“I’m not helpless, but I need help.”

Hope Krause was born with cerebral palsy. She depends on Medicaid and other state programs to help her pay for her medical necessities, like her caregiver and wheelchair. If her Medicaid allotment were to be cut, she would not be able to afford to live independently. She is worried that she would have to go to cheap nursing home.

Her condition makes her unable to move her legs on her own and impairs her body movement. Her caretaker helps her adjust her body when she requests it so that she can manage her pain. Without this proper attention, she will need to start taking strong painkillers regularly and move out of her own home into a nursing home. In a nursing home, Hope would have to wait for help from attendants who are juggling several patients. No human being wants to wait around in a dirty Depend.

Her caregiver and other state-funded services allow Hope to be active in her community. She is the Colorado Cross-Disability Coalition Coordinator and is an advocate for people with disabilities in Ft Morgan, Brush, and Sterling. As an advocate for people with disabilities, she empowers people and helps them navigate services so that they can live more fulfilling lives. But with Medicaid cuts on the table, Hope is also worried about her ability to live the life she wants to live.

There have been several ‘repeal and replace’ health care bills in 2017, and they all impose a per capita cap on Medicaid spending. Research shows that a per capita cap will not be able to keep up with increasing healthcare costs, reducing the federal dollars that go to states to provide care for people like Hope. States depend on these federal dollars to fund Medicaid, Medicare, and other state medical services; with a per capita cap, states will be forced to choose between cutting schools and roads, or cutting services, like in home care and lifesaving prescription drug coverage for the elderly and disabled.

Call you Senators and Representatives and tell them that you want people who rely on Medicaid to live healthy and humane lives!

Video produced by Dominica Gonzalez

By Chris Stiffler  

CFI Economist

When I lecture on taxes to college students I’m always surprised by how little students understand taxes, particularly how graduated, or progressive, income tax structures work. To see what I mean, consider the following question:  Pretend that somewhere, there is a graduated income tax structure as follows:

So, under this system, if you made $25, how much would you pay in income taxes?

Most students say, “Well, $25 multiplied by 5 percent is $1.25.” And most students are wrong.

This happens because they haven’t learned the distinction between “marginal tax rates” and “effective tax rates.” They generally assume that all income is taxed at the top rate. This makes sense because a lot of people always tell of the story of the individual who earned more this year and got “bumped into a higher tax bracket.” But this doesn’t mean that all income is now taxed at that higher rate.

The correct answer is $0.95. Here’s the math  

They paid 3 percent on the first $10 then 4 percent on the next $10 then 5 percent on the last $5. Yes, that person paid 5 percent on the last dollar earned (the marginal rate), but their effective tax rate was 3.8 percent.

The federal income tax is a graduated structure, and most states also utilize a graduated tax code. But Colorado is one of the few states with a flat income tax rate — a flat 4.63 percent. This means that every taxpayer in Colorado pays the same rate, 4.63 percent, on every dollar they earn.  Colorado used to have a graduated income tax structure before 1986.

To teach students about graduated rates, I have them calculate how much extra someone in Colorado would pay if Colorado had the same tax brackets as Montana. Like the majority of states, Montana has a graduated income tax structure. The first $2,900 dollars earned is taxed at 1 percent. Income above $2,900 and below $5,200 is taxed at 2 percent. Income above $5,200 and below $7,900 is taxed at 3 percent. Income above $7,900 and below $10,600 is taxed at 4 percent. Income between $10,600 and $13,600 is taxed at 5 percent, and income between $13,600 and $17,600 at 6 percent. Any income above $17,600 is taxed at 6.9 percent.

Colorado would generate $2.5 billion more in income taxes under Montana’s income tax rates. That would increase income tax collections by a third.  The average Colorado family would end up paying $350 more in income taxes annually under Montana’s income tax structure. Such a structure would generate a lot more income from upper income earners and give a tax break to lower income Coloradans, who already pay a significantly greater portion of their earnings in taxes when you account for sales, gasoline and other consumption-based taxes.

For example, a Coloradan whose income puts them in the top 1 percent of earners in the state would end up paying $30,000 more annually while a Colorado household making $30,000 would see its income taxes drop by $60 a year.

If Colorado adopted Montana’s graduated income tax structure, 25 percent of taxpayers would see their income taxes fall while income taxes on upper income Coloradans would increase.

After this exercise, students are normally curious to know what Colorado would buy if the state budget had an additional $2.5 billion. Those students also have suggestions on what the revenue should be used for (higher education and roads are usually on top of the list). If you have the same curiosity, you can build your own state budget here:

https://www.greateducation.org/advocates-corner/mission-possible/

By Esther Turcios

As Americans focus attention on the proposed cuts and changes to our health care system, less attention has been given to other changes to our tax system that will hit working families hard. 

As two of the best mechanisms to lift individuals and families out of poverty, the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) are facing large cuts and changes under the president’s proposed budget.

The federal EITC and CTC are refundable tax credits that support low- to moderate-income individuals and families. In 2014, 377,000 Colorado households benefited from the federal EITC, and in 2015, the state EITC went into effect for the first time since 2001.

Throughout the years these programs have supplemented the wages of many low-wage workers across the nation. According to the Center on Budget and Policy Priorities, in 2015, these programs helped lift a total of 9.3 million people out of poverty, 4.9 million of who were children. The extra support has allowed many individuals and families to pay for things such as home repairs or vehicle maintenance, while it also helps to pay for educational opportunities, ultimately increasing people’s employability and earning power.

Unfortunately, the president’s proposed budget includes a $40 billion reduction to the Earned Income and Child Tax Credits over the next decade, as reported by the Center on Budget and Policy Priorities. This is in addition to the president’s proposed cuts to SNAP and TANF and in addition to the House-passed American Health Care Act to repeal the Affordable Care Act, which also supports working families across the country.

Under the proposed changes to the child care and earned income credits, in order for taxpayers to claim these tax credits, all adults in the household would be required to provide a Social Security number (SSN) that is valid for work. Under current law, people who don’t have SSNs that are valid for work can claim the CTC and its refundable portion as long as they have an Individual Taxpayer Identification Number, and families can claim the EITC if one adult has a Social Security number, but not every adult in the household must have one.

So, what exactly does this mean? According to the president’s “2018 Major Savings and Reforms” document, in order to claim the EITC, the CTC, taxpayers, their spouses, and all qualifying children (child, stepchild, foster child, sibling or step-sibling or grandchild) must have Social Security numbers that are valid for work. This will effectively exclude millions of undocumented individuals and families who file taxes using their Individual Taxpayer Identification Number. These are folks who work, pay sales taxes and property taxes, and contribute to our economy but who don’t get to reap the same benefits other taxpayers do. This also leaves approximately 5 million children of undocumented parents, the vast majority of these children who are U.S. citizens, without CTC benefits as found by the Center for Law and Social Policy.

Research shows that unlike other programs intended to assist low- and moderate-income communities, the EITC and CTC are better in the long run at lifting people out of poverty and reducing poverty rates than programs such as SNAP and TANF. Clearly, the Earned Income Tax Credit and Child Tax Credit are programs that are crucial for both low- and moderate-income individuals, families and our economy.

This change, and many other changes included in the president’s budget are harmful to Colorado communities, especially those with undocumented populations.

A report from the Institute on Taxation and Economic Policy examined the state and local tax contributions of young immigrants eligible for DACA (deferred action for childhood arrivals) and found that, collectively, they annually contribute $2 billion in state and local taxes, but this number would drop by nearly half without DACA protection. The Trump Administration has sent mixed signals on whether it intends to honor the DACA executive order in the long term.

In Colorado, DACA-eligible individuals now pay nearly $34 million in state and local taxes, a number that would be nearly cut in half if DACA protections are lost.

Nationally, the 1.3 million DACA-eligible population pays an average effective tax rate of 8.9 percent, which is on par with the state and local tax rate paid by the middle 20 percent of Americans. The report (State and Local Tax Contributions of Young Undocumented Immigrants) analyzed taxes paid by working immigrants eligible for and receiving DACA (852,000 people), as well as taxes paid by those eligible for but not receiving DACA (453,000 people).

“Within the last year, immigration policy has become a far more divisive political issue with public discourse often overlooking the tremendous economic, fiscal and societal contributions of immigrants, and in particular young immigrants,” said Meg Wiehe, deputy director of ITEP. “We produced this report and our larger report on undocumented immigrants’ tax contributions to help ensure the debate is more fact-driven.

“The fact is that the overwhelming majority of young, undocumented immigrants are working or pursuing education,” Wiehe said. “They also are contributing to their communities and paying state and local taxes.”

Since 2013, ITEP has produced regular analyses examining the state and local tax contributions of the nation’s estimated 11 million undocumented immigrants.

DACA recipients’ state and local tax contributions increase substantially in part because they can legally work and are required to file income taxes using the Social Security number granted by their DACA enrollment.

The report notes that employment rates go up for young immigrants receiving DACA protection (from 51 percent to 87 percent), and they experience increased wages. The report estimates that young immigrants’ state and local tax contributions would drop from $2 billion to $1.2 billion without DACA protection. Further, the report finds their collective tax contributions would increase by $504 million if they were granted full citizenship.

The report concludes: “If the Trump administration fails to protect this population from deportation, the nation risks forcing them back into the shadows and losing the economic and societal contributions these engaged young people are making in their communities.”

Colorado State and Local Tax Contributions of DACA-eligible individuals

• Current state and local taxes: $33,977,000 (7.8% effective tax rate)
• Taxes if all eligible receiving: $37,631,000
  • Change if all eligible are receiving: +$3,654,000
  • New effective tax rate: 7.9%
• Taxes if all eligible granted citizenship: $38,845,000
  • Change if all granted citizenship: +$4,868,000
  • New effective tax rate: 7.9%
• Taxes if DACA protections lost: $17,479,000
  • Change if DACA protections are lost: -$16,498,000
  • New effective tax rate: 6.7%
• Estimated Population in Colorado Immediately Eligible for DACA: 23,000
• Estimated Population in Colorado Enrolled in DACA: 18,830
• Estimated Population in Colorado Eligible for DACA but not Enrolled: 4,170
• Share of Est. Undocumented Immigrant Population: 14%

Chris Stiffler- CFI Economist

1. The Complexity of SB17-267 on the State Budget

The comprehensive bill that made the Hospital Provider Fee an “enterprise” under TABOR, provided money for transportation projects, changed the automatic transfers to roads and capital construction and adjusted the marijuana taxes (among other things) created more General Fund flexibility this year and next.  Without SB17-267 Colorado would be giving $214 million in rebates in FY2018-19. Because of SB17-267, Colorado is $430 million below the TABOR cap in FY2017-18 and $420 million below the cap in FY2018-19.  In other words, because of SB17-267, there are no TABOR rebates in the forecast period.

2. Greatest Job Market Ever, Ever!

Colorado is currently in the 3^rd longest economic expansion since 1900. The Colorado economy has been growing since 2009.  The unemployment rate in Colorado is 2.3%, well below the national rate of 4.3%.  It is also the lowest since the unemployment series began in 1976 and the lowest in the county.  The tight labor market is finally translating to wage growth. Colorado has also been able to weather the downturn in the oil and gas industry.

3. Struggling to Save

The state’s General Fund Reserve (rainy day fund) is below the 6.5 percent rate required in statute.  The FY2016-17 budget will finish with a 4.6 percent reserve. The FY2017-18 budget is expected to end with a 4.8 percent reserve, which is $172 million below the 6.5 percent target.  Normally, Colorado should be saving for the next economic downturn when the state is experiencing rapid economic growth, not reducing our statutory reserve level.

4. Still Can’t Recover from Cuts Made During Great Recession

Even with the best economy in the country and the budget flexibility provided by SB17-267, the state isn’t able to make up for the cuts it made during the Great Recession.  The state is still $830 million below the level of school funding required by Amendment 23.  The General Assembly will have $510 million more to spend in next year’s budget (FY2018-19) than what was budgeted for in FY2017-18.  This sounds like a lot until we account for the increase in caseload of students and Medicaid enrollees every year.  Last year the state had to pay an additional $200 million to schools just to keep up with per pupil growth and inflation.  In other words, the “Negative Factor” (henceforth “Budget Adjustment”) isn’t going away any time soon under our current tax code.

5. Waiting for the World (of Federal Tax Policy) to Change

There was a slight reduction in General Fund Revenue expectations compared to the March forecast. The downward revision was made because of some unexpected surprises on income tax returns in March and April.  It seems that taxpayers are delaying the sale of certain assets and delaying reporting certain income in hopes of seeing lower tax rates at the federal level in the future.

By Dominica Gonzalez

CFI Intern

In April, Colorado’s unemployment rate fell to 2.3 percent which is the lowest it has ever been in the last 40 years, the lowest in the nation and well below the national average of 4.3 percent. However, there is still work to be done so that all Colorado communities can thrive. Here are five things to consider when looking at that record low unemployment rate.

1. The job market is unequal across race, gender and different regions of the state.

Statewide average unemployment rates aren’t the whole story. Huerfano County has an unemployment rate of 4.5 percent as opposed to Denver, where the unemployment in April was 2.1 percent. In Colorado, the African-American unemployment rate is 4.8 percent and the Latino/a unemployment rate is 4.7 percent. The unemployment rate for Latina women is 6.2 percent.

2. Underemployment vs. unemployment

Our economy is at its best when we utilize the full skillset of all citizens. However, 35 percent of minimum wage workers in Colorado have attended college. Also, the unemployment rate does not include workers who work part-time for economic reasons, such as those who cannot work full time in order to take care of a family member. In addition, this rate does not include those who have struggled to find a job, so they give up seeking work. Adding in these two factors, the underemployment rate is 6.9 percent

3. Wages are not keeping pace with cost of living.

Not all jobs are created equal. The unemployment rate looks only at Coloradans with a job; it makes no distinction between a job that pays $10 an hour or one that pays $30 per hour. The record low unemployment rate belies the struggle to afford the cost of living for many Coloradans. This is particularly apparent in the Denver area. The high cost of living in Denver makes it unaffordable for home healthcare workers, janitors and much of the service industry from affording Denver. The average rent for a two-bedroom apartment in the Denver metro area was $940 in 2013 and increased to $1,227 at the end of 2016. That is a 31 percent increase in 3 years. But the average wages for healthcare workers in Denver only increased 3 percent over that same period. More than 25 percent of the Colorado workforce makes less than $12 per hour. That means those workers make between $1,488 to $1,920 a month before tax, which makes it difficult for them to afford the average monthly rent.

4. Minimum wage increase 2017

Due to a vote on November’s ballot, the minimum wage jumped from $8.31 to $9.30 in 2017 and will increase to $12 by 2020. Despite cries that the bump in the state minimum wage will cause businesses to fire workers, this doesn’t seem to be slowing the Colorado job market down. According to a recent Denver Post article, Colorado has a highly competitive employee market, and recruiters are advising companies to hire quickly. With rapidly rising rents, a minimum wage increase was a big help for low-income Colorado families, but money is still tight.

5. Full employment is no longer the only goal

Since the Great Recession in 2009, the focus has been on getting back to full employment. We are there! Now we should turn our effort to making sure all Coloradans have a livable wage and aren’t one illness, birth or parent sickness away from losing their jobs.

With six weeks scheduled before the August recess in Congress, we are entering an intense summer facing serious threats to programs that provide basic assistance to struggling families across all areas of our work, including:

• The repeal of the Affordable Care Act with its Medicaid expansion
• Harmful structural changes to key programs, such as Medicaid and SNAP
• Deep budget cuts to discretionary and entitlements programs – the Trump Budget cut SNAP, TANF, Social Services Block Grant, SSI and SSDI as well as cutting Medicaid beyond the House repeal bill cuts
• Massive tax cuts for the wealthy that could force deeper budget cuts either now or in the future

Here are the latest details from our friends at the Center on Budget and Policy Priorities:

Health Timing Update

Senate Republican leaders continue to work on reaching agreement among their members on modifications to the House health care bill and to bring this legislation to the floor in the last week of June. There are growing indications that the Senate bill is likely to retain much of the House passed bill.

With respect to Medicaid, it is expected that like the House bill, the Senate bill will cut Medicaid deeply by ending the expansion and converting the program’s structure to a Per Capita Cap. We do expect some modification to the House Medicaid provisions. For example, some Republican Senators from Medicaid expansion states have suggested a slower phase out of the higher Medicaid match for the expansion than the House approach, but this will make little difference in either the short or long run as compared to the House version.

We are deeply alarmed at the very real possibility that the Senate Republican substitute will not be unveiled until the end of the debate in the Senate, providing little time for the public to understand the impact of the proposal for their states.

Fiscal Year 2018 Budget Timing

While the Senate is focused on negotiating a health care repeal bill, House Republican leaders have begun working on their FY18 budget resolution. There had been reports of a possible mark-up in late June, though we believe this may well slip until later this summer. Even if markup is delayed, we understand that decisions about when and how to move forward are currently being discussed, so we must act quickly to ensure that the House budget resolution does not include harmful “reconciliation instructions” – a provision that would create a fast-track process for legislation that cuts entitlements or cuts taxes.

Right now, we are focused on the very serious risk that this budget resolution could include reconciliation instructions that would require Congress to make deep cuts to SNAP, Medicaid, and other poverty-reduction programs while at the same time allowing Congress to pass large tax cuts that could lead to additional funding cuts in the future.

Alarming new press reports emerged last week in which some House and Senate members indicated that they want tax cuts to be paid for, at least in part, with cuts in entitlement programs. Jim Jordan, leader of the House Freedom Caucus, called for tax cuts to be paid for by cuts in safety net entitlements, with support from Sen. Hatch, chair of the Finance Committee.

With these important Member-level discussions underway in the House, it’s very important for Members to be hearing from groups and constituents back home about the importance of rejecting any budget that:

• Requires cuts in key programs that helps struggling families afford the basics, including food on the table, a roof over their heads, and access to health care.
• Paves the way for fast-track tax cuts that will lose revenue (causing deep spending cuts in the future) and that benefit mostly the wealthy and corporations.

President Trump’s Fiscal Year 2018 Proposal

President Trump released his budget proposal on May 23^rd. As a reminder, the budget proposal contained the largest dollar cuts to programs for low- and moderate-income people proposed by any President’s budget in the modern era, getting three-fifths (59 percent) of the budget’s cuts would come from these programs (food assistance, health care, housing, etc.) that help low- and moderate-income families afford the basics or improve their upward mobility.

The Trump budget called for more than $193 billion in cuts to the Supplemental Nutrition Assistance Program (SNAP) over the next ten years ― a more than 25 percent cut – through a massive cost shift to states, cutting eligibility for millions of households, and reducing benefits for hundreds of thousands more. It would also cut “non-defense discretionary” programs by $57 billion next year (as compared to 2017 funding levels) and even more over the next decade, while giving massive tax cuts heavily skewed toward the wealthy. And contrary to the budget rhetoric, it would make it harder for many to climb economic ladder, with cuts in job training and a range of other proposals making it harder for people to succeed in the labor market while hurting the millions of program participants already working.

While the Trump budget proposal has been panned as “dead on arrival,” it’s important to note that it’s broadly consistent with House-passed Republican budgets in recent years.

Debt Ceiling

Last month, the Trump administration warned policymakers that the government will likely hit the debt ceiling sooner than expected and is requesting that Congress act on the debt ceiling it before the August recess.

Many conservative Republicans are insisting on tying any increase in the debt ceiling to new entitlement cuts and/or harmful budget process reforms.

House Speaker Ryan said he’s “reserving all options” and among those being proposed according to press accounts are: caps on mandatory spending, extending across-the-board spending cuts known as sequestration, and matching any debt limit increase with an equivalent amount of spending reductions, a balanced budget amendment, adding work requirements to government assistance programs. All of these will make the debt ceiling much more controversial and run the risk of a government default of the parties can’t reach agreement.

CHN sign-on announcement

STAND TOGETHER

President Trump’s administration is planning to cut funding for policies and programs that our communities rely on. These are not small threats: the clean air we breathe and the clean water we drink, the healthcare for the neediest among us via Medicaid, the food for the hungry via SNAP, the shelter we provide through rental assistance. These and so many more services are on the chopping block.

We MUST oppose these cuts, We MUST make sure our voices are heard, and we are loudest and most effective when we Stand Together.

To do this, organizations, coalitions and campaigns are coming together from many different parts of our community on a national sign-on letter asking that Congress safeguard the policies and programs we and our neighbors rely on in the FY 2018 Budget.

If your organization has not yet signed, please do so here. Deadline to sign is June 19^th. 

You can read the letter and find a current list of signers here.

Our ability to protect the programs and services that provide basic living standards for millions of Americans depends on all of us Standing Together.

Contact info for Colorado congressional delegation:

Sen. Cory Gardner – 303-391-5777  Email here.

Sen. Michael Bennet – 303-455-7600 / 866-455-9866 Email here.

Rep. Diana DeGette (CO District 1) –  303-844-4988 Email here.

Rep. Jared Polis (CO District 2) – 303-484-9596  Email here.

Rep. Scott Tipton (CO District 3) – 970-241-2499 Email here.

Rep. Ken Buck (CO District 4) – 970-702-2136   Email here.

Rep. Doug Lamborn (CO District 5) – 719-520-0055   Email here.

Rep. Mike Coffman (CO District 6) – 720-748-7514  Email here.

Rep. Ed Perlmutter  (CO District 7) – 303-274-7944 Email here.

President Trump released his full budget plan yesterday, which slashes nutrition, health care and other important assistance programs that help millions meet a basic living standard. With the help from our friends at the Center on Budget and Policy Priorities (CBPP), we have more detail on the President’s budget, as well as an update on Senate health reform developments below.   

President Trump’s Budget

As CBPP President Bob Greenstein’s statement outlines, the President’s Fiscal Year 2018 budget “proposes steep cuts in basic health, nutrition, and other important assistance for tens of millions of struggling, low- and modest-income Americans, even as it calls for extremely large tax cuts for the nation’s wealthiest people and profitable corporations… In fact, this stands as the most radical, Robin-Hood-in-reverse budget that any modern President has ever proposed.”

Among the lowlights, the President’s budget:

• Slashes food assistance (SNAP) by $193 billion over ten years and shifts the cost of more than $100 billion of SNAP benefits, a long time federal responsibility, to the states.
• Cuts Medicaid by $600 billion over ten years—on top of the already-massive cuts in Medicaid and subsidies for private health coverage in the House-passed bill to repeal and replace the Affordable Care Act that President Trump supports and incorporates into his budget. These additional cuts would almost certainly increase the number of uninsured and would shift significant Medicaid costs to states on top of the giant cost shift in the House health bill.

Timing on Health Care

While Senate Majority Leader McConnell would like to bring a health reform proposal to the Senate floor in June, various reports indicate this could easily slip until July.

Today’s release of the CBO analysis of the House-passed bill, will kick off a process within the Senate, including consultations with the Parliamentarian about which aspects of that bill violate the Senate’s reconciliation rules. That process could take a few weeks.

We do know that intense conversations are happening in the Senate around their proposed bill now – which is why we view these next few weeks as incredibly crucial in impacting those conversations by lifting up and amplifying the opposition to ALL of the harmful proposals in this bill.

Senate Negotiations

Sen. McConnell’s appointed Republican working group to design a health reform bill as a replacement to the House’s AHCA bill, has reportedly been meeting very frequently, focusing on a wide array of issues including Medicaid; private market reforms; affordability, etc. There are some signals that the group is not close to an agreement, and that there are growing differences among Republicans on some key issues.

Several press reports confirm that some Republican senators from Medicaid expansion states are working to develop changes and improvements to the House’s Medicaid provisions.

Yet, as of now, it does not appear that this group – or any senator within – is willing to oppose eliminating the Medicaid expansion (e.g. the higher match) or converting the program to a per capita cap. The ideas that the press reports mention from this group, include delaying the effective dates and other relatively minor adjustments.

It appears that there are three particularly salient and politically-powerful harmful impacts of the House’s harmful Medicaid changes among some key Republican senators:

1. the opioid crisis
2. rural communities
3. seniors, especially very elderly, poor Americans

What’s Next & How You Can Help:

CBO Score:

First, the CBO analysis offers yet another opportunity to highlight that the House bill will cause millions of Americans to lose Medicaid coverage. The CBO score estimates that in 2018, 14 million more people will be uninsured under the American Health Care Act than under current law. The increase in the number of uninsured people relative to the number projected under current law would reach 19 million in 2020 and 23 million in 2026. We must use that fact to pressure the Senate to reject the House changes and protect Medicaid.

A summary of the CBO score can be found here: https://www.cbo.gov/publication/52752

Memorial Day Recess:

Second, the Memorial Day recess could be the last recess before the full Senate takes up health reform (even though it could slip), so we need to use it to the maximum extent possible to continue your terrific efforts to educate our senators about the impact of the House changes in Medicaid.

In the coming weeks, and during Recess, ideas and asks for engagement on Medicaid include:

• Continue to call our Senators to ask them to commit to not voting for something that would violate our core principles (below)
• Participate in House member “accountability” events – it will be important to show House members who voted for AHCA that we won’t forget their vote; this also sends an important message to our Senators as well
• Write a letter to our Senators asking them to commit to the below principles
• Call, email and tweet at our Senators with the same message
• Commit to get five friends to do the same

We continue to think the most effective message is the one we have shared before: please ask our senators to COMMIT opposing any bill that:

1. Reduces coverage for millions of Americans; OR
2. Effectively ends Medicaid expansion (no matter how delayed the effective date is) by phasing out the higher federal funding match; OR
3. Effectively ends the Medicaid program by converting it to a per capita cap or block grants; OR
4. Makes individual market coverage less affordable for low- and moderate-income people

The “ASK”:

• Cory Gardner, Republican Senator
  • With Colorado’s decision to take part in the Medicaid expansion, it is particularly important to stress that simply delaying the effective dates of the House provisions (such as phasing out federal funding) or making other relatively minor adjustments to the end of the expansion or the per capita cap (PCC) are just unacceptable.
  • There is no policy justification to end the highly successful Medicaid expansion or convert the program to a cap that will lead to the rationing of Medicaid services to the elderly, people with disabilities, and children.

• Michael Bennet, Democratic Senator
  • Democratic senators can play a vital role in this debate by continuing to lift up the harmful impact of the House Medicaid provisions in Colorado.

In the coming days, we will continue to update you on important developments and the state of play, along with sharing relevant information and messaging to help impact ongoing Senate negotiations and help keep the pressure on our Senators!

Thank you again for your hard work and willingness to keep going.

Contact info for Colorado congressional delegation:

Sen. Cory Gardner – 303-391-5777  Email here.

Sen. Michael Bennet – 303-455-7600 / 866-455-9866 Email here.

Rep. Diana DeGette (CO District 1) –  303-844-4988 Email here.

Rep. Jared Polis (CO District 2) – 303-484-9596  Email here.

Rep. Scott Tipton (CO District 3) – 970-241-2499 Email here.

Rep. Ken Buck (CO District 4) – 970-702-2136   Email here.

Rep. Doug Lamborn (CO District 5) – 719-520-0055   Email here.

Rep. Mike Coffman (CO District 6) – 720-748-7514  Email here.

Rep. Ed Perlmutter  (CO District 7) – 303-274-7944 Email here.

By CFI Staff

Here’s a summary of bills on which CFI played a role this year:

SB 17-267 – Sustainability of Rural Colorado (Sens. Guzman & Sonnenberg, Reps. Becker K. & Becker J.)

The most significant act by the 2017 General Assembly was the passage of SB 267, a bipartisan fiscal compromise designed to protect access to hospital care for rural Coloradans and provide an infusion of capital for transportation and capital construction. This measure came together late in the session and was on and off the respirator many times during its journey to the governor’s desk. SB 267 is an example of the kinds of deals we haven’t seen lately, the horse-trading of priorities. SB 267 is remarkable, as it embodies compromise across parties and among priorities.

CFI played the role of trusted adviser throughout SB 267’s journey. We were consulted for our technical expertise on the fiscal policy details of the bill and worked with other stakeholders to understand, explain and refine the bill. Though there were tough compromises made on all sides, we are ultimately very glad the bill passed.

The following outlines the most significant components of SB 267:

Hospital Provider Fee Enterprise

The centerpiece of the bill reconstitutes the Hospital Provider Fee as an enterprise and will have the effect of reducing TABOR revenue by $865 million and reducing the revenue cap by $200 million. This change will take TABOR revenue below the cap, eliminating TABOR rebates of $264 million in FY 2017-18. In addition to eliminating rebates, it means the state will earn $264 million in federal matching funds. This provision is estimated to provide $264 million more general fund dollars for public investments in FY 2017-18 and $288.6 million in 2018-19.

Marijuana Tax Provisions

SB 267 creates a state sales tax exemption for the sale of recreational marijuana products. In place of the state sales tax, the special, voter-approved sales tax on marijuana will be increased by 2.9 percentage points. The legislature can make this change because Prop AA allows the legislature to raise the rate as high as 15 percent and any revenue raised will NOT count as TABOR-defined spending. This provision will reduce TABOR revenue by approximately $30 million dollars, meaning the state will have more room to keep collected revenue before it must be returned to voters.

SB 267 contains other language that affects marijuana taxes. It makes a couple of changes in the current special sales tax rate, which is set to fall from 10 percent to 8 percent on July 1. SB 267 would keep the rate from falling to 8 percent and would set the new rate at 15 percent.

Recreational marijuana purchasers will experience an increase in the total state sales tax rate from 12.9 percent to 15 percent. The net new revenue generated from recreational marijuana taxes is approximately $40 million in FY 17-18. This revenue will provide the funding for the bill’s increases in school funding and for the increased exemption for business personal property taxes.

Senior Homestead Property Tax Exemption

SB 267 makes the Senior Homestead Exemption a TABOR rebate mechanism in any year when TABOR revenue exceeds the cap. If TABOR revenue is below the cap, the Senior Homestead Exemption will be paid from general fund revenue, as it is now. When we have TABOR rebates, the provision will free up approximately $150 million in general fund revenue and reduce taxpayer refunds by an equivalent amount.

Certificates of Participation

SB 267 authorizes the use of Certificates of Participation (COPs) valued at up to $2 billion for transportation and capital construction. The COPs require debt payments for 20 years. SB 267 identifies $100 million in general fund revenue and $50 million in highway funds for debt repayment. The general fund obligation will ramp up from $9 million in FY 2018-19 to $100 million by FY 2021-22.

Business Personal Property Tax

SB 267 reduces business personal property tax liability for businesses with business personal property valued at less than $18,000. The state will reimburse local governments for the loss of property tax collections. The cost to the state will be approximately $21 million annually. This new state obligation will be funded by the changes in the voter-approved marijuana sales taxes.

School Funding

Requires $30 million of new marijuana revenue be transferred to the State Public School Fund to be used for rural schools in FY 2018-18. These state obligations will be funded by the increases in recreational marijuana taxes. For subsequent years, the marijuana sales tax revenue transferred to the fund can be used for all school districts as part of the state’s share of total program funding for schools.

Medicaid Copays

SB 267 increases cost-sharing provisions for certain Medicaid services, including outpatient services and pharmacy services, consistent with federal law. Beginning in 2018, the bill requires that copays be double relative to their 2016 levels. This would take the average pharmacy copay from $1.25 to $2.50 for Medicaid clients.

HB 17-1187 – Change Excess State Revenue Cap Growth Factor (Rep. Thurlow, Sen. Crowder)

Another very significant bill for CFI during the 2017 session was HB 17-1187. This bill, sponsored by Rep. Dan Thurlow and Sen. Larry Crowder, proposed to modernize the current TABOR formula by tying allowable revenue growth to personal income rather than the Consumer Price Index (CPI). Personal income is a much more accurate indicator of economic growth. The proposed change would have been sent to voters on the November ballot.

In most states, during good times, revenue generated by normal economic growth can be used to restore the size of their rainy day funds (a state’s savings account), to restore cuts that had to be made during lean times and to invest in innovations and improvements, in addition to paying normal ongoing costs for teachers, road repairs and health care. But in Colorado, the rules are different. The current TABOR formula says revenue can’t grow faster than increases in population and consumer inflation. This perpetual challenge would have been addressed by linking allowed investments to economic activity measured by total state personal income. The change could have made a real difference in the ability of the state to recover from the impact of economic downturns.

CFI worked closely with Rep. Thurlow on the development of the bill. We testified in favor of the bill in House Finance Committee as well as in the Senate State, Military and Veterans Committee, where it died on a party-line vote.

We were disappointed voters were not given the opportunity to have input on the how their money is to be used. We are encouraged, however, with what appears to be a growing bipartisan, geographically diverse consensus that our fiscal rules need to be adapted to better reflective changing economic conditions.

HB 17-1191 – Demographic notes (Reps. Becker & Herod, Sen. Donovan)

One of the bills CFI drafted and worked on from the ground floor was HB 17-1191. What began as “equity impact statements” turned into a bill that would create “demographic notes.” Demographic notes are an effective and innovative way to examine the impacts of potential legislation on different demographics, including race, gender, age, income, disability status and geography. By studying disparities in these areas, lawmakers would be better equipped to ensure their policies are truly targeted at the Coloradans they are intended to benefit.

Similar evaluations have been used across the country.

In Minneapolis, the local board of education used an equity assessment in its decision-making process related to reorganizing school enrollment and transportation routes in the public school district. Using this tool, the school board was able to identify how new school initiatives could minimize adverse consequences and racial disparities while saving money for the schools. Iowa and Connecticut have incorporated similar evaluations into the development of all new sentencing laws. And King County in Washington uses an “equity impact review tool” to ensure equity is a key component in the development and implementation of new policies, programs and funding decisions within the county.

This bill passed on a party-line vote in both House Finance and on the House floor. The bill sparked an interesting discussion on the floor when a legislator stated bills like this, which point out disparities, create “class warfare” because we are all simply “Coloradans and Americans” and that is all we need to know. Several members of the House were quick to jump on this argument and point out the disparities that are currently present and the reason this bill is so valuable in illuminating the impacts of legislative policies on different people.

Though the bill was eventually killed in Senate Finance, we hope to work with our sponsors to draft similar legislation in the future.

HB 17-1324 – Education Opportunity Act (Reps. McLachlan & Pettersen, Sen. Todd)

HB 1324, another priority bill for CFI, did two things. First, it would have created a tax incentives for rural Colorado teachers, and second, it helped middle-class families save for college. CFI believes both of these goals are extremely important for Colorado communities, and we were excited to put them together in this bill.

This bill would have created a tax incentive for new teachers to teach in rural Colorado. The incentive began at $1,000 for the first year of teaching and increased every year for five years, ending at $5,000 in year five. When you consider that the average teacher salary at rural schools is $38,000, with some teachers making as little as $28,000, this credit would have made a huge impact on the lives of teachers who want to make a difference in our rural communities.

This bill also provided a one-time $2,500 tax credit to offset the tuition for student teachers in rural Colorado.

And all of this would have been provided with minimal fiscal impact to the state.

The reason for that is because of the second part of this bill, which would have means-tested the Colorado 529 tax deduction and helped middle-class families save for college.

The bill increased the benefits of 529 plans for those earning up to $100,000 per year by doubling their tax benefit from the state. That would have meant that roughly 80 percent of all Colorado earners would be eligible for $2 dollars of tax deduction for every dollar they contribute to a 529 college savings plan. Then the bill would have gradually reduced the deduction as income increases.

It is rare that we have the opportunity to draft a bill that provides a meaningful tax incentive at a minimal fiscal cost. HB 1324 would have made a huge difference in the lives of Colorado families and children, all across the state, and especially in rural Colorado. However, the bill was killed in the Senate finance committee, even after passing through the house with bipartisan support.

The bill was featured in both the Denver Post and on the Colorado News Connection.

We intend to work on this bill over the summer with our partners in the rural education community and hope to bring it back next year with bipartisan support.

HB 17-1242 – Concerning Transportation Funding (Reps. Duran & Mitsch Bush, Sens. Grantham & Baumgartner)

The original “deal” of the legislative session was HB 1242, a bill to send a measure to the ballot to increase sales taxes to fund transportation. This bill, introduced by leadership in both the House and the Senate, would have increased our current sales tax rate by .062 percent to 3.56 percent and would have used the new revenue to bond for transportation funding. The transportation funding was to be split between the state highway fund, local governments and a newly created multi-modal fund.

CFI was supportive of the bill, but was concerned about the regressive nature of the increase in sales taxes. As a result, we testified in favor of a multi-modal fund to partially fund affordable transit for low-income families.

Despite widespread support from bipartisan leadership, business groups, environmental organizations and rural advocates, the bill was met with resistance from a small group of lawmakers who didn’t want to rely on new revenue to fund transportation and instead insisted we could raid the general fund for necessary funds. As a result, the bill was killed in the Senate on a party-line vote.

Defense

CFI remained vigilant against bad bills and zombie tax policies that came out this session. We worked to defeat two bills that would strip business personal property tax revenue from rural communities, a bill that would require the General Assembly to prioritize transportation funding above all other priorities, and bills that would move Colorado backwards regarding immigration policy.

SB 17-238 – Notifications Regarding Online Purchases (Sen. Holbert, Reps. Wist & Neville)

In 2010, Colorado passed a notification and reporting law that required online retailers to either collect state sales taxes in Colorado, or give notice to the Department of Revenue and individuals on how much use tax they owe on their online purchases. CFI worked to pass this bill at that time and is excited to see it take effect this year. Unfortunately, not everyone shares our enthusiasm.

SB 238, brought by a large, national group of internet retailers, attempted to eliminate an important compliance standard in the bill, by requiring online retailers to notify only individuals, but not the Department of Revenue about use taxes owed. The bill’s modifications would have taken the “teeth” out of the bill and reversed the progress Colorado has made on the collection of internet sales tax.

CFI testified against this bill in Senate Finance and then in House Finance, where it died on a party-line vote.

SB 17-287 – Endowment Tax Credit (Sen. Priola, Rep. Garnett)

SB 287 was introduced again this year and would have allowed taxpayers an income tax credit for contributions to an eligible endowment fund. While we recognize the good intentions behind this bill, research shows that the effect of this type of tax credit is inequitable and largely benefits only the wealthiest Coloradans in the top income brackets. Furthermore, this bill creates winners and losers within the charitable community as the tax credit incentivizes donors to give disproportionally to charities with an endowment. Frequently, these are the largest organizations with the highest number of assets. Recognizing that the Colorado tax system is already regressive in nature, with low- and middle-income families paying a higher effective tax rate than wealthier individuals, CFI opposed this bill. The bill died on the calendar in House Appropriations.

HB 17-1007 – Tax Benefit Employer CollegeInvest Contribution (Rep. Garnett, Sen. Gardner)

HB 1007 would have created a tax break for employers who contributed to an employee’s 529 CollegeInvest savings plan. CFI dubbed this bill the “Duck, Duck, Goose” bill because it would have allowed employers to take a double deduction for contributions to employees’ college savings plans while simultaneously requiring employees to pay state tax. Employers first duck their tax liability by deducting their contribution as employee compensation. Then, they’d duck their tax liability on an authorized 529 contribution. Meanwhile, employees would then get goosed with the tax on the employer contribution, as it would be considered income to the employee. CFI lobbied against the bill and it was eventually killed by the sponsor in its first committee of reference.

In coalition

HB17-1307 – Family and Medical Leave Insurance Program Wage Replacement (FAMLI) (Rep. Winter, Sen. Moreno)

HB 1307, a CFI priority again this year, would guarantee every Colorado worker up to 12 weeks of wage replacement while taking time to care for themselves, a sick family member or to welcome and bond with a new child. CFI worked closely with coalition leader, 9to5 Colorado, and bill sponsors to provide an estimate of the cost and legal feasibility of the program, and to help find innovative financing solutions that work given Colorado’s unique fiscal constraints. CFI supports paid family and medical leave because mounting research shows that having access to paid leave is good for workers, good for families and good for the economy. Allowing workers to take paid time off to care for themselves or their loved ones saves the state and Colorado employers money in the long run.

The bill passed House Business, House Finance, and House Appropriations after families and businesses told moving stories of the need for paid leave, and others presented extensive research on the benefits. Then, the House passed the bill after a spirited debate. Unfortunately, the FAMLI bill died in Senate State Affairs committee on a party-line vote. With momentum building around the country and in Colorado, we’re sure to see this bill in some form next year and CFI will be there to support it.

With the American Healthcare Act (AHCA) passing in the House yesterday, we wanted to take a quick moment to thank you all for your hard work and efforts to defeat this bill. Although we did not get the outcome we wanted, it’s worth taking a moment to acknowledge the true successes we’ve had in postponing this passage in the House for as long as we did. With that, we would like to share a message with you from our partners at the Center on Budget and Policy Priorities (CBPP) on what’s next.

We now move into the next phase of our efforts as this bill heads to the Senate. We will continue to share additional information and updates, but for now, there are a few important things to know about what we expect in the coming weeks and months:

• The Senate cannot take up this without a score from the Congressional Budget Office (CBO) – this score will provide fiscal and coverage impact of this bill
• From what we understand today, we don’t expect to see that score for a week or two – but once it is released, it will be a very important data point that we will want to collectively lift up
• While this timeline could very well change, preliminary reports are that the Senate may not take this bill up until June
• That being said, it is very important to note that we have direct reports that Senate conversations around this bill are well underway – that means key decisions could start being made as early as the next week or two
• The above point underscores that there will be plenty to do to affect this vote in the near future through additional action and outreach.

While the Republicans have a much smaller margin to contend with than in the House (they only need 51 votes to pass it), we must assume that Sen. McConnell will put together a package that can garner those 51 votes. Much of the conversation around this bill’s prospects in the Senate from pundits and other news media has centered on the fact that it “can’t pass in the Senate” and it’s “dead on arrival in the Senate.”

This line of message is extremely worrying for two reasons:

1. It allows anyone not following this extremely closely to think this fight is over – that our work is done and we know that to not be true
2. There is a real and grave risk that the Senate makes a number of changes to the bill, but leaves the most harmful elements of the bill intact. The most glaring example of this is the Senate leaving in the potential for Per capita caps – which would end Medicaid as we know it.

Another example of this is that many Republican Senators are already on record saying they oppose the House bill “as is” and that it needs changes.

We MUST hold Senators accountable for changing the specific, harmful provisions in this bill – rather than allowing them a pass in saying “they don’t support the House bill”. This will make it easier for them to make several changes that either don’t affect the real policy issues with this bill, or make them worse, and pass it while claiming they have changed it.

We must ask Senators to oppose ANY bill or measure in the bill that:

• Causes millions of Americans to lose healthcare coverage
• Ends Medicaid expansion funding in states
• And ends Medicaid as we know it through the use block grants and PCCs to shift costs to states

Please take a moment to read President and founder of CBPP, Bob Greenstein’s, statement on the passage of this bill: http://www.cbpp.org/press/statements/greenstein-house-votes-to-take-health-care-coverage-away-from-millions-and-make-it

Thank you once again for your tireless energy and work – we live to fight another day and despite today’s vote in the House we are still better positioned than we imagined we would be several months ago. That is due to your hard work and successes to date.

Onward!

Contact info for Colorado congressional delegation:

Sen. Cory Gardner – 303-391-5777  Email here.

Sen. Michael Bennet – 303-455-7600 / 866-455-9866 Email here.

Rep. Diana DeGette (CO District 1) –  303-844-4988 Email here.

Rep. Jared Polis (CO District 2) – 303-484-9596  Email here.

Rep. Scott Tipton (CO District 3) – 970-241-2499 Email here.

Rep. Ken Buck (CO District 4) – 970-702-2136   Email here.

Rep. Doug Lamborn (CO District 5) – 719-520-0055   Email here.

Rep. Mike Coffman (CO District 6) – 720-748-7514  Email here.

Rep. Ed Perlmutter  (CO District 7) – 303-274-7944 Email here.