- Associated Press - Thursday, November 12, 2015

DENVER (AP) - Colorado Gov. John Hickenlooper warned lawmakers Thursday of several cuts they’ll have to make to close a $373 million budget for next year, painting a dire picture for colleges, public schools and medical providers for the poor and uninsured.

But Hickenlooper’s budget plan will likely be challenged by a politically divided Colorado Legislature with different ideas on how to solve the shortfall.

Hickenlooper released his proposal last week, but the briefing with lawmakers was the first forum to discuss it. To balance the budget, Hickenlooper is proposing:

- Reducing funding for public colleges by $20 million, possibly resulting in higher tuition for students. The current budget for higher education is $857.4 million.

- Using nearly $240 million from the state’s rainy day account for education to help with school funding. That would bring the account’s balance down to about $103 million. This at a time when the state still hasn’t backfilled nearly a billion dollars in cuts to schools during several tough recent budget years.

- Cutting reimbursements by nearly $20 million to doctors who provide indigent care for the state in Medicaid, human services, and prisons.

Those items alone would be enough to prompt big debates among lawmakers. But Hickenlooper’s plan also tries to reduce refunds to taxpayer’s required under the Taxpayer’s Bill of Rights - known as TABOR - when the state collects revenue in excess of the growth of inflation and population.

Democrats, who are in control of the House, have long criticized TABOR as restricting their ability to fund crucial budget areas like education and transportation in the aftermath of recessions. But Republicans, who run the Senate, view TABOR as a tool to prevent overzealous government spending.

The state owes taxpayers $289 million in refunds over the next two years, and that figure is expected to grow in the future. To minimize refund amounts, Hickenlooper is proposing a legal maneuver to reduce the amount the state collects from a fee charged to hospitals for occupied beds. The collected fees are used to get a federal match to help with Medicaid costs.

Hickenlooper is suggesting capping collections at $656 million, instead of an anticipated $756 million. The $100 million that is not collected would reduce the state’s refund liability to taxpayers because the money would not count as revenue exceeding Colorado’s TABOR limit. But that reduction in fee collections also means hospitals would lose $100 million in federal dollars to serve Medicaid patients.

Lawmakers will finalize a budget to vote for in the spring. Including federal funds, the budget is $27 billion. The general fund, which is made up of tax collections, is about $10.4 billion.

The budget shortfall is happening even though the state economy continues to grow. Through October, tax collections in the general fund are 5 percent above the same period last year, Hickenlooper noted.

Hickenlooper argues the hospital fee is problematic because it creates a refund liability for the state, even though the money never goes into the general fund.

But Republicans have always viewed the fee as a tax and have said they won’t budge on anything that reduces TABOR refunds.

“It’s still a little bit troubling that we’re talking about anything that will give more access to the taxpayer dollars to the tax-dollar spenders. This is essentially what we’re dealing with here,” said Sen. Kevin Grantham, a Republican on the budget-writing Joint Budget Committee.

Rep. Millie Hamner, a Democrat who chairs the Joint Budget Committee said the budget picture would be different if both parties had agreed during the last legislative session to reclassify the hospital fee so it’s doesn’t count against the state’s spending limit.

“Unfortunately, if we had been able to find compromise during the last legislative session, these cuts are unnecessary,” she said.

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