Colorado’s rural hospitals sacrifice most in proposed budget
March 26, 2017
DENVER — Colorado's rural hospitals would sacrifice the most under a balanced budget proposal for the upcoming fiscal year that will be introduced in the Legislature next week — though another pending bill could help fix that.
To offer a balanced general fund budget, the Joint Budget Committee had little option but to cut the amount the state's hospitals receive under a federal matching grant program that supports their operations, Democratic Rep. Millie Hamner, the panel's vice chair, said Friday.
To get those federal grants, hospitals have to make payments to the state. But those state payments count as general fund revenue, and that revenue would have surpassed limits set by the Taxpayer's Bill of Rights, the 1992 constitutional amendment that requires refunds of any taxes above the limit.
The committee's proposal reduces hospital revenues by $264 million — nearly the amount of money above the TABOR limit that was projected by legislative economists for the 2017-18 fiscal year. Those fees could have reached $865 million without the limits, according to a legislative forecast released this week.
"Here we are refunding $284 million but needing $385 million to fund our schools," Hamner said of the task that faced the committee.
The fix eliminates taxpayer refunds in 2018 that would have averaged between $15 and $30. But it also could force rural hospitals that frequently serve uninsured patients to reduce services or even close, said Republican Sen. Larry Crowder, who represents rural southern Colorado.
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"I have nine hospitals in my area. Northeastern Colorado has 11. The reality is that it's a question of distance," Crowder said. "If Johnny or Sally out in southeastern Colorado break their arm, you can imagine that with hospitals starting to close how far they'd have to drive to get that fixed."
"In our metro areas, hospitals are big business — all of your specialty care, everything in the world you've ever heard of," Crowder said. "In rural Colorado, all we're looking to do is get stabilization."
Both lawmakers said they were looking forward to pending legislation by Republican Sen. Jerry Sonnenberg, who represents rural northeast Colorado, to help far-flung hospitals. Sonnenberg has suggested his bill would exempt those hospital payments from TABOR to restore critical hospital funding and tackle rural transportation needs.
Budget-writers were able to increase state public school funding by $335 million, or $241 per student, despite what Hamner called the "double whammy" of reduced local funding — between $130 million and $150 million — caused by another constitutional amendment that's reducing residential property tax collections this year.
Hamner noted that the state's share of K-12 spending has risen from about a third of the total to two-thirds over the past decade. "If we had been able to maintain the local share where it was 10, 15 years ago we would not be in the situation we are now," she said.
The budget proposes only $79 million for transportation, though lawmakers are working on a bill to create a sustainable revenue source that could deliver hundreds of millions of dollars annually over the next two decades. And it increases Medicaid spending by $145 million, largely to meet the needs of Colorado's aging population.
Budget-writers worked under the assumption that any changes — especially in health care — coming under the Trump administration can be addressed in a special legislative session that would be called by the governor, Hamner said.
By law, legislators must reach a balanced budget each year. The committee's budget proposal will be introduced Monday, and the GOP-led Senate gets the first shot at considering it. The 2017 session ends May 11.