Why it matters to you: It impacts our state budget in a big way.
We’re here to help you understand what this fee is and how state accounting for this fee is impacting how we fund roads, bridges and schools—key items that will have a long-term impact on business and Colorado’s economy.
Something’s not adding up in the TABOR formula.
Over the past year, we’ve been talking about some real gaps in our budget to support education and transportation—by hundreds of millions of dollars. Although the economy is doing great, some provisions in Colorado law are misrepresenting how much revenue is coming into the state. As a result, we risk losing funding for education and transportation.
Why? Well, it starts with TABOR
TABOR is short for the Taxpayer’s Bill of Rights. It was put in place back in 1992 and did a few things:
- Aimed at curbing the growth of government, TABOR creates a population-plus-inflation formula to guide state spending and provides a rebate to taxpayers when state revenues come in over the forecast amount in that formula. In years where the revenue is below, no rebates come and often services are cut.
- Requires voters to approve all proposed state and local tax increases.
In the aftermath of the Dot Bomb, communities were having a tough time. Many took a “timeout” from TABOR. In 2005, the state followed suit and asked voters if the state could retain revenue in excess of the TABOR limit for five years, essentially resetting it.
Fast-forward to 2009. Hospitals worked with the private, nonprofit and public sectors to pass the hospital provider fee. In 2010, hospitals began paying a fee—the hospital provider fee—and those dollars were matched by the federal government and then used to expand health care coverage and increase Medicaid reimbursement rates. Today, it’s $689 million in fees, and more than 400,000 people have received insurance coverage as a result.
Here’s the problem: We’re counting money we shouldn’t towards the TABOR cap.
The hundreds of millions of dollars collected for the hospital provider fee are being counted as state revenue, falsely inflating the actual dollars coming into the state. When we hit the TABOR cap, it triggers a refund to taxpayers, which results in less general fund dollars for education. It also triggers a provision in earlier law that means we actually lose all or some of the general fund dollars set aside for transportation.
Imagine you’re saving for something—maybe a new road bike. It’s like counting the money in your road bike savings account in your monthly personal budget—even though you won’t spend that money on anything other than a new road bike. It’s counting money that is collected by a specific group of businesses that can’t be spent on anything other than what is outlined by law—in the case of the provider fee, that’s insurance coverage and provider reimbursement.
Now, we’re at a crossroads. At a time when we rank 48th for K-12 funding and have crumbling roads and bridges, we can’t fund those needs because the formula is counting dollars from the hospital provider fee, falsely inflating revenue and bringing us alarmingly close to the cap.
But, there’s a simple solution the hospital provider fee should be in a separate account.
The hospital provider fee should have been classified as an enterprise fund when it was established. These are accounts for organizations that provide a government service in exchange for the fee and that have no power to tax. We should correct this error.
Moving the hospital provider fee into an enterprise fund more closely aligns the state budget with the funding formula established by voters in Referendum C in 2005.
We think this is the right—and constitutional—way to categorize the hospital provider fee without impacting the TABOR formula, taxes or Coloradans’ right to approve tax increases.
We have advocated at the Capitol over the past year to reauthorize the hospital provider fee into one of these funds. Other folks agree: The governor, two attorneys who have advised Colorado governors of both parties and nine editorial boards from newspapers around the state all say the same thing. And, most important, Attorney General Cynthia Coffman and former Attorney General John Suthers both agree this is a change that is constitutional.
We know this change won’t solve long-term funding challenges, especially as the state continues to grow. But, we know it’s a start and it provides some extra time to work hard on innovative solutions.
How can you help? Not everyone at the Capitol agrees. Lend your voice and contact your
state senator at http://bit.ly/1OcyiqJ or visit fixtheglitch.org to share your support.