Rural hospitals and roads bill off life support; still driving wedge between Republicans

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DENVER — A bill that divided Republicans and looked to be on its last breath, has received a jolt of energy, but may be dividing the party more than initially thought.

SB17- 267, sponsored by Republican Jerry Sonnenberg, who represents a big chunk of northeast Colorado, is known as the Sustainability of Rural Colorado Act. In its original form, it sought to pump about $400 million into rural school districts, $300 million into rural communities for road projects and inject millions more — possibly even hundreds of millions — into rural hospitals by way of Medicaid and the Hospital Provider Fee (HPF).

What the money will fund is not as much the problem as how it will be funded. But it had enough Republican support to get it out of the Senate Finance Committee.

After almost killing the bill himself in appropriations a couple weeks ago, saying Democrats refused to compromise, Sonnenberg thinks he has found enough common ground to seal the deal.

It is scheduled for Appropriations on Friday, if it clears that committee, it will move to the Senate floor, where Sonnenberg believes he has the support to get it through.

Sonnenberg has repeatedly said the money this bill would filter into the rural communities is important to the survival of most smaller hospitals, but to do it, he must compromise on the controversial HPF that Republicans in the past have refused to reclassify as an enterprise fund.

The fee is assessed on all hospitals, which pays a varied amount for every night someone sleeps in a hospital bed.  The fee is collected through a charge added to patients’ hospital bills, though the law creating the fee bars hospitals from showing it on the bill as a line item, leading some to call it a bed tax. The revenue is then used to reimburse hospitals to sustain and expand Medicaid programs and for the Colorado Indigent Care Program.

For the past two years, Democrats have tried to convert the fee, which currently goes into a segregated cash fund, to an enterprise fund. Because it generates more than $800 million a year in revenue, it causes the state to hit its revenue cap under the Taxpayer’s Bill of Rights (TABOR). For the past couple of years, taxpayers have received refunds because of the excess.

If it were converted, it would no longer fall under TABOR. Instead, a 13-member board appointed by the Governor, would control what is equal to about 10 percent of the state’s total expenditures. The conversion would free up space under the cap, allowing the state to collect more and spend more.

In the original version of 267, Sonneberg proposed reducing the state spending limit under TABOR by $670 million. When Democrats refused that, he cut it in half to $335 million. Democrats still refused, so on Monday, Sonnenberg announced the new reduction at $200 million.

Appropriations Chairman, Sen. Kevin Lundberg (R-Berthoud), said Thursday he does not support the bill and had planned to not let it be heard in Appropriations, something he usually has the discretion as chairman to do.

However, with a majority vote, members of the Appropriations Committee can overrule Lundberg and force it to be heard. Lundberg said he got a letter from the committee Thursday letting him know they would do just that if he didn’t put it on the schedule.

It will move forward as planned.

“It’s out of my hands,” Lundberg said, adding he still won’t support the bill.

Sonneberg said earlier that two other Senate Republicans, Jake Tate (Arapahoe), and Owen Hill (El-Paso), stuck their necks out trying to find a compromise on the issue that has long caused angst among lawmakers.

Hill previously said he gave the bill his support because there is right way and a wrong way to do an enterprise fund, and he believed this was the right way.

“The Democrats in the past have tried to enterprise this fund to give them more money to spend,” Hill said. “But I’m proud of Jerry Sonnenberg for standing up and saying, ‘No, we’re going to protect this from being used wrong. We’re not going to use hospital provider fees to pay for the rest of our budget. That’s fiscally wrong, so we’re going to move it out and protect it from state meddling. But at the same time, we’re going to reduce the overall amount the state is going to spend.’”

Hill said previously, however, that lowering the TABOR cap was mandatory for his vote. Thursday afternoon he said he hadn’t had a chance to review the new proposal, so it was unclear if he would support the bill as amended.

Lundberg said the bill is in violation of the Colorado Constitution, and he doesn’t believe it’s legal.

Under TABOR, Lundberg said, any funds that are initially governed by TABOR and are reclassified must lower the spending by an equal amount. In this case, 267 would free up $870 million of cap space but only lower spending by $200 million, essentially giving lawmakers $670 million more a year to spend without asking voters.

“It’s not just a bad bill,” Lundberg said. “It’s a constitutionally bad bill.”

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