Rural funding bill survives first crucial test

A Senate committee today put a bipartisan stamp of approval on its most significant legislation of the session, a measure that its sponsors hope will rescue rural hospitals, schools and roads.

The Senate Finance Committee voted 4-1 for the measure, winning not only one, but two critical Republican votes. The heart of the bill, titled “Sustainability of Rural Colorado,” is its reclassification of a fee hospitals pay the state in order to win matching federal dollars used to help cover health-care costs (mostly Medicaid) for low-income Coloradans.

The fee is now counted against the state’s constitutionally-set revenue limits. For several years, Democrats have wanted to remove the fee out from the limits by reclassifying it as an enterprise. Doing so would free up about $350 million a year. Democrats have proposed using that money for health care, transportation and K-12 education.

The Republican quid pro quo, contained in the bill, calls for lowering the state’s revenue limit by roughly the same amount as would be reclassified. That would keep the state’s revenue — and its spending — on a tight leash. Lowering the revenue limits is a sticking point for Democrats and it may be open for some negotiation among Republicans. One of the “yes” votes on the measure today came from Republican Sen. Owen Hill of Colorado Springs, who said he favored a smaller reduction of the revenue limit.

Hill was joined in his support of the bill by fellow Republican Jack Tate of Centennial and Democratic Sens. Lois Court of Denver and Andy Kerr of Lakewood. The committee’s chair, Sen. Tim Neville of Littleton voted no, as expected. The measure now heads to the Republican-controlled Senate Appropriations Committee.

The state’s revenue limit, which is what it can collect under the 1992 Taxpayer’s Bill of Rights (TABOR), is increased annually by a percentage based on population and cost of living. Right now, the provider fee pulls in just under $700 million per year, and that pushed the state over its limit this year by about $287 million. That excess money must be refunded to taxpayers.

The measure is expected to see a lot of tweaking in the coming weeks. That started Tuesday with its sponsors, Republican President Pro Tem Jerry Sonnenberg of Sterling and Democratic Senate Minority Leader Lucia Guzman of Denver. Both sought to address concerns raised by the state’s public universities and community colleges around a portion of the bill that deals with money for renovations and maintenance.

The most controversial amendment came from Tate and would allow Medicaid patients to seek out-of-network services. That amendment, which drew objections from both Sonnenberg and Guzman, cleared the committee on a party-line vote, but isn’t likely to last long.

The bill is about more than just reclassifying the provider fee. The measure also includes about $1.35 billion for rural transportation projects, about $400 million over three years for rural schools, and an optional across-the-board 2 percent cut in state agency budgets.

The vote came after several hours of testimony on the struggles of rural Colorado. Superintendents of rural school districts described losing teachers to Target and Walmart. 

Rural hospital administrators testified that their facilities will close without the help contained in the bill.

Where we live in this great state should not determine if we live,” said Connie Martin, CEO of San Luis Valley Health. Martin oversees two facilities in the San Luis Valley, which includes the six most impoverished counties in the state. Her facilities face a cut of $4.2 million, with just $700,000 in the bank, she said. “We go from a solidly-run health care system to one in immediate jeopardy,” she told the committee.

The measure received only token opposition from one person, Scott Rankin, a former candidate for the Greeley school board, who called the measure an “end run around TABOR…there’s answers out there without incurring more debt,” he told the committee.

Even though they voted for it, the committee’s Democrats did so with some reluctance. “I have grave concerns about many of the pieces and parts of this bill,” Court said, adding that reducing the revenue limit was not a prudent fiscal move. Yet, she said, she knows rural hospitals and urban ones, too, will suffer if the bill fails. Kerr said he hoped the parts he likes, chiefly reclassifying the provider fee, would make it over the hurdles to come, and “the parts I don’t like, I hope they will stumble.”

And Hill sent out a warning to House Democrats who are expected to try to take the revenue limit out of the bill. If that happens, Hill said, his support will turn to opposition.


Photo credit: _ChrisUK via Flickr: Creative Commons