Assessing the session: Difficult times, many tough decisions
With the current legislative session almost in the books, we wanted to step away from the action to offer an early assessment of some of the broad accomplishments and outcomes from the 2010 General Assembly.
Against a backdrop of severe economic strain, lawmakers were faced with many tough decisions. Tensions were high at times, but we think lawmakers worked together to take significant steps in many areas.
"These are challenging times, and that made for a challenging session," said Wade Buchanan, president of the Bell. "For the most part, especially on the budget side, legislators met those challenges by bringing a balanced approach to their deliberations.
"That said, even though the economy is recovering, there will be more painful decisions ahead with the loss of stimulus funds and one-time spending measures."
"It's not good for Colorado to lurch from one crisis to the next. This year, we essentially patched the roof on a house that has a weak foundation," he said. "We have structural problems in our budget, and the only way out is significant long-term fiscal reform."
Here is a recap of action in some key areas:
Budget: By the time lawmakers got to work on the Long Bill for 2010-11, Gov. Bill Ritter had already been through three rough rounds of budget cutting.
Even after those cutbacks, the prolonged recession made for many difficult choices for lawmakers, and in general, we believe they made the best of a terrible situation. There were cuts we did not like, but for the most part they were balanced, and many critical programs were spared during a time of great need.
We believe Gov. Ritter was right to propose balancing cuts to programs with reducing or eliminating tax credits or exemptions as a way to offset declining revenues. Simply put, we agree that, in these difficult economic times, revenue options ought to be on the table along with budget cuts.
By opening the discussion, the governor brought some balance to the budget debate and reduced, at least partially, the reliance on cuts to public services to balance the budget.
In testimony, we noted that lawmakers wrestle with spending decisions every year but do not routinely do the same with tax exemptions and credits that siphon off revenues. In essence, Colorado spends almost a quarter of General Fund revenues every year in tax credits and exemptions without any review or debate about priorities or whether they are effectively meeting public policy goals.
Unfortunately, a bill that would have required an annual review of a range of tax credits and exemptions was defeated this year. We hope there is continued discussion on this matter next year, because lawmakers will once again face difficult budget decisions. Colorado is recovering slowly from the economic downturn, but many one-time budget-balancing measures, such as stimulus spending, will end.
We were pleased that lawmakers created a performance budgeting process that will tie funding more closely to results, increase transparency and improve public accessibility to budget data.
Looking at it broadly, the extraordinary measures undertaken in this difficult session serve as a reminder that Colorado residents and our legislators must be willing to discuss and enact long-term fiscal reforms.
Education: Declining revenues, of course, had many ramifications for P-12 and higher education. Given the budget situation, we understood but were not happy about the unprecedented cuts to P-12 education.
Higher education governing boards were given greater latitude in raising tuition rates. We reluctantly supported this approach after the bill (SB 3) was amended to ensure that this will be only a temporary approach until a long-term, sustainable means of supporting higher education can be identified.
In the long run, we believe that cutting P-12 and higher education funding is detrimental to the expansion of opportunity in our state -- which again points to the need for fiscal reform.
On a more positive note, the legislature took several important steps to make it easier for Coloradans to pursue post-secondary studies and complete a degree by passing bills to require the creation of statewide transfer agreements in key subject areas; allow qualified core courses at non-public institutions to be included in the state's guaranteed transfer program; and permit two-year colleges to offer specialized degrees in certain subjects.
Payday lending: The third time was a charm. After failed attempts in two previous sessions, lawmakers passed a bill that will lower the fees and extend the terms on payday loans. The key element is a six-month minimum loan term, which will help to eliminate the cycle of debt that has trapped far too many Coloradans. While fees remain high, they will be cut by about 60 percent from current rates.
Enterprise zones: The legislature took a positive step toward improving the criteria for defining enterprise zones, requiring pre-authorization of zone tax credits and collection of better data on the use of these credits within enterprise zones. We believe it is sound fiscal management to determine whether these credits work as intended, and this change will help policymakers judge the effectiveness of these credits.
Our review of research has shown that enterprise zones have not been effective at encouraging economic development and job growth.
On the negative side, it appears lawmakers will defeat a proposal to limit for three years the amount in investment tax credits that could be claimed in enterprise zones. We thought this was a reasonable proposal, particularly at a time when these revenues are needed to balance the budget.
Constitutional reform: Lawmakers rejected two common-sense efforts to protect our state constitution and set the stage for long-term fiscal reform.
We start with the idea that the Colorado Constitution is the most important legal document in the state, and we believe that in recent years it has been amended more times than is wise or appropriate. Many of these amendments have had unintended consequences and several conflict with one another.
Lawmakers were asked to let voters create a constitutional review commission and to reform the process by which citizens initiate constitutional amendments. We believe both proposals were sound approaches to reform, and we hope that lawmakers will be open to further discussion next year.
Health: Lawmakers dealt with a number of health-related bills during the session, killing some that would have been harmful for opportunity in our state and passing others that will increase health care access and affordability for Coloradans.
One bill that passed, despite opposition from the Bell and other health care advocates, will change the way insurance carriers may offer incentives and rewards in wellness programs from a system based on participation to one based on outcomes. We remain concerned that, even with the numerous amendments, such a change could unfairly discriminate against certain groups and individuals, as well as adversely affect doctor-patient relationships.
On the positive side, however, Gov. Ritter's signature on a bill that will end "gender rating" in health insurance is a victory against discrimination in the non-group health insurance market. This change in law will help eliminate financial barriers that women face in securing quality, affordable health care in Colorado.