Gov. John Hickenlooper delivered his final State of the State address on Thursday, laying out his priorities for the homestretch of his eight-year tenure while hinting voters should approve new funding for road and bridge repairs and changes to the state constitution.
Over the course of his 49-minute speech, he reminisced over a tenure that began in the wake of the Great Recession and is now riding the wave of a booming economy. He recalled the summer smell of barbeque at Little League ballfields in Sterling, as well as the state’s trailblazing the legal sale of recreational marijuana, which he opposed in 2012.
Hickenlooper said there is a lot to accomplish in the next 119 days of the legislative session, which kicked off on Wednesday. As he enters his last year in office, the state’s public workers’ pension plan is at risk of insolvency in the event of another economic downturn. A backlog of needed transportation projects is nearing $9 billion over the next decade. Schools face teacher and special needs staff shortages. Families are trying to cope with life-threatening addiction to opioids. Residents are facing a looming water crisis due to a growing population and low snowpack levels. Rural communities still lack access to high-speed Internet needed for educational and economic opportunities. Abandoned oil and gas wells need to be cleaned up as future wells and housing developments encroach upon one another despite the Firestone explosion last year. And a constitutional amendment is squeezing rural local government and school budgets as property values rise in the Front Range.
“It’s an opportunity for us to continue showing the country how it can be done. That politics need not be a blood sport. That we need not wage war between the ‘blue team’ and the ‘red team,’” Hickenlooper, a Democrat, told a packed House chamber from the wooden lectern.
Some lawmakers have said this may be a lame duck year for Hickenlooper. But others see it as a chance for the administration to mediate differences between the Republican-controlled Senate and the Democrat-controlled House during a session in which the looming November election will cast its shadow over public policy.
Senate Minority Leader Chris Holbert spoke to the Senate on the opening day of the 2018 legislative session on Jan. 10. Photo by John Herrick
“They’re not sitting on their laurels watching the session go by,” Senate Majority Leader Chris Holbert, R-Parker, said of the Hickenlooper administration.
Fixing the state’s transportation infrastructure is one shared priority. But the solutions vary widely.
Hickenlooper told reporters after the speech he would support an “appropriate request to the voters for new revenue.” He drew a standing ovation from at least half the House chamber when he suggested a ballot measure for transportation. The Colorado Department of Transportation is facing a $25 billion funding gap over the next 25 years, according to its 2016 annual report.
“The cost of asphalt and concrete continue to rise. Yet we haven’t increased the state gas tax in over 25 years,” Hickenlooper said. “We’ve been driving on a flat tire for a quarter century.”
Republicans, however, are opposed to raising new revenue through a ballot initiative.
“They are holding your commute hostage for a tax increase,” House Minority Leader Patrick Neville told The Colorado Independent. “We have enough money. We have plenty of money. We’re swimming in it.”
Instead, Republicans want voters to approve a bond sale to shore up more upfront money for roads and bridges by allocating some of the state’s surplus this year to pay debt service.
Lawmakers are expecting a revenue surplus for the 2018-19 fiscal year of about one billion dollars. But they are certain to scuffle over how this money is spent.
Hickenlooper also called for innovation and additional funding for K-12 education. His budget request to lawmakers seeks $100 million above inflation and enrollment to pay down the state’s $828 million debt to schools. He stopped just short of calling for a statewide ballot initiative to pay down the IOU the state issued schools after the Great Recession in 2010.
“We need to be honest with ourselves and the voters. This number won’t go down much without their help,” Hickenlooper said.
Hickenlooper, a former mayor of Denver, likened rural Colorado to a bristlecone pine: sturdy, resilient and beautiful, but a conifer that grows more slowly than a spruce. One issue that speaks to this metaphor is the Gallagher amendment, which Hickenlooper told reporters was like a finger trap for local governments’ budgets.
The Gallagher amendment sets the rate to tax residential properties, which was as high as 30 percent prior to the amendment and now is 7.2 percent. It could drop as low as 6.1 percent in 2019, according to the Legislative Council. In rural Colorado where home values are not rising as fast as those in the Front Range, less money is going into local government coffers. It also affects the state’s budget because the state must backfill constitutionally mandated education costs that are not covered by local property taxes.
Hickenlooper wants a new formula that recognizes conditions in rural Colorado. He did not propose a specific plan. Lawmakers are considering freezing the rate in place and restructuring the formula so that it is different for rural and metro areas of the state. No bills have been introduced on the subject.
Another issue hurting rural Colorado is the lack of Internet coverage due to the economics of serving a small customer base. The governor said the state has made “modest deposit” on broadband and told lawmakers “we need legislation and funds to ensure full broadband buildout in rural areas.”
Proposed changes to the Public Employees’ Retirement Association, or PERA, may affect all of the pension’s 585,000 members by either asking them to contribute more from their paycheck or receive less in retirement benefits. Changes are needed to address the growing unfunded liability.
Hickenlooper mentioned reforming the pension fund during his speech, and afterward told reporters a fix can be as easy as dropping the cost-of-living adjustments to zero. But his proposal seeks to ask employees to pay more out of their paychecks into the fund. He does not support increasing the employer contribution because he believes employers already pay enough. This would come at a cost to taxpayers.
Hickenlooper’s position on PERA may receive pushback from members of his own party who believe employers should contribute more to help spread the burden of the reforms. Meanwhile, House Minority Leader Neville hopes to bring about structural reforms and did not rule out moving the pension from a defined-benefit plan to a defined-contribution plan like a 401K.
Senate President Kevin Grantham briefed reporters ahead of the 2018 legislative session on Jan. 8.
Senate President Kevin Grantham, R-Cañon City, told reporters that reforming PERA is like playing with a soundboard. Lawmakers will turn dials and move slides to adjust the employer and employee contributions and tweak the cost-of-living adjustment.
“It’s hard enough when you have two people making the sound right. Think about 100 people,” Grantham said.
This is where the governor may be helpful.
“The power of the governor to call people in to talk through things is really important,” said Mark Ferrandino, who served in the House from 2007 to 2015, and as House speaker from 2013 to 2014.
Senate Majority Leader Chris Holbert said the governor has brought lawmakers together before. During the 2015 legislative session, both chambers fought over proposals to reduce testing requirements for K-12 students. Holbert then met with Hickenlooper and his chief of staff to discuss the stalemate. Afterward, they agreed on a compromise. Holbert said on the last day of the session, lawmakers passed a bill out of House.
“No one thought we were going to get an assessment bill that year. No one thought we were going to agree on opt-out. But it happened,” Holbert said. “I think the word magic or magical was used.”
It remains to be seen how Hickenlooper wraps up his tenure. Lawmakers are hesitant to characterize his legislative legacy.
“I think the characterization of that will have to wait until May,” Grantham said. “We still got some big issues ahead of us that have not been solved during his governorship.”