- Associated Press - Monday, February 29, 2016

DENVER (AP) - Democratic Gov. John Hickenlooper’s proposal to reclassify a Medicaid-related fee to balance the state budget and avoid taxpayer refunds is legal, Republican Attorney General Cynthia Coffman said in an opinion issued Monday.

Debate over the arcane fee has dominated the legislature this year. Hickenlooper and Democrats who control the House want to remove about $750 million generated by the fee from constitutional spending limits that otherwise would require refunds. At stake, they say, is long-term investment in roads and schools in the fast-growing state.

Republicans who control the Senate insist that Colorado can make do with what it has and that residents are entitled to refunds under the limits known as the Taxpayer’s Bill of Rights.

The real problem, they contend, is out-of-control Medicaid spending. Colorado expanded Medicaid under the Affordable Care Act and spends about $2.5 billion on the health care plan for the needy.

Coffman insisted that her opinion isn’t an endorsement of Hickenlooper’s proposal and that it’s up to lawmakers to decide what to do. Senate President Bill Cadman said he was studying the opinion but is worried about a legal challenge to any reclassification that, if successful, could leave taxpayers on the hook for tens of millions of dollars.

Hickenlooper said he hoped the opinion would encourage compromise with Republicans. He suggested he would lift his opposition to GOP proposals to issue bonds to pay for roads if reclassifying the fee frees up money to back those bonds. Both he and Cadman said they were talking to each other.

Hickenlooper requested Coffman’s opinion weeks ago in submitting his $27 billion budget plan. Republican leaders cite an opposing legal opinion crafted by the legislature’s own lawyers.

House Speaker Dickey Lee Hullinghorst, D-Boulder, said Monday she will draft a bill to change the fee.

The governor originally forecast a $270 million deficit for fiscal year 2016-2017. Sen. Kent Lambert, R-Colorado Springs and head of the Joint Budget Committee, recently estimated the shortfall at $61 million, thanks to lower-than expected public school enrollment, higher property taxes and other savings.

Under TABOR, voters must approve any state and local tax hike. Democrats are still stung by a resounding defeat of a 2013 ballot initiative to raise $1 billion for schools.

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James Anderson can be reached on Twitter at https://www.twitter.com/jandersonap


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