No new federal COVID-19 dollars. Record inflation. State services stretched thin by a growing population.
Those are the circumstances under which the Colorado legislature’s Joint Budget Committee this year drafted the $38.5 billion state budget that takes effect July 1.
“It’s not a sexy budget,” said state Sen. Rachel Zenzinger, an Arvada Democrat who chairs the JBC. “It’s pretty conservative.”
Sen. Barbara Kirkmeyer, a Brighton Republican who sits on the JBC, called next year’s spending plan a “get ’er done budget.”
But it’s still packed with plenty of notable items. Here’s what you need to know about the budget — being debated by the legislature right now — and how it may affect you:
An 8.9% general fund increase — but some big asterisks
The general fund portion of the fiscal year 2023-24 budget, which is the money state lawmakers have discretion over, is up 8.9% over the current year to $14.7 billion. But Zenzinger said about two-thirds of that new spending is going toward Medicaid, the state and federal program that provides health insurance to low-income people.
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Of the Medicaid dollars, $442 million will be allocated to replacing federal matching funds that are going away as the Biden administration ends the COVID-19 public health emergency and eliminates the enhanced federal Medicaid match rate. Another $396 million was set aside to handle projected increases in Medicaid enrollment because of a slowing economy, as well as for a 3% increase in health care provider rates.
Zenzinger said the rest of the increase is going toward ensuring the state has a 15% reserve in preparation for an economic downturn and to account for inflation’s effect on the state’s ability to offer government services. The Department of Corrections, for instance, will get $275,000 to cover the increased cost of food served to prison inmates, as well as $1 million for a jump in the cost of utilities.
The JBC also set aside $30 million for the legislature to spend on miscellaneous bills and new, ongoing programs. For the current fiscal year, it was more than double that amount.
Overall, the budget is smaller than it was last year when you take into consideration the federal American Rescue Plan Act dollars the state had to spend in the current fiscal year, which ends June 30.
Keep in mind: The Colorado legislature is constrained in how much it can spend each year by the Taxpayer’s Bill of Rights, which caps government growth based on population increases and the rate of inflation.
While Republicans complain that the state budget is growing too large, it’s TABOR — which conservatives adore and Democrats generally loathe — that really determines the size of the budget.
It’s still up to lawmakers — mainly the Democratic majority in the House and Senate — how the money is spent, but TABOR is the real deciding factor of the top-line number.
Senate Minority Leader Paul Lundeen, R-Monument, said during budget debate in the Senate last week that he wishes the legislature would stop creating new programs and offices and focus its money on core government responsibilities: education and roads.
“I will be a ‘no’ vote, not in strenuous objection to this budget but in a call of a pursuit of a policy horizon that honors first our constitutionally mandated requirements and honors first that which should be our primary priority: the full funding of public education in Colorado,” he said.
One other thing to keep in mind: TABOR requires the state to refund any money it collects over the cap. Next fiscal year, that’s expected to be $2.7 billion.
The inflation rate used to calculate the cap, however, lags current conditions, so state budget writers say while the amount of money they have to spend appears large, it’s not keeping up with economic conditions that have increased the cost of governing.
The notable line items
There are a handful of line items in next year’s budget that could be described as (somewhat) big-ticket items.
- $26 million to purchase a second Sikorski S-70 Black Hawk helicopter that will be converted into a “Firehawk” that can battle wildland fires. The legislature set aside money two years ago so Colorado could buy its first Firehawk. The chopper still hasn’t been put in service, however. The budget also sets aside another $1.7 million to operate and staff the new helicopter.
- $3.2 million for Senate Bill 13, which would help the Division of Fire Prevention and Control investigate the causes and origins of fires, with a priority on investigations into wildfires.
- $15 million toward a new Office of School Safety in the Department of Public Safety that will house a variety of existing efforts to prevent and respond to tragedies at K-12 schools. That represents about $9 million in new spending that will help expand some of those existing initiatives. The Senate also passed an amendment allocating an additional $10 million in new spending for a grant program in the new office.
- $7.3 million to account for a forecast increase in the state’s prison population.
- $221 million set aside for forthcoming property tax relief legislation, as well as other housing-related bills.
- $115 million to implement Proposition FF, a ballot measure passed by voters in November that raises taxes on wealthy Coloradans to pay for universal free lunches in public schools. The money will be repaid to the general fund once the tax collections begin.
- $120,000 to respond to the decision to disband Tri-County Health Department and to help Douglas, Arapahoe and Adams counties stand up their own public health agencies.
- $1.6 million that includes funding to hire 14 people to represent the state in Colorado River water negotiations.
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State Sen. Jeff Bridges, a Greenwood Village Democrat who sits on the JBC, said one of his favorite line items in the budget is a $416,000 allocation to hire five people in the Department of Veterans Affairs to help connect Colorado veterans with the benefits they earned.
“This is an investment to help veterans get the benefits they’re entitled to — that they’ve sacrificed for — that the Department of Veterans affairs makes nearly impossible to access,” Bridges said, calling the agency a “labyrinth.”
An item that would likely go overlooked? A $9 million spend on a technology building at Adams State University in the San Luis Valley. Without it, students at the Alamosa school could be left without internet access, Bridges said.
State colleges, universities can raise tuition by 5%
Colorado Gov. Jared Polis wanted the budget to cap the amount state-run colleges and universities can raise undergraduate, in-state student tuition at 4%, but the legislature decided on 5% with the exception of the University of Northern Colorado, which will be able to increase tuition by 6%.
Zenzinger said the state’s higher education institutions had an 11% gap in their mandatory costs and that even with allowing for such a large tuition increase they will only have enough money to close the gap at 10.1%.
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“My biggest regret (about the budget) is that we just were not able to close that gap fully,” she said.
Zenzinger said the JBC was trying to meet schools’ financial needs without pricing students out of higher education. If the legislature were to allocate enough money to colleges and universities to cap tuition at 4% it wouldn’t have had any money left for new legislation and ongoing programs.
Total state funding for higher education in the budget was increased by $147 million to $1.4 billion.
K-12 education funding
The fiscal year 2023-24 budget includes $485 million more in K-12 education funding than in the current year, which represents a $900 per-pupil increase.
The budget calls for a 5.7% increase in base education spending to $8.9 billion and an 8.4% increase in average per-pupil spending to $10,404, Chalkbeat Colorado reports.
There’s no money in the budget, however, for buying down the budget stabilization factor — sometimes referred to as the negative factor — which is a Great-Recession-era scheme that allows the General Assembly to allocate to schools each year less than what they are owed. The IOU persists today.
That’s because there’s enough money in the State Education Fund to buy down the deficit. And that will happen in the School Finance Act that will be debated later on in the legislative session.
(The State Education Fund, which is expected to be a rainy day pool of money to help the legislature fund K-12 education, is filled with income tax revenue. The fund gets 0.33% of taxable income, meaning that it rises and falls with the economy and as Coloradans’ pay increases or decreases. There’s expected to be more than $1 billion in the fund next fiscal year.)
“For the first time in a very long time we don’t need to use general fund money to effectuate that buy down in the budget stabilization factor,” Zenzinger said. “That will come from the State Education Fund this year. That fund has grown and grown and grown and we’ve tried not to tap it. But now we’re in a situation where we need to spend it down.”
The budget stabilization factor is roughly $321 million. Zenzinger says the plan is for the JBC to buy it down by either half or fully in the school finance act.
Zenzinger said there are also two things happening that are reducing how much it costs for the state to run K-12 schools: an increase in property values driving up local property tax revenue and a decrease in student enrollment.
“The circumstances are different (this year), the context is different,” she said.
Startup money for universal preschool and the Behavioral Health Administration
Next year’s budget also contains money to start up several new departments and initiatives launched by lawmakers in recent years, including universal preschool and the Behavioral Health Administration.
Starting next school year, 4- and 5-year-olds will be eligible for a minimum of 15 hours per week of preschool with no out-of-pocket costs for their parents. The budget has $322 million to get that up and running, half of which is a reallocation of existing funds while the rest is coming from tax revenue generated by Proposition EE, the 2020 ballot measure raising nicotine and tobacco taxes.
The budget also has $2.5 million to incentivize preschool providers to be a part of the program.
When it comes to the Behavioral Health Administration, which was created by the legislature in 2021, there is $1.9 million in the budget for staffing, $5 million for community providers and $2 million for children’s programs. The total amount the administration is slated to get is about $270 million.
State employee pay raises
The budget provides a 5% raise to state employees, with an additional 3.5% pay boost for state employees who work at 24/7 facilities, like the Mental Health Institute at Pueblo. It’s tough to quantify how much money that will cost because it affects various agencies and departments differently.
Additionally, any state worker who makes minimum wage will have their hourly pay bumped up to $15 an hour.
There is also $7.3 million set aside in the budget to increase pay for Colorado State Patrol troopers.
Finally, the budget includes $9 million for the Department of Corrections to be spent on $1,000 per month housing stipends for 1,133 staffers through February 2024. The money will be targeted at DOC staff serving in the Buena Vista, Sterling and Limon correctional facilities.
CORRECTION: This story was updated at 9:10 a.m. on Monday, April 4, 2023, to correct a description of the budget-stabilization factor. It was adopted in response to the Great Recession.