What Issues Important to Business will the Colorado Legislature Take Up in 2016?

The Colorado legislature begins its 2016 session on January 13, and will meet until early May.  During that time, it will address a long list of important issues:  passing a state budget of more than $11 billion, funding education, health care, prisons, and other state services.  The legislators will also consider bills covering a wide range of subjects, including matters of interest to the business community.  What are some of the more important issues, and what can we expect?

Earlier this week I attended the Denver Metro Chamber of Commerce breakfast on the 2016 legislative outlook. Speakers included the Republican and Democratic leadership of both state houses.  While their remarks were somewhat general, a few themes did emerge:

Hospital Provider Fee

The hospital provider fee will be a contentious issue.  The fee raises some $500 million each year and is matched by federal funds. Currently, the amount collected is included in calculating the TABOR cap, which will trigger refunds to taxpayers.  Governor Hickenlooper and Democrats in the legislature would like to move this fee out of the budget’s general fund and into an enterprise fund.  Doing so will remove the hospital fee revenue from the TABOR calculation, which will free up revenue that would otherwise have to be refunded to taxpayers under TABOR.

Republicans in the legislature oppose moving the provider fee for a number of reasons. They argue that moving the fee violates the spirit of TABOR and will allow the legislature additional taxpayer money to spend. Opponents also argue that the legislature does not have the authority under TABOR to make the proposed changes.

The governor wants to move the hospital provider fee’s funds because the state budget will actually have to be cut this year (due to TABOR), despite increased revenue resulting from Colorado’s strong economy.  In addition, the governor and many Democrats in the legislature argue that we need to increase spending on transportation infrastructure, which has received very little additional funding in recent years.  With the two houses of the legislature split between the parties, the outcome of this issue will remain in doubt for now.

Construction Defects

Another issue which has failed to pass the legislature in recent years is reform of the state’s construction defects law.  The issue here is that condominium owners and homeowners’ associations can file class action lawsuits claiming defects in constructions. Class action suits can be very expensive to defend, so real estate developers have largely stopped building condominiums.  With rising real estate prices in the Denver area, this leaves a gap in the housing market, especially for first-time buyers who may not be able to afford a house but want to own property.

While the legislature has not passed a reform bill, the three largest cities in Colorado have addressed the defects issue (Denver, Aurora, and Colorado Springs, combined population nearly 1.4 million).  Since condos are often found in larger cities, isn’t this a reasonable solution?  Not really, because the ordinances in each city are different, meaning developers must deal with a patchwork of requirements. Supporters of reform favor a statewide solution, allowing developers to work within a single regulatory structure.

Higher Education

Just a couple of decades ago, the state funded 25% of public institutions of higher education. It is now down to 7%, due to requirements for funding K-12 education and health services.  Public institutions, from the University of Colorado to local community colleges, have made up the shortfall by increasing tuition and fees to students, which has made it more difficult for many lower income families to afford college.

Having a post-secondary degree or certificate is becoming more and more important in Colorado’s 21st century economy.  If students cannot afford to earn those credentials, companies will find it harder to recruit qualified employees.  Local Chambers, including the Denver Metro Chamber, the North Metro Chamber and the South Metro Chamber, want the legislature to find ways to avoid further cuts to higher education funding, although this will be a challenge given the other spending requirements and the hospital provider fee’s effect on the budget.

Conclusion?

Predicting what the legislature will actually accomplish is never easy, but addressing these and other important issues will affect businesses throughout Colorado.