Colorado Governor OKs Bill Exempting Hospital Fee From Tax Policy

By Tripp Baltz

Colorado Gov. John Hickenlooper (D) signed a bill ( S.B. 267) repealing the state’s hospital provider fee and replacing it with a new enterprise exempt from the spending limit of the state’s Taxpayer Bill of Rights.

Democrats touted the bill, signed by the governor May 30, as a bipartisan measure that will save the state’s hospitals from $528 million in budget cuts and address several state budget shortcomings.

“It took a lot of work to get to where we are today, but it was time well spent because all Coloradans will benefit,” said Rep. KC Becker (D), House Majority Leader and co-sponsor of the bill, in a statement. “It will literally save lives by preventing dangerous cuts in health care services. It will also allow us to tackle some of our most badly needed transportation projects and help seniors and small businesses.”

Federal Match

The previous program, implemented in 2010, assessed a fee not to exceed 6 percent of net patient revenue on hospital providers. The revenue was then matched by federal dollars, increasing hospital reimbursement by $1.4 billion through September 2016 with no expense to the state’s general fund.

The money generated by the program counted as revenue for purposes of TABOR, a constitutional amendment approved by voters in 1992 that limits annual state and local government spending to the rate of inflation plus the rate of population growth. Revenue collected over the TABOR limit must be returned to taxpayers. TABOR also requires voter approval for tax increases.

Recategorizing the provider fee program as the Colorado Healthcare Affordability and Sustainability Enterprise (CHASE) within the Department of Healthcare Policy and Financing exempts it from TABOR, relieving pressure on other areas of Colorado’s budget. Opponents of the move said it was bad tax policy, and they decried S.B. 267 as being laden down with numerous pet policy priorities. The measure provides new funding for transportation projects, K-12 education, small business owners, and seniors.

Bipartisan Votes

The bill was approved 25-10 in the Senate and 49-16 in the House with bipartisan support.

House Speaker Crisanta Duran (D) said the bill isn’t a long-term solution, “but it is a meaningful step to begin to address the needs of our growing and increasingly prosperous state.”

The bill will provide for $100 million to buy nearly $2 billion in certificates of participation to start to chip away at $9 billion in needs for Colorado’s transportation system and directs $30 million to rural schools. It also reconstitutes the senior homestead property tax exemption as the first rebate to taxpayers in years when TABOR rebates are mandated.

“It is incredibly gratifying to see that after so much work, discussion, and compromise, this important bill is finally law,” said Sen. Lucia Guzman (D), Senate minority leader and a co-sponsor of the bill.

Other Changes

The measures addresses several other areas of tax policy, including:

•  increasing the sales tax on recreational marijuana to 15 percent from 10 percent effective July 1;
•  replacing the existing and temporary income tax credit for business personal property taxes with a more generous permanent income tax credit for business personal property taxes paid on up to $18,000 of the total actual value of a taxpayer’s business personal property; and
•  permanently reducing an existing FY 2017-18 spending cap by $200 million and specifying that the base amount for calculating the cap for all future state fiscal years is the new lowered cap, adjusted for inflation.

To contact the reporter on this story: Tripp Baltz in Denver at abaltz@bna.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bna.com

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