Updated to add comment from Michael Fields of Americans for Prosperity.
While conservative lawmakers are squabbling about how to finance an immediate need for $3.5 billion for transportation projects, one of their own has quietly been working on a solution that will take some by surprise: reclassifying the hospital provider fee.
The hospital provider fee is a bookkeeping maneuver that could free up more than $350 million per year to fund transportation, K12 and health care.
It’s that last piece – health care – and a concern about keeping the doors of rural hospitals open, that changed President Pro Tem Jerry Sonnenberg’s mind about changing the fee. Republicans have previously argued that changing how the fee is handled would be illegal.
Late this afternoon, Sonnenberg, a Sterling Republican, got permission to run the bill (required for bills introduced late in the session) from Senate President Kevin Grantham, a Cañon City Republican.
The provider fee works like this: every hospital in Colorado is charged a fee on the number of inpatient overnight stays per day, as well as the number of outpatient services provided. That money is pooled and then matched with federal dollars, and redistributed back to hospitals to expand Medicaid, pay for health care for people who use emergency rooms for non-emergency treatment, and reimburse hospitals for indigent care.
The fee brings in about $700 million per year.
The problem: that money counts against the revenue limits established under the Taxpayer’s Bill of Rights (TABOR). The revenue limit is the amount of general fund (made up of income and sales taxes) the state is allowed to keep each year to pay for state government operations. The provider fee is pushing the state over its revenue cap, and that money must then be refunded to taxpayers.
What Democrats have proposed for the last several years is to change the provider fee to an enterprise, a government-owned business. That reclassification is allowed under TABOR, despite howls from Republicans and groups like Americans for Prosperity who characterize the change as an attack on TABOR. That would remove the fee from TABOR calculations, and would free up about $350 million per year that Democrats have wanted to put into transportation, K-12 education and health care.
Senate Republicans have steadfastly refused for the past three years to even consider the move. That began in 2015, with then-Senate President Bill Cadman of Colorado Springs, who waved around a legal opinion from the legislature’s attorneys that said reclassifying the fee would be unconstitutional. Cadman stuck to that position in 2016, too, despite conflicting opinions from the current Attorney General, Cynthia Coffman, and her predecessor and fellow Republican, John Suthers.
House Democrats this year backed off any plans to seek the provider fee change, pointing to Grantham’s insistence at the beginning of the session that he would stick to the same position as his predecessor.
Sonnenberg’s bill is still in draft form, but he told The Colorado Independent it has the buy-in from Democratic leaders, such as Speaker of the House Crisanta Duran of Denver, House Majority Leader KC Becker of Boulder and his main co-sponsor, Senate Minority Leader Lucia Guzman of Denver.
Rep. Jon Becker, a Fort Morgan Republican, told The Independent last week he’d rather see the hospital provider fee reclassified than to ask Coloradans to shell out more in sales tax, which is contained in a bipartisan transportation bill rolled out last week.
He should also be able to count on support from at least one Senate Republican: Sen. Larry Crowder of Alamosa, who carried the hospital provider fee drafted by Democrats in both 2015 and 2016.
Guzman today asked a Senate committee to kill her version of the bill, hinting at what was to come. She later issued a statement, saying she looks forward “to continued work on a solution to tackle the fiscal issues facing Colorado’s rural hospitals. Ensuring rural hospitals have access to critical funds that increase delivery of care is of the utmost importance to their survival. With 50 days left in the legislative session, it is my hope we can achieve a bipartisan solution that will go even farther to achieve this goal, which is why I decided to shelve Senate Bill 57 in committee today, in order to move forward.”
Senate Majority Leader Chris Holbert of Parker said Sonnenberg had briefed the Republican Senate caucus on the bill yesterday, and while he hasn’t seen a draft, Holbert told The Independent that Sonnenberg has a lot of respect from the caucus for trying to figure out a solution for rural hospitals.
*Michael Fields of Americans for Prosperity tweeted moments ago:
— Michael Fields (@MichaelCLFields) March 21, 2017
Fields’ comment refers to a possibility that the bill might try to reduce the TABOR revenue limit by some $700 million. We’ll update, and answer that question, when the bill is introduced.
Photo of San Luis Valley Hospital by Jeffrey Beall (Own work) [CC BY-SA 3.0, via Wikimedia Commons