State Budgets

State of the State: Colorado

Despite good intentions, the big-spending agenda put forth by the governor only pays lip service to the trailblazing which made Colorado great.

Governor John Hickenlooper wasted no time Thursday evening demanding more dollars be squeezed from the wallets of Colorado taxpayers. In his remarks, the governor has this to say:

Talking about the hospital provider fee on the second floor of the Capitol is about as popular as the Oakland Raiders. BUT it’s a sensible way to solve some of our problems, though it won’t solve all of them. Let’s see if we can take a fresh look at the hospital provider fee itself.

The hospital provider fee is a fee of up to 6 percent imposed on net patient revenues received by hospital providers. Under ObamaCare, the federal government matches revenue from this fee dollar for dollar. It’s the governor’s end run around a technical tax hike, thus avoiding the protections under Colorado’s Taxpayer Bill of Rights (TABOR) which requires approval by voters for spending in excess of the rate of growth of inflation plus population or any tax revenue increases.

The governor’s rhetoric assumes agreement exists on the capacity of the fee to “solve some of our problems.” If that “problem” is a necessity to expand state-funded health care to include an ever-broadening percentage of the population, then he is correct. Already, those earning far above the poverty line can now receive state-funded healthcare through Health First Colorado and the Child Health Plan Plus. But if affordability for health services for ALL Coloradans is a concern, increasing-or maintaining- this fee exacerbates the looming problem of upward spiraling costs.

Stupendously, the governor claimed, “We can free up the money we already have, from existing revenue, to begin building the infrastructure we need to support our growth.”

How does raising the fee result in freeing up “money we already have?” By the governor’s logic, the inducement of federal matching dollars against the fee will alleviate the need for increasing other “taxes” to fuel the spending on other area. But regardless of whether this hospital provider fee is classified as just a “fee” or a tax, the effect is the same—a further increase in the cost of healthcare for Coloradans. Even if $1 billion in hospital fees resulted in $1 billion of additional federal dollars (and thus $1 billion less in other taxes imposed), the fact remains the same—the fiscal burden on Colorado taxpayers increased by another billion dollars.

Considering the potential repeal and replacement of Obamacare, the legislature would be wise to resist the call to increase this financial burden under the hopes of receiving federal matching dollars.

Governor Hickenlooper turned next to infrastructure development. “Over the next decade, Colorado has $9 billion dollars of unmet transportation needs, and the need will only grow.” He claimed “we’re already squeezing every penny out of our transportation revenue but efficiencies can only get us so far… With the gas tax unchanged since 1992, more fuel efficient cars and normal inflation. It’s basic math. It’s a funding problem. We’ve had this debate for too long.”

But is lack of funding truly the impediment to Colorado quality roads? Reason Foundation’s 22nd Annual Highway Report ranks Colorado 35th in terms of highway performance and cost-effectiveness, far below Utah’s number 13 ranking. In fact, while the neighbor to the west jumped 14 spots over two years, Colorado sank by 6.

Diving deeper into the data, Colorado ranked 33rd in its disbursements per mile of $188,696. Colorado spent $46,845 per mile in maintenance-more than 38 other states. In addition, administrative costs also contributed to Colorado’s inefficiencies, with Colorado spending more per mile ($14,228) on these costs than 30 other states. For all this spending, a greater percentage of Colorado rural interstate (7.23 percent) is in worse condition than in 45 other states.

Greater stewardship in the use of taxpayer dollars rather than lack of funding appears to be the culprit. Yet the governor completely ignored these glaring statistics in his speech. Instead, he choose to present false alternatives, deriding those “who believe we can pay for our infrastructure through cuts along to “tell us who loses healthcare or what schools have to close to add a mile of highway.”

The governor may declare the only options to improved infrastructure are “new revenue, simplifying or replacing old tax streams, or a combination of both.” But this ignores findings which suggest significant spending inefficiencies erode the value of each transportation dollar spent.

Switching to energy, Hickenlooper claimed the following:

With the support of both Republicans and Democrats, we have quadrupled the amount of energy we get from wind and sun in recent year. Costs of these technologies are dropping like a rock–while the clean energy industry provides jobs to over 60,000 Coloradans.

What he failed to mention is much of this increase is due to the state-wide Renewable Energy Portfolio Standard (REPS). Under REPS, investor-owned utilities must generate at least 30 percent of their electricity from renewable sources by 2020.  In addition, the state mandates net-metering which forces utilities to pay market rates for excess solar energy produced from solar panels of customers regardless of whether energy can be utilized by the grid. A select group of parties benefit from the production and purchase of energy which could be generated through other means (such as utility-scale solar and natural gas) at a lower cost. Everyday workers suffer from higher prices. In fact, across the nine state Mountain region, only Arizonans pay more for electricity than Coloradans.

The governor glowingly recalled “in Colorado, we’ve always been trailblazers.” Yes, the early pioneers blazed trails across a land unencumbered by a heavy hand of bureaucratic overseers eager to seize for their own political ends the fruits of their labor. Despite good intentions, the big-spending agenda put forth by the governor only pays lip service to the trailblazing which made Colorado great. A further discontinuation of this environment so hospitable for the pursuit of dreams will demagnetize the allure this state holds for those seeking opportunity.

In Depth: State Budgets

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