Transcript Legislative Update January 2017

CACTA Mid-Winter Conference
2017 Legislative Update
Stacey M. Lestina
Colorado Consulting
2017 CO General Assembly
• Colorado Senate
•18 Republicans
•17 Democrats
• Colorado House
• 37 Democrats
• 28 Republicans
• Convened – Wednesday January 11, 2017
• Adjourns – Wednesday May 10, 2017
2017 CO General Assembly
• Colorado Senate
•President: Kevin Grantham (R, Canon City)
•President Pro Tempore: Jerry Sonnenberg (R, Sterling)
•Majority Leader: Chris Holbert (R, Parker)
•Minority Leader: Lucia Guzman (D, Denver)
• Colorado House
•Speaker: Crisanta Duran (D, Denver)
•Majority Leader: KC Becker (D, Boulder)
•Assistant Majority Leader: Alec Garnett (D, Denver)
•Minority Leader: Patrick Neville (R, Castle Rock)
• Joint Budget Committee (JBC)
• Senators Kent Lambert (Chair) , Kevin Lundberg, Dominick Moreno
• Representatives Millie Hamner (V. Chair), Dave Young, Bob Rankin
Colorado’s Budget &
Education Funding
FY2016-17 Supplementals
SB17-173 School Finance Mid-Year Adjustments
• $25.5M excess state appropriation resulting from lower
than anticipated pupil count & at-risk enrollment
• $23.1M lower than anticipated local property tax revenues
• No change in appropriations
• $2.4M difference applied to negative factor, lowering the
total amount from $830.7M to $828.3M
No Supplemental Adjustment to Higher Education
TABOR
Transfers to Capital Construction &
Transportation (SB09-228)
The Future for Funding:
Reaching the Fiscal Cliff
The Constitution & School Finance
Colorado’s ‘Fiscal Gordian Knot’
Gallagher Amendment
•45/55 base property tax ratio
•Adjusts the residential assessment rate
•Estimated $7.4 billion reduction in FY17-18 property tax revenue
TABOR
•Requires a vote to increase the residential assessment rate or mill
levy
•For districts that have not “de-bruced”, requires mill levies to be
reduced when revenue exceeds a district’s TABOR limit
Amendment 23
•Requires base funding to increase by inflation & enrollment
Where are we going?
Tough Budgets will Persist
Revenue growth is slowing
• Slower economy
• Demographic changes
• State Constitution
Budget pressure is rising
Where are we going?
Tough Budgets will Persist
Revenue growth is slowing
• Slower economy
• Demographic changes
• State Constitution
Budget pressure is rising
Several factors will continue to slow economic growth
• Demographic changes
• Rising inflationary pressure and interest rates
• Subdued global demand
• Elevated political uncertainty skews forecasts
2017 Session Day 31:
Complex Issues,
Difficult Decisions &
Few Solutions
Proposed Budget Solutions
Proposal #1: Modifications to TABOR (House Bill Draft)
What? Modify TABOR to allow for an increase to the state
revenue cap based on the average annual change of Colorado
personal income. Currently, TABOR requires the state revenue
cap, and therefore the amount of required tax dollar refunds, be
adjusted for changes in inflation and population.
Why? Proponents argue that basing TABOR refunds on an
economic measurement that does not reflect Colorado’s economy.
By changing the measurement of growth to the rate of personal
income, TABOR would more directly reflect the ability of citizens
to pay for government services.
How? A proposal to modify TABOR requires 2/3 approval of the
legislature and the approval of voters in November.
Proposed Budget Solutions
Proposal #2: (JBC Staff)
What? To address the current inequities in the school finance property tax
system, JBC staff has recommended that the legislature refer a statewide
measure to the voters that would:
1) “Return the state to a uniform (statewide) mill levy for school finance
property taxes such that each school district’s total program mill levy (total
property tax revenues) would be the lesser of the statewide mill levy or the mill
levy necessary to fully fund the district’s total program with local revenues.”
2) “Allow mill levies in districts that are fully locally funded to “float” on an
annual basis below the uniform mill levy to continue to fully fund the district
without requiring state funds.”
Why? Setting a uniform tax on personal property would increase school funding
in districts that have little control over their relatively low local tax revenues and
ease the pressure on the state budget to make up for those districts with low
levels of local funding.
How? A proposal to modify tax rates requires 2/3 approval of the legislature
and the approval of voters in November.
Proposed Budget Solutions
Proposal #3: Increase Marijuana Sales Tax & Reduce Senior Homestead Tax Exemption
(Gov. Hickenlooper)
What? Governor Hickenlooper has introduced two proposals to address the gap
between state revenue amounts and the amount needed to adequately fund K12
education and keep the negative factor from increasing for FY17-18.
•Increase the special sales tax on adult-use recreational marijuana from 8% to
12% and earmark the $41.9 million in proceeds for the state’s share of K12
education financing.
•Reduce the Senior Homestead Exemption by half and direct the $68.1 million
in savings to the state’s share of K-12 education financing.
Why? The Governor’s office estimates that without the increase in resources
from these two legislative requests, K12 education’s negative factor will increase
to from its current amount of $831 million to $982.3 million.
How? Both proposals can be achieved through the annual legislative budgeting
process.
Ongoing Policy Reforms
Uncertain Future for Reforms
Federal Every Student Succeeds Act
• HUB group recommendations due in March
• Option for 5th Performance Indicator
• USDoE unknowns
• ESSA Legislative Interim Committee
Statutorily required CDE review of Colorado Academic
Standards
Accountability framework and Turnaround requirements
Future Focus for CTE
State funding reductions
Federal funding uncertainty
Ballot proposal for a tax increase is inevitable
**Advocacy & Information**
CACTE / CACTA Bill Report
Linkhttp://www.coloradocapitolwatch.com/billanalysis/3037/2017/0/
Stacey M. Lestina
[email protected]
303.241.6670