Rural hospitals saved by compromise
Calling it “the most important legislation” of the year, two area Republican lawmakers came to agreement with their Democratic counterparts on a deal that will save rural hospitals, fund rural schools and transportation projects, and provide tax relief to small businesses.
The agreement is tied to a hospital provider fee bill rolled out by Senate President Pro Tem Jerry Sonnenberg of Sterling, Rep. Jon Becker of Fort Morgan, Democratic House Majority Leader K.C. Becker of Boulder and Senate Minority Leader Lucia Guzman of Denver.
The final deal came after weeks of intense negotiations, with Reps. Jon Becker and K.C. Becker hammering out the final numbers in a series of meetings in the past week.
The provider fee is a program where hospitals pay a fee to the state’s Department of Health Care Policy and Financing, based on the number of overnight patient stays and outpatient services. That fee is matched with federal dollars and then redistributed to the hospitals to pay for health care for low-income Coloradans, either for Medicaid or to cover uninsured medical costs. In 2017-18 that’s expected to be about $656 million for the hospitals’ share. Double that, and it puts $1.3 billion into covering those costs.
But the provider fee program is also counted under a revenue limit set by the Taxpayer’s Bill of Rights. The provider fee money pushes the state over its revenue limits, triggering taxpayer refunds. So Democrats for several years have pushed for the program to be reclassified into a government-owned business, or enterprise. College tuition and fees paid to the state’s parks are already classified that way.
Reclassifying the provider fee would take it out from under TABOR and free up millions of dollars for other priorities, most notably schools and transportation. The Colorado Department of Transportation estimates the state has $9 billion in unmet transportation needs.
In the agreement reached Thursday, and especially important to Republicans, the TABOR revenue limit would be reduced by $200 million, to keep the state on a tighter spending leash.
Rural schools would receive a one-time boost of $30 million in 2017-18, to be divvied up among the 147 school districts defined as rural by the state Department of Education. Another $20 million would be added to the state’s education fund in the two years after that.
The deal would put $1.88 billion into transportation projects, especially important since a major transportation bill died about two weeks ago. Twenty-five percent of those dollars would go to transportation projects for rural communities, defined as counties with populations of 50,000 or less.
Republicans got another big win out of the deal: a tax credit for small business. Currently, businesses pay a business personal property tax to counties, based on the value of property such as desks, computers and other personal property used in the business. The law exempts the first $7,300 from the tax, but under the agreement, that would increase to $18,000. The state would issue a tax credit, so counties won’t lose out on that revenue.
But the deal’s main provision, reclassifying the provider fee, is at its heart. And doing so will save as many as a dozen rural hospitals, according to the Colorado Hospital Association. Two of those hospitals are in Sonnenberg’s 11-county district, although he has never identified which two.
Under the 2017-18 budget, sent to the governor last week, hospitals faced a cut in the provider fee of $264 million. Double that, with the federal match, and the pain was expected to be $528 million, which would force some to close and others to make critical cutbacks on staff and services. The agreement reverses those cuts.
The agreement also lowers the amount charged by the Department of Health Care Policy and Financing for administering the program, from 5 percent to 3 percent, The savings, about $56 million, would go to the hospitals and would come with the federal match.
State agencies also would be required to submit a budget to the governor’s budget director for 2018-19 showing a 2 percent across-the-board cut, although Guzman has said the governor is not obligated to implement that cut.
The last sticking point was whether to require Medicaid patients to pay a greater amount for the services they receive. Democrats initially balked at any increase, while Republicans insisted on an increase that would raise the copays to the maximum allowed under federal law.
The agreement settled on doubling the copays — for prescriptions, that would go from $1 to $2; for outpatient services from $2 to $4, although those amounts vary by income. The copays do not apply to children or pregnant women. Copays are capped, and some have pointed out that this means only that Medicaid patients will reach those limits faster.
“Each side had different ‘asks’ going into this, and I think because we’re both not smiling really big, we both love and hate pieces of this — which is exactly where it should have ended up,” Rep. Jon Becker told reporters Thursday.
The agreement, in the form of an amendment, must be approved by lawmakers in both the House and Senate before Wednesday, when the General Assembly is scheduled to adjourn for the year.
School finance is priority in last days of session
With just days left remaining in the 2017 session, lawmakers are scrambling to finish up more than 100 bills. Among the top priorities: resolving a conflict over the school finance act.
The bill, which was introduced April 19, would provide $6,546.20 per-pupil funding, an increase of 2.8 percent over 2016-17. But the measure was hijacked by Senate Republicans in an education committee hearing on April 27 to insert another bill that House Democrats are holding up in the House.
The other measure, SB 17-61, would require school districts to share property tax revenues with charter schools.
Currently, charter schools receive the same state funding for their students, but most don’t get a share of local property taxes, known as mill levies. They argue that because they get less funding, their per pupil dollars must cover costs for building or leasing facilities, and that their teachers get paid less.
But Democrats point out that charter schools are largely freed from transparency and a long list of other state and local school district requirements that traditional public schools must follow, such as employing licensed teachers.
Speaker of the House Crisanta Duran of Denver has refused to allow the bill to receive a hearing in the House, so Republicans’ counter-move was to insert the charter school language into the school finance act.
Democratic Rep. Brittany Pettersen of Lakewood, who is seeking the Democratic nomination for Congressional District 7 (Jefferson County), said this week she may attempt to strip out the charter school language and run a separate bill. She chairs the House Education Committee.