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Down The Home Stretch

The Legislature Twists And Turns Its Way To The Finish Line

By the time you read this, there will be less than two weeks remaining in the 2018 legislative session. Although major issues remain to be addressed, in spite of the legislature’s preoccupation with the expulsion of members, politics appears to be what is on everyone’s mind.

The state assemblies were concluded in mid-April and each gave us surprising results. On the Republican side, Walker Stapleton breezed to the top line in the primary battle and will be competing with Greg Lopez, the former mayor of Parker, and former state Rep. Victor Mitchell.

Although prevailing with the top line designation, Stapleton has to be shaken at the allegations regarding the fraudulent conduct in his campaign with the securing of petition signatures. In a move to eliminate the controversy, Stapleton last month asked the Secretary of State to have all of his petitions withdrawn. Instead he went through the assembly – and dominated so thoroughly that, to everyone’s amazement, Attorney General Cynthia Coffman did not come close to reaching the threshold to make the primary ballot for the governor’s race. It would appear that her political career is in considerable doubt, if not ended.

The Democratic assembly was not without surprises as well. Former state Treasurer Cary Kennedy secured a convincing victory over U.S. Rep. Jared Polis, who many regarded as the early favorite. They will be joined on the primary ballot by former state Sen. Mike Johnston and current Lt. Gov. Donna Lynne.

Bottom line, Colorado will see an eight-candidate primary within the two major political parties representing a broad swath of the local and national political spectrum. A number of candidates will campaign on very conservative or very liberal platforms to secure the primary victory and then become more “moderate” for the general election.

As we are in the age of Russian hacking, planted news stories on the internet and in other media, and a general distrust of what we see and hear, this primary campaign promises to be full of more surprises, including U.S. Rep. Doug Lamborn of Colorado Springs failing, for now, to qualify for reelection. And, it will continue to impact the legislative session and process.

The $28.9 billion budget

In performing its constitutional duty, the House and the Senate have approved a $28.9 billion state budget. The budget, in addition to funding nearly 90 percent of the state government over which there is no discretion, also includes new moneys for rural broadband deployment, affordable housing and school security.

Specifically, the House added $495 million for transportation projects, much of which must be spent on mass transit and a substantial portion is to be transferred to local governments to help fund their local road programs.

We would all be wise to keep an eye on this particular expenditure. First, Senate Republicans are not likely to support devoting a substantial amount of this money to mass transit. Second, it is extremely rare for the State to send state revenues to local governments for road programs. The long-standing policy has been that since local governments have their own taxing authority, they should use that authority to fund their own local road projects. This significant departure from established policy may well not be a wise departure.

The budget also includes $225 million to help close the actuarial funding gap for PERA, the State’s retirement program. This is in addition to whatever funding compromise is reached in a separate PERA funding bill, Senate Bill 200.

School finance is receiving an additional $150 million, and $35 million is being devoted to school security grants. Since the House and Senate versions do not align, the budget will be sent to a conference committee. If all goes well the final compromise will be introduced and passed in both chambers before the end of April.

From here to there

Passing a balanced budget is one of the constitutional requirements that the Colorado Legislature must meet every year. Responsibly funding the needs of Colorado citizens, although morally required, is not a constitutional requirement. Significant political time and focus has been devoted this year on one of these issues – transportation funding.

Senate Bill 1 has passed out of the Senate and is in the House. However, passage by the Senate does not represent any accord on the issue. Indeed, the only initial agreement is that the bill move from the Senate in one form and allow the House to modify it substantially. Details would be worked out in committee.

Here is where I think we stand: Senate Republicans favor a plan that would take $250 million per year of existing state revenues and pledge them for the next 20 years to support a $5 billion transportation bond funding program.

Generally House Democrats object to this approach. Their concern principally is with committing $250 million of state revenues annually to support a transportation bonding program when other needs of the State will likely rise in prominence during that 20-year cycle. Democrats would also like to go to the voters with a tax increase – a vehicle ownership tax, state sales tax, or gas tax – to support a roughly $5 billion bonding program over 20 years.

Generally speaking, Senate Republicans oppose any tax hike proposal but may compromise with the gas tax or vehicle ownership tax.

Both parties have allowed Senate Bill 1 to move forward to enable business groups to propose a tax increase proposal to the voters in November 2018. If the initiated measure fails, Senate Bill 1, would ultimately contain some combination of bonding program and tax increase.

Take it or leave it?

I don’t believe that Senate Bill 1 as currently drafted is wise in allowing a business-initiated measure to move forward in 2018 and if it fails, hoping that some other legislation or fix can be proposed in 2019 or after. In my experience, referred measures are more palatable with Colorado voters than initiated measures.

Referred measures are referred by the Colorado legislature to voters and, as a result, are subject to public hearings in both the Senate and the House and typically will not pass without bipartisan support. As a result, those referred measures tend to be better drafted, more rigorously vetted, and more reflective of the will of a broader cross section of Coloradans as a bipartisan coalition of elected officials approve moving it to the voters for their consideration.

By contrast, initiated measures are often drafted by small insular groups that have a particular agenda and view of the world. While their agendas may be laudable, the reality is that more often than not, the proponents of initiated measures are not interested in hearing competing viewpoints and compromising on the language or the focus of their proposal.

They quite often have a “take it or leave it” approach with voters. In my opinion, if you want to make progress on the issue, giving voters an ultimatum is rarely the successful way to go.

PERA debate continues

Finally, although we are in the quiet before the storm, keep an eye on Senate Bill 200, the PERA funding and reform bill.

As of this writing, the bill passed out of the Senate and is sitting in the House awaiting negotiation on a version that can be accepted by majorities in both chambers.

Current points of contention include how much should taxpayers contribute to close the funding gap, estimated to be between $30 billion to $50 billion. Taxpayers’ support would come in the form of increased funding for state agencies to pay a larger employer contribution into the plan.

Also under consideration is whether to allow state employees to opt out of the current defined benefit plan and instead move into a defined contribution plan that is more often seen in the private sector.

The current version calls for employee contributions continuing to rise by 3 percent over the next three to four years while also eliminating two years of cost-of-living increases in benefits. Future cost-of-living increases would drop from 2 percent annually to 1.25 percent. This debate will continue into the final month of the session.

Again, remember that PERA is not broke. The current debate is focused on whether the risk of insolvency is too high for the comfort of retirees, legislators, and the public in general. Expect the defined contribution option to survive but also expect to see increased employer contributions to help balance the scales on increased employee contributions and reduced benefits and close the funding shortfall.

That’s it for this month and happy Spring.

Penfield W. Tate III is an attorney with Kutak Rock and serves on a number of nonprofit boards. He represented Park Hill in the Colorado House of Representatives from 1997 to 2000, and in the State Senate from 2001 to February 2003, when he resigned from the Senate to run for Mayor of Denver. Penfield’s adult daughter was born and raised in Park Hill, and he and his wife Paulette remain in the neighborhood.


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