Colorado’s biggest political battle hangs in legal limbo

Leaders on both sides of a debate over the hospital provider fee wait for an opinion from the GOP AG.

Colorado’s biggest political battle hangs in legal limbo

DENVER — More than a month has passed since the Democratic governor here asked the Republican attorney general to help clear up a legal question involving what’s become this year’s biggest political debate in Colorado.

At issue is whether it would be constitutional to reclassify a billion dollar hospital program so money generated from it will not push general fund revenue over mandated limits under the state’s Taxpayer’s Bill of Rights.

Governor John Hickenlooper and many Democrats in the legislature want a program called the hospital provider fee reclassified so there’s more money in the budget to fund roads, education and other programs.

The Republican Senate President, Bill Cadman, and other conservatives say reclassifying the program is a scheme to circumvent TABOR, a constitutional amendment approved by voters in 1992. They’d rather see money refunded back to individual taxpayers when general fund revenue spills over its limits.

Without a legal determination from Attorney General Cynthia Coffman, any action and substantial debate on the hospital provider fee remains on hold as the clock ticks on the 2016 legislative session, which ends in May.

Whether to reclassify the program isn’t a novel idea this year. Last year, the state’s Democratic House Speaker brought forward a bill, late in the session, and Republicans killed it. The hospital provider fee draws federal matching dollars, and hospitals use the money to expand Medicaid, provide indigent care, and other services. The fee is assessed based on how many patients hospitals see. Some hospitals pay a lot, and some pay nothing.

The program brings in so much money— more than $700 million last year— to state government that it pushes revenue up against TABOR limits. But the fee wouldn’t do that if the program were reclassified as an enterprise.

Related: What is the hospital provider fee? What is an enterprise? CLICK HERE

That’s the big fight, and as far as the Hickenlooper administration is concerned, the legal issues surrounding it have already been settled.

“We worked with the Attorney General’s office last year to ensure our proposal comports with TABOR,” says Jacki Cooper Melmed, Hickenlooper’s top lawyer. “The governor requested a formal opinion to reassure Coloradans on this point on January 7, 2016, and we are confident that the attorney general’s opinion will be consistent with the advice we received last year.”

Now, a month later, the AG’s office says its lawyers are still working on it. An attorney familiar with the process said a month isn’t out of the ordinary because a legal opinion on a question like this could typically take the office six to eight weeks to render.

“Obviously, as you can imagine, those are well thought out, well researched,” is the official response coming from Coffman’s spokesman Roger Hudson. He notes that once his office’s lawyers have formalized an opinion, it will be published on the attorney general’s website.

In the meantime, at least one lawmaker says a private law firm has been doing its own analysis of the proposed hospital provider fee enterprise question and assuring legislators the plan is legally sound.

“They said they looked at it and they said it was doable, that’s all they said,” says Alamosa Republican Sen. Larry Crowder, who spoke to an attorney working on it, but didn’t know the name of the firm.

Crowder illustrated just how important it is to clear up the legal issue in a previous interview with The Colorado Independent. He’s a self-described “staunch Republican” who represents a poor, rural district in southeastern Colorado with many hospitals that rely on the hospital provider fee. He says he has been lobbied heavily by hospitals about the importance of the program and said he’d be open to the idea of reclassifying the fee as an enterprise, but first, before anything else, he wants to know if doing so would be constitutional.

In a divided Capitol where Republicans control the Senate and Democrats control the House, gridlock isn’t uncommon. But until a legal opinion comes down from the state’s top law enforcement officer, the biggest political battle in Colorado will remain in a stalemate. The legislature is headed into its second month, and both sides of the hospital provider fee debate are able to say the issue is out of their hands until these legal questions are settled.

Since before the start of the legislative session, Hickenlooper made a big push for reclassifying the fee to keep it from TABOR restrictions. He toured the state giving talks about the plan, which is his administration’s key strategy to working around the knot of fiscal constraints that TABOR opponents say is holding Colorado back. Hickenlooper himself is not what status quo conservatives might call a “TABOR hater.” He’s more of a pragmatic technocrat who believes his state’s voters wouldn’t go for reclassifying the fee as an enterprise if they were asked that question on the 2016 ballot. And he has said that if the state’s political leaders can’t work out a way to free up money from the state’s fiscal straightjacket to pay for vital services, well, then it might be time to re-look at TABOR.

Hickenlooper’s foil in all this, the Senate’s GOP leader Cadman, has called restructuring the hospital provider fee unconstitutional. As proof, he has held up a non-binding legal opinion from the non-partisan Office of Legislative Legal Services that states just that.

“Frankly, the Constitution is pretty clear,” Cadman said on a recent public affairs TV show, Devil’s Advocate, with host Jon Caldara of the libertarian Independence Institute. “And last time I looked, we all swore to uphold it.”

When Cadman asked the legislature’s own lawyers about the constitutionality of the proposal, he’s said he got a response back in about 40 minutes. (The lawyers aren’t that quick, Cadman said at the time, so someone must have asked for such an opinion previously, and when he or she got it declined to make it public.)

The governor’s administration has countered that the legal memo Cadman is relying on missed key facts or was examining only a narrow part of the hospital provider plan.

The fight over whether to reclassify the hospital fee has, oddly, pitted Republicans against a near monolithic voice of the state’s business community that includes the Denver Chamber of Commerce, the Colorado Association of Commerce and Industry, Associated General Contractors, the state Wheat Growers Association and chambers from Aurora to Grand Junction, and others. 

Last year, when the hospital provider fee issue was being debated late in the legislative session, 307 lobbyists had signed up to work in support of reclassifying it. Only one group was opposed: Americans for Prosperity, the prime political arm of the billionaire industrialist Koch brothers.

This year in Colorado’s legislature, AFP has made its top priority defending TABOR and keeping revenue generated by the hospital provider fee inside the economic structure that can trigger TABOR refunds. The group has asked lawmakers to sign a pledge saying they won’t vote to reclassify the program. Last week, AFP organizers swarmed the Capitol, promoting the group’s agenda and holding news conferences with lawmakers. Cadman was one of them.

“AFP is a partner of ours…I don’t think I’d be the president of the Senate if it wasn’t for the efforts of you and yours in the previous elections,” Cadman said in appreciation of the group’s support of his rise to power in the state Senate.

Since a fight over the hospital prover fee emerged as a fulcrum point for a power struggle at the Capitol, neither side has been able to put any real points on the board while the question about reclassifying it hangs in legal limbo at the AG’s office.

One member of the state’s budget writing Joint Budget Committee, Democratic Sen. Pat Steadman, wonders whether leaders are playing this scene off stage.

“Closed-door conversations, shuttle diplomacy,” he mused. “Until there is a counter to the [Cadman] legal opinion, I doubt you hear many public statements on the issue.”

In a way, the longer the hospital provider fee question remains in a holding pattern, the stalemate could be playing right into the hands of those who say TABOR is to blame for dysfunction in state government. They can point to the impasse as a symptom of a broken tax system.

In his State of the State speech on Jan. 14, Hickenlooper underscored this point.

“If we can’t make this very reasonable change — like many already allowed under TABOR — then what choice do we have but to re-examine TABOR?” he asked. “Right now, no one can say with a straight face that our budget rules are working for us.”

Just this week, The Associated Press carried a story published in multiple media outlets about how the tax fight over TABOR will shape the future of this rapidly-growing state.

“By 2030, Colorado’s population will grow from 5 million to 7 million people, thanks in part to a strong and diverse economy, the state’s famed Rocky Mountain quality of life and its constitutionally mandated low taxes,” the article read. “And because of those voter-sanctioned tax limits, this fast-growing state could someday fall victim to its own success.”

Attorney General Coffman’s legal opinion on the hospital provider fee might be just a small piece of a puzzle that makes up the state’s complex tax system. But right now, the glaring lack of such an opinion and this current atmosphere of wait-and-see inaction says plenty about the state of contemporary Colorado politics.

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About the Author

Corey Hutchins

is a journalist in Colorado, and Columbia Journalism Review's Rocky Mountain correspondent for the United States Project. Follow him on Twitter @CoreyHutchins and email him at CoreyHutchins [at] gmail [dot] com.

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