Colorado Medical Society

State budget considerations

Tuesday, January 24, 2017 01:23 PM

Colorado Gov. John Hickenlooper submitted his executive branch budget request for fiscal year (FY) 2017-18 on Nov. 1, 2016.

Status of Colorado economy
Colorado’s economy continues to be among the best performing in the country. A recent economic forecast from the University of Colorado predicts that the state’s economic expansion will continue in 2017, led by hiring in construction, tourism and health care. Low energy and agriculture prices will temper the growth, however.

Colorado budget process
The governor makes his initial budget request in November for the fiscal year that starts the following July 1. The General Assembly, acting through the six-member Joint Budget Committee (JBC), will review each executive agency’s request and by early April will recommend a funding level for each line item in 20 state departments. The recommended budget will be based on available revenues, as Colorado is required to have a balanced budget.

Budget gap
In preparing his budget request, Gov. Hickenlooper was constrained by the difference between required expenditures and available revenues. Current statute requires the following expenditures:

Against these $926 million in expenditures, the executive branch economists project available new revenue of $426 million in new general fund dollars; that leaves a budget gap of $500 million.

To address this gap, the governor proposes to take the following actions.

Health care
What does Gov. Hickenlooper recommend for health care in the budget request? One request is to increase the reimbursement for physicians at the University of Colorado Health Sciences Center – because those doctors, in a public medical school, provide an essential source of primary and specialty care for Colorado’s Medicaid population.

Frequently asked questions about the budget
1. Where does all of the marijuana tax money go?

One recurring question is what Colorado does with all of the tax money it collects from marijuana sales. In FY 2016-17, Colorado is expected to collect approximately $105 million in tax revenue from the sale of legal and medical marijuana, and this revenue is allocated to three broad categories.

As you can see, those categories total $102 million; there is not a lot of state “profit” from legal marijuana.

2. Can the Hospital Provider Fee be changed?

Colorado established the Hospital Provider Fee to increase revenues available to treat indigent patients. Hospitals pay the state, which in turn uses the revenues from the hospitals to draw down additional federal Medicaid funds to be returned to the hospitals. However, in Colorado, unlike the 49 other states, we have the TABOR revenue limit, and the moneys given by the hospitals to the state count against the state’s revenue cap. In the last two legislative sessions, there have been efforts to designate the Hospital Provider Fee as a TABOR enterprise but these efforts have failed.

What the legislature can do is restrict the revenues collected from the hospitals. That’s what happened in FY 2016-17 and it is part of the governor’s request in FY 2017-18.

3. What about changes at the federal level?

Given the election and inauguration of President Donald Trump, we can expect to see a lot of changes in federal health care. The timing of these changes is unknown, but changes to the Affordable Care Act and Medicaid are likely.