final word.
After 11.6% growth in the state’s general fund — composed mostly of sales and income tax revenue — in the 2021-2022 fiscal year, Legislative Council Staff forecasters predict that growth will slow considerably in 2022-2023, to 0.6%. Last session, though, lawmakers sought to shore up the general fund against future downturns by increasing the amount they’re saving each year. For the next fiscal year, JBC members propose leaving about $2 billion in reserve.
Legislative staff projects that the slower growth next year will still be enough to trigger refunds to taxpayers that are required under the Taxpayer’s Bill of Rights, a voter-approved constitutional amendment that placed limits on government spending.
General fund spending would increase 12.1% under next year’s proposed budget, with the most significant growth in the Department of Health Care Policy and Financing, the Department of Education and the Department of Higher Education.
Some of the biggest factors driving the state budget’s growth from 2022 to 2023 relate to the Department of Health Care Policy and Financing, or HCPF, which manages the state’s Medicaid program providing medical coverage for low-income people and those with disabilities. Congress passed coronavirus relief legislation in 2020 and 2021 that enhanced the medical assistance payments Colorado received from the federal government. The enhanced funding is set to expire June 30 — meaning that the responsibility for covering hundreds of millions of dollars’ worth of Medicaid services will shift from the federal government back to the state.
The general fund contribution to HCPF’s budget is set to grow $1.02 billion, a 33.4% increase, in the 2022-2023 fiscal year. The total budget for the department, including federal funds, amounts to $14.2 billion in the long bill.
Central to that budget is the cost of medical services premiums, which pay for doctor’s appointments, prescriptions, hospital visits and long-term care for Medicaid members. The required funding for medical services premiums alone will increase approximately $215 million next fiscal year, with $109 million of that coming from the general fund. Long-term services and supports such as nursing home care, along with the decreased federal match, are driving the higher cost to the state.
Also of note: The Joint Budget Committee moved this year to boost the rates Medicaid pays to community providers by 2%. On top of that, it provided targeted rate increases for home- and community-based service providers, emergency medical transportation, non-emergency transportation and other types of providers.
Meanwhile, the Denver-Aurora-Lakewood consumer price index, a measure of inflation that accounts for the costs of food, energy and medical care, rose 7.9% in the last year. It’s expected to grow by another 7% in 2022.
The largest of the targeted HCPF provider increases is aimed at raising the minimum wage to $15 for all employees of Medicaid home- and community-based service providers in the state. This group includes home health workers and certified nurse aides. The nationwide shortage of available workers for these highly demanding, low-paid jobs is straining nursing homes and long-term care facilities, as The Denver Post and others have reported.
When asked why the across-the-board provider rate increase wasn’t higher, McCluskie noted that the governor’s November budget proposal had included a 1% increase for community providers, which the JBC doubled. “I think the 2% was actually a really exciting and successful step to be able to take for those community providers,” McCluskie said.
More money for schools
The Department of Education would receive a total of $7.19 billion in the 2022-2023 fiscal year, representing an 11.7% increase from last year. The state’s contribution to school funding would grow $195 million, decreasing the budget stabilization factor — the amount of money that lawmakers owe schools based on a funding formula, but choose not to prioritize — to $321 million. That brings the budget stabilization factor down to its lowest level since 2010, according to Chalkbeat.
“In this very difficult moment, as we know many students have suffered learning loss these past two years, we’re bringing down the budget stabilization factor to an all-time low, being able to put more dollars into school districts and classrooms and hopefully into educator pay raises as well,” McCluskie said.
The long bill also funds the Department of Early Childhood, which was created through legislation last year. A bill recently approved in the state House would set the expectations for the new department, which would receive $8.19 billion in next year’s proposed budget. State lawmakers and Gov. Jared Polis want the department to set up universal preschool for all Colorado 4-year-olds by fall 2023.
“I am so pleased to bring forward a long bill that invests in our schools during what has been a very difficult time for student success,” McCluskie told her colleagues during Democrats’ budget caucus Tuesday, “and also in our colleges and universities, to make sure that those students who may have dropped out or have had a hard time completing or going on to get that postsecondary education will have that opportunity, and that we’re able to maintain low tuition increases.”
The budget bill includes a $132 million general fund increase for the Department of Higher Education, a 10.8% increase as compared with last year’s budget. Of that, $129 million is going from the general fund to public higher education institutions and financial aid — $24.1 million of which is for an increase in need-based aid that’s required under state law.
The “low tuition increases” that McCluskie referred to are tied to an increase of $99 million in cash funds that higher education institutions will have to spend next fiscal year. This funding means public institutions other than those in the University of Colorado system must raise undergraduate resident tuition rates by no more than 2% next year. At the University of Colorado, most undergraduate students starting school in 2022 will pay 4.3% more than a first-year student would have in 2021, but tuition will then be held flat for four years.
The Department of Higher Education’s budget for the 2022-2023 fiscal year would total $5.4 billion, including federal funds. That’s a 4.3% increase over the prior year.
“We know that education is a gateway to economic prosperity and generational wealth, and this is one way that we are investing in that,” Rep. Leslie Herod, a Denver Democrat who serves on the Joint Budget Committee, told reporters.