A competing transportation proposal, a new look at the hospital provider fee and other things to watch in the second half of the Colorado General Assembly

The 2017 legislative session has crossed the halfway mark. The next two months will determine if this session is a success or failure.
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Colorado Governor John Hickenlooper walks down the Capitol steps after his annual State of the State Address. Jan. 12, 2017. (Kevin J. Beaty/Denverite) state of the state; copolitics; politics; governor john hickenlooper; capitol; kevinjbeaty; colorado; denver; denverite;

Colorado Governor John Hickenlooper walks down the Capitol steps after his annual State of the State Address. Jan. 12, 2017. (Kevin J. Beaty/Denverite)

The 2017 legislative session has crossed the halfway mark, and Colorado's representatives and senators are now staring down the barrel of the issues that will make this session a success or failure.

Legislators started the session saying that transportation funding and construction defect litigation reform would be top priorities. As they enter the second half of the session, lawmakers have a transportation funding compromise -- one that asks voters to approve a 0.62 percent sales tax increase to support $3.5 billion in bonding -- to debate, and construction defects legislation similar to efforts that failed in previous years is being taken up by the House.

And there are hints that a key Democratic budget reform -- reclassification of the hospital provider fee -- might not be dead after all. 

Construction defects reform has passed the Senate.

Assistant Minority Leader Rep. Cole Wist, a Centennial Republican, said he was asked if he was "cautiously optimistic" about a reform bill passing this year, and he said he was optimistic, no modifier needed.

That's if SB 156 can make it to the floor of the House.

"The reason this issue has not gotten resolved over the past five years is because special interest politics has hijacked this process," he said. "We have to decide if we’re going to side with Coloradans or whether we’re going to allow special interest politics to hijack this process. The Senate had bipartisan support for SB 156. Five Democrats voted for the bill. We believe there is bipartisan support in the House. It has to get to the floor for that vote to happen. We’re very encouraged. We’re optimistic."

SB 156 passed the Senate earlier this month, and it hasn't been assigned to a committee yet in the House. Republicans are hoping that it doesn't land in a "kill" committee. While reiterating her commitment to construction defects reform, Speaker of the House Crisanta Duran has been hesitant to endorse mandatory arbitration, which SB 156 includes.

Several other bills that address separate aspects of construction defects litigation are also working their way through the legislature. There's SB 45, which has Duran and Senate President Kevin Grantham as sponsors, which would expedite the process of assigning liability to different parties and theoretically reduce insurance costs, and there's SB 157, which would require additional notification and voting by members of a homeowners' association before a lawsuit can be filed.

Would an approach that doesn't include mandatory arbitration get the job done and jump start the condo market in Colorado?

"We are open to all suggestions. It’s that opponents of construction litigation reform are not open to all suggestions," state Sen. Jack Tate, a Centennial Republican, said Monday.

Gov. John Hickenlooper said last week that he expects that any legislation that passes the Republican-controlled Senate will need amendments to pass the House, but he kept it pretty high-level when it came to the substance of a compromise

"I want to get a compromise where both sides feel heard and they're willing to make compromises to allow more housing to get built, more condominiums to get built," he said. "If homebuilders don't think this thing does any good and they're not going to do more building, we probably haven't gone far enough. If the other side feels we're not going to be able to protect the rights of people who purchase condominiums, then we've probably gone too far. There's got to be a middle ground."

There will be competing transportation measures.

The compromise legislation, the long-awaited "deal" between House Democrats and Senate Republicans, that was introduced last week, calls for a 0.62 percent sales tax increase to run for 20 years. That tax increase, as well as $50 million a year in existing revenue, would support a $3.5 billion bonding program that works through CDOT's priorities list. It would also support money for transit and local communities. That bill faces a lot of opposition from Republicans who don't like the tax increase and want to look deeper at the existing budget to find money for roads, even if it means a smaller funding package.

Because the tax measure would have to go to the voters before it could be implemented, it won't affect the budget that lawmakers adopt this year. But with so much interest from Republicans in finding an alternative -- and the possibility that a referred tax increase won't pass -- transportation funding is likely to be part of the budget discussion.

Senate President Pro Tem Jerry Sonnenberg, a Sterling Republican, is drafting an alternative proposal -- he called it "supplemental" but it doesn't really mesh with the compromise tax increase bill -- that would take the money that currently is transferred each year from the general fund to the CDOT under Senate Bill 228 and use a portion of it to support about $1.3 billion in bonding on transportation. Additional 228 money would go to increase education funding.

Sonnenberg said another key difference in his bill is that instead of working entirely off the CDOT priority list, he would direct more money toward maintenance in rural areas.

"I have bridges that need to be fixed. I’m looking at boosting maintenance," he said.

Sonnenberg said he "applauded" Grantham and Senate Transportation Committee Chairman Randy Baumgardner for bringing forward solutions and expressed skepticism toward the idea that transportation funding can be solved solely by finding "efficiencies" in the state budget. However, he doesn't think the compromise legislation does enough for the parts of rural Colorado that he represents.

"(This bill) is a higher prioirty for me," he said. "I’m not sure it will be a higher priority for the caucus."

The hospital provider fee rides again.

Republican concern about the proposed tax increase could lead to a new openness to discuss an issue many Democrats seemed prepared to drop.

Last year, reclassification of the hospital provider fee to an enterprise fund was a top priority of Democrats, but it failed. The hospital provider fee is charged to hospitals, gets matched with federal dollars and goes back out to hospitals to cover uncompensated care and other costs. The hospital provider fee also causes the state budget to hit limits imposed by TABOR much quicker than it otherwise would and thus requires lawmakers to make cuts to other areas.

One way the governor has proposed balancing the budget is by reducing the amount of the hospital provider fee that's collected in the first place, but that means forgoing a corresponding amount of federal matching funds and requiring hospitals to do without millions of dollars.

At the start of the session, Senate Minority Leader Lucia Guzman, a Denver Democrat, said she still had hopes of reclassifying the hospital provider fee, but neither the governor nor Duran seemed to be putting a lot of stock in a change there as long as Republicans controlled the Senate.

But Sonnenberg said Monday that it may make more sense to look at putting the fee in an enterprise fund, where it won't count against the limit, than to raise taxes.

"It’s definitely a challenge when you have federal money coming into the state and you have unintended consequences for our own budget because of the federal dollars," he said. "... If they’re going to use the hospital provider fee and more cuts to hospitals to balance the budget, we’re going to have to seriously look at that, and it probably makes more sense than a tax increase."

Last week, even before the roads tax proposal was announced, Guzman said she had been in talks with Republican leadership about the hospital provider fee, and she remained optimistic.

"Shift happens," Guzman said.

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