In the summer of 2020, Colorado lawmakers were grappling with deep cuts to the state’s budget amid uncertainty about coronavirus and how the pandemic would impact the state’s economy.
Now, as they enter the 2022 legislative session, they have a very different and welcome challenge: deciding how to spend more than $2.6 billion in federal coronavirus stimulus dollars.
“It’s like having a completely separate budget,” said state Rep. Julie McCluskie, describing the scale and challenge of using the federal funds. The Dillon Democrat was recently appointed chair of the Joint Budget Committee, a powerful panel of lawmakers that writes the state budget.
The Colorado General Assembly received nearly $3.8 billion this year through the American Rescue Plan Act, the second federal coronavirus stimulus bill. The money presents a rare opportunity for lawmakers to dive into difficult-to-tackle issues like affordable housing and mental health, using one-time dollars outside the scope of the Taxpayer’s Bill of Rights, the state’s law limiting government growth.
Roughly $1.2 billion of the stimulus money was spent or allocated during the 2021 legislative session. The rest was set aside, and lawmakers created four task forces – made up of lawmakers, state officials and private sector experts — with the goal of using the remainder of the year to study how to spend the funds by 2026.
“We knew this was an unprecedented, historic opportunity and want to meet the moment and address structural issues we wouldn’t (otherwise) be able to address,” Senate Majority Leader Steve Fenberg, a Boulder Democrat, said.
The idea is to fund initiatives or partnerships that are “transformational” without creating new financial obligations that the state budget can’t sustain long-term.
“When you talk about behavioral health or homelessness, one-time investments are not going to be, in the end, very helpful. It’s not a short-term problem,” Fenberg said. “So we want to figure out partnerships – are there local matches to the money? Can there be a partnership where the state puts up money to build a facility, but a local county staffs it for the long term?”
Lawmakers and state officials have been talking for months about how to spend this money
The four task forces have been meeting since August to study how the stimulus money could be spent. Most of those panels will continue working through the beginning of January, just before the legislature reconvenes on Jan. 12 for its 2022 lawmaking term, to finalize their recommendations.
The task forces are:
- The Affordable Housing Transformational Task Force, which has $400 million to consider for projects related to housing affordability
- The Behavioral Health Transformational Task Force, which has $450 million to consider for initiatives related to mental and behavioral health
- The Task Force on Economic Recovery and Relief, which has $697 million to consider for initiatives to stimulate the state’s economy and provide relief
- The Student Success and Workforce Revitalization Task Force, which has $95 million to consider for initiatives focused on higher education and workforce development
Another $1 billion in the stimulus dollars is in a cash fund under the purview of the legislative budget writers to support long-term budget stability.
Lawmakers and officials serving on those panels have had wide-ranging discussions.
The behavioral health panel, for instance, has discussed ideas like expanding the number of emergency mental health beds available statewide. The committee has also talked about problems for low-income patients and the providers that serve them, as well as behavioral health treatment for people within the criminal justice system.
The workforce revitalization group has discussed creating grants for local and regional organizations to develop training programs to get more people into critical jobs.
“The idea is to take those dollars and let regional partnerships, higher education and local employers come together and invest in the needs they’re seeing in their part of the state,” McCluskie said.
A task force on affordable housing recently voted to recommend that most dollars for housing initiatives be devoted to flexible funds that local governments, nonprofits and other groups could leverage alongside their own dollars. The panel voted earlier this month to recommend that 37% of total stimulus dollars in their fund go toward loans to create new housing or maintain existing affordable units. The panel said another 37% of its dollars should go toward grants to nonprofit organizations and local governments.
They suggested that another 8.75% of the total should be dedicated to initiatives to help residents buy up mobile home parks or other housing communities, and another 10% on prefabricated “modular” housing communities.
Sen. Rob Woodward, a Loveland Republican, said while the affordable housing task force was dominated by Democrats and appointees from the Governor’s Office, he appreciated that private sector experts made up a subpanel that did much of the “heavy lifting” of identifying policy priorities.
Most of the ideas considered by the task force were good ones, Woodward said. But Republicans on the panel may submit a minority report to raise concerns that some of the recommendations, including funding for transitional housing for unhoused people, aren’t the most efficient use of the federal funds.
“When we spend a whole lot of money on very few people, does that lower the cost of apartments or homes?” Woodward said, citing discussions of a proposal to buy hotels in Denver and convert them into housing. “I’m not convinced that would have a long-term impact for most people in the state.”
Meanwhile, the panel focused on economic recovery and relief has a much broader task of targeting dollars to stimulate local economies. The task force convened a subcommittee of economists to study how different sectors of Colorado’s economy have fared during the coronavirus pandemic, and has discussed impacts on workers, tourism and agriculture and supply chain disruptions.
The task force recently began accepting proposals from its members on how to spend the remaining $697 million in stimulus dollars.
Lawmakers will also consider recommendations from Gov. Jared Polis on how the stimulus money should be spent. He included suggestions for the stimulus spending as part of his annual budget proposal, many which overlap with discussions among the task forces.
Polis’ proposal to spend stimulus dollars toward “missing middle” renters – households struggling to afford rent but that have incomes too high to qualify for other programs – has also been adopted as part of the affordable housing task force recommendations.
The governor’s recommendations for the stimulus funding also include:
- $200 million toward projects to tackle homelessness, half which would go toward local, competitive matching grants and $50 million toward a new recovery campus in Denver for unhoused people
- $35 million toward a residential facility for children with complex mental health needs
- $175 million in grants for local behavioral health projects
- $91 million for projects to help rural economies, including for broadband, water and sewer projects at state parks, and rural community colleges
- $100 million in stimulus dollars, plus $500 million in state general fund money, to restore the Unemployment Insurance Trust Fund and pay off a $1 billion federal loan. The aim is to reduce employer premiums.
Still a lot left to decide – and other federal dollars on their way
The governor’s proposals and task force recommendations will be the starting point for lawmakers. At the end of the day, it’ll be up to the whole legislature to decide how to allocate the stimulus money.
“It’s not going to be a specific roadmap on how to spend the money — there will be further refining,” Fenberg said.
Once the legislature reconvenes, members of each party will hold caucuses to discuss which ideas to advance and submit their own proposals.
“Once those reports and recommendations are in hand, then we’re going to have an opportunity as a legislative body, and in partnership with the governor and those other groups, to decide how we’re going to invest these funds,” McCluskie said.
Colorado is also expecting billions in federal funds from the $1.2 trillion bipartisan infrastructure law that President Joe Biden signed in November. It will likely be months before state officials and lawmakers know how the final dollars will be distributed, although some federal agencies have released details in recent weeks.
The Environmental Protection Agency earlier this month, for instance, announced more than $121 million in funds from the infrastructure package will go to Colorado to fund projects related to drinking water and wastewater. Last week, the U.S. Department of Agriculture also announced that $226.8 million will go toward projects in rural Colorado, including $26.8 million for work in Las Animas, Otero, Routt and Weld counties.