11-01-16 CO ​Governor Hickenlooper proposes FY 2017-18 State budget


CLICK HERE to view the entire CO HY 2017-18 Budget Proposal

Gov. Hickenlooper proposes FY 2017-18 State budget

DENVER — Tuesday, Nov. 1, 2016 Gov. John Hickenlooper today delivered the FY 2017-18 proposed State budget to the Joint Budget Committee of the General Assembly. Prepared by the Governor’s Office of State Planning and Budgeting (OSPB), the request totals $28.5 billion, 3.3 percent above the current year’s expected budget. In the General Fund (mostly income and sales taxes), the request totals $10.9 billion, 3.7 percent above the expected current year’s budget.

“Colorado’s economy continues to grow, though more slowly than in recent years. Within the confines of the competing requirements of the State Constitution and formulas in current law, this budget prioritizes the fiscal priorities of the state with a modest 3.3% increase,” said Hickenlooper.

As with last year’s budget, the request requires numerous balancing actions to match revenues and expenditures. The OSPB identified some $926.1 million in new constitutional and statutory demands on the General Fund against available new revenue of $426.0 million. These demands include:

  • New students and inflation in K-12 education: $243.5 million

  • Projected Taxpayer’s Bill of Rights (TABOR) rebates: $195.0 million

  • Repaying the current year’s reserve: $180.8 million

  • Statutory transfers to transportation and buildings: $164.0 million

  • New Medicaid costs: $142.8 million

Thus, the proposal closes a $500.1 million gap. The proposals to close the gap and support the request include:

1) Continuing a strategy adopted on a bipartisan basis for the FY 2016-17 budget, the request reduces the maximum allowed collections of the Hospital Provider Fee by $195 million, thereby preventing state revenue from exceeding the TABOR limit;

2) Not fully funding enrollment and inflation in K-12 education by $45.4 million. The “negative factor” in the new budget grows by this amount to $876.1 million;

3) During this year and next, reducing expected transportation transfers by $109 million;

4) Transferring $31.7 million in restricted severance tax dollars to the General Fund. To date, under Senate Bill 16-218 the General Fund has accommodated $100.5 million in support of declining severance taxes;

5) Transferring $46.9 million of unspent salary dollars that were set aside in recent years for employee compensation. This action supports the proposed total compensation request.

The funding plan restores the full 6.5 percent budget reserve in the General Fund. In the current year, revenue expectations have dampened since the adoption of the current budget and the State is using part of its reserve to fund the budget. However, Hickenlooper is proposing restoring the reserve so the state can be better prepared in the event of actual recession, not just slower growth.

In other areas of State government, highlights of the request include:

Education and Higher Education

With respect to financing K-12 education, the proposal increases average per pupil spending by $182.02 to a total of $7,606.68 (an increase of 2.45 percent). The request increases the negative factor from $830.7 million in FY 2016-17 to $876.1 million for FY 2017-18. After reducing the negative factor by $180.8 million over the past four fiscal years, we are disappointed that fiscal circumstances require us to increase the negative factor, even modestly, in FY 2017-18. It would require an additional $52.17 per student, or $45.4 million, to keep the negative factor flat in FY 2017-18. To eliminate the negative factor entirely would require $1,007.50 more per pupil.

Under the proposal, Total Program funding will be $6.614 billion (up from $6.396 billion today), comprised of $3.789 billion from the General Fund, $2.45 billion from Local Funds, and $373.5 million from the State Education and Public School Funds.

Also for local schools, the request increases funding for providing school health professionals by $9.7 million from the Marijuana Tax Cash Fund. The increase will fund an additional 105 health professionals in schools in order to increase substance abuse and mental health prevention and intervention programs.

The bulk of the appropriation to the Department of Higher Education supports the 29 public colleges and universities and three technical colleges in the state system. The proposed increase of $20.5 million General Fund for the Colorado public higher education system will address operating costs and health care increases for institutions and will help moderate tuition increases for students and families. The request is comprised of $16.0 million for Governing Boards, $631,397 for other public institutions such as Area Technical Colleges, and $3.8 million for Financial Aid.

With this modest General Fund increase, it is anticipated that tuition increases will average around 6.0 percent statewide, with variation among the institutions ranging from 5.0 percent to 7.7 percent.

Health Care and Human Services

The Department of Health Care Policy and Financing administers Colorado’s Medicaid program. The Department currently has an appropriation of $9.11 billion total funds, $2.65 billion General Fund. The request reflects a total funds increase of $373.1 million (4.1 percent), and a General Fund increase of $142.7 million (5.4 percent).

In FY 2017-18, we expect a 7.1 percent higher caseload than the original FY 2016-17 appropriation.

The Department of Human Services currently has an appropriation of $1,902.6 million total funds, $831.6 million General Fund.  The request reflects a total funds increase of $51.8 million (2.7 percent), and a General Fund increase of $34.0 million (4.1 percent).

In the proposed budget, the top priorities of the Department of Human Services include continued staffing and operational improvements at the Division of Youth Corrections (DYC) and augmenting child welfare resources in response to a recent workload study by the Office of the State Auditor.

For the DYC, the request includes: 1) $5.0 million General Fund and 80.6 FTE to improve security in its facilities and to comply with the federal Prison Rape Elimination Act; 2) $2.0 million General Fund and 16.0 FTE to ensure 24-hour medical care in its facilities; and, 3) $1.0 million General Fund to contract for mental health services in detention facilities, with reporting on the impact of the new services.

For the Division of Child Welfare, the Department is requesting $4.0 million total funds, including $3.6 million General Fund to provide counties with 58 additional child welfare caseworkers. Additionally, the Department is requesting $320,830 total funds, including $266,289 General Fund to improve state oversight and technical assistance for county child welfare programs.

For county governments’ costs to deliver human services programs, the request includes $16.6 million total funds, including $5 million General Fund. This funding will support the administration of the Food Assistance Program, Low Income Energy Assistance Program, Adult Cash Assistance Program and Child Support Services.

Infrastructure and Operations

The Department of Revenue requests $1.3 million to continue reducing wait times and to handle higher demand at Division of Motor Vehicle offices.

The request includes $18.3 million new dollars ($16.3 million from marijuana taxes and $2.0 million General Fund), for affordable housing, housing for those with behavioral health needs, and to address chronic homelessness.

Public Safety

Out of new tax revenue from marijuana and in addition to continuing existing programs, Hickenlooper is setting aside $16 million for initiatives to control marijuana trade on the “grey market”, to augment criminal justice diversion, and to support behavioral health services.

The request includes $1.7 million Cash Funds from the Highway Users Tax Fund (HUTF) “Off the Top” for the Colorado State Patrol to hire 12 new troopers for statewide traffic and safety operations.

Click here for the entire budget transmittal letter.