Saving Rural Hospitals – and Much More

(May 8) – The House Finance Committee voted 11-2 this afternoon to advance one of the biggest bills of the session – a bipartisan measure to save Colorado hospitals from more than $500 million in budget cuts that would have doomed some rural hospitals and forced every hospital to reduce programs and services.

As amended in the Senate, the bill also makes significant adjustments to the state government’s finances, benefiting public school students, motorists, small business owners and seniors.

“We all have a goal of improving education for our kids,” Majority Leader KC Becker, D-Boulder, told the committee. “We all have a goal of supporting small business. We all have a goal of making sure our hospitals are thriving and sustainable. We all have a goal of helping seniors. This bill does all that.”

“There is power in collaboration and this bill is a clear example of what we can accomplish when we work together to problem solve,” Speaker Crisanta Duran said. “This is a bill that will help Coloradans in every county in the state.”

SB17-267, which is sponsored in the House by Majority Leader Becker and Rep. Jon Becker, R-Fort Morgan, passed the Senate this morning. The bill would:

  • Repeal the hospital provider fee, a device instituted in 2009 to draw federal matching funds to reduce hospitals’ unreimbursed costs for treating indigent or uninsured patients. The problem is that the roughly $700 million paid by hospitals each year counts against the state’s Referendum C revenue cap, forcing cuts to schools, roads and other critical state priorities.
  • Reconstitute the hospital provider fee as a state enterprise, still drawing federal matching funds but exempt from the Ref C cap and separate from the rest of the budget.

Some of the Ref C cap headroom freed up by the hospital provider fee shift would be allocated to

  • Reduce the cap by $200 million.
  • Dedicate $100 million from the general fund and $50 million from the Highway Users Tax Fund to purchase nearly $2 billion in certificates of participation, including $1.8 billion for transportation projects and $120 million for other capital construction over the next four years.
  • Increase the exemption from the business personal property tax to the first $18,000 of taxable property, increasing the property subject to the tax break by $10,700 and decreasing state revenue by $37 million.
  • Dedicate $30 million for rural schools.
  • Allocate $29 million a year in marijuana taxes to the Education Fund.

The amended bill also

  • Reconstitutes the senior homestead property tax exemption as the first rebate to taxpayers in years when TABOR rebates are mandated, helping Colorado seniors stay in their homes and protecting this important exemption during economic downturns.
  • Requires increased copayments from Medicaid patients for pharmacy services and hospital outpatient services. The copay for a typical prescription – a brand-name drug – would increase from $3 to $4. Other services that are currently exempt from Medicaid copays will remain exempt, and children, pregnant women and mothers of newborns, patients in institutions, and breast and cervical cancer patients would remain exempt from copays.
  • Eliminates the existing 2.9 percent state sales tax on marijuana and increases the state’s excise tax on marijuana from 10 percent to 15 percent, for a net increase in marijuana taxes of 2.1 percent.
  • Turns off the on-again, off-again SB09-228 transportation funding mechanism after SB17-262 transfers to CDOT – $79 million this year, $79 million next year – are completed.
  • Requires a mandatory calculation of a 2 percent across-the-board reduction for all departments of government, except for the state Department of Transportation, the Department of Education and those departments outside of the governor’s purview, principally the Secretary of State’s office and the Attorney General’s office.
  • Requires the state to seek federal approval and dollars to build an enhanced pediatric health home for children with complex medical conditions.

SB17-267 goes to the Appropriations Committee, which will hear it this afternoon.

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