Colorado Capitol Report

In this Capitol Report:

• Senate Gives Omnibus Revenue-and-Spending Bill Preliminary OK
• Legislature Sends Construction-Litigation Bill to Governor
• “Ban-the-Box” Bill Dies at the Hands of Senate Committee
• Senate Committee Nixes CACI-Opposed “FAMLI” Bill
• Senate Committee Blocks Bill to Eliminate Non-Economic Damages Cap for Wrongful Death of a Child
• Federal News Blink
• CACI's Legislative Agenda

Senate Gives Omnibus Revenue-and-Spending Bill Preliminary OK

About mid-day today, the Senate gave preliminary, voice-vote approval on Second Reading to an omnibus revenue-and-spending bill, SB-267, that seeks to address in some way and to some degree a large array of unresolved, controversial issues: transportation, Medicaid, the hospital provider fee, K-12 education and state agency spending.

Conversion of the hospital provider fee (HPF) to a state enterprise is the central, critical keystone of the compromise.

The Senate must approve the bill Monday on a recorded, final Third Reading vote, which will send the bill to the House with the session ending Wednesday.

Yesterday, a bipartisan group of senators and representatives announced a “grand compromise” on numerous revenue-and spending provisions, which follows weeks of intense discussion between the parties and between the two chambers.

SB-267, the vehicle for the compromise is, which was introduced March 27^th, and it had in the Senate Appropriations languished until earlier this morning as lawmakers worked hard to forge the compromise.

SB-267 is co-sponsored by Senator Lucia Guzman (D-Denver) and Senate President Pro Tem Jerry Sonnenberg (R-Sterling).

CACI supports SB-267 as introduced because CACI last year endorsed HB-1420, which would have converted the hospital provider fee to a state enterprise.  HB-1420 died at the end of the 2016 session in the Senate Finance Committee.

The Senate Appropriations Committee approved the introduced bill this morning on a 5-to-2 vote, which sent it straight to the Senate Floor for Second Reading debate this on Special Orders.  The Committee’s Chair, Senator Kevin Lundberg (R-Berthoud) and the Vice-Chair, Senator Kent Lambert (R-Colorado Springs), were the only two votes against the bill.

Here are the major provisions of the compromise as reported by the news media:

• State agency spending will be reduced by 2 percent in the 2018-2019 fiscal year beginning July 1^st, 2018;
• Hospital funding will not be cut;
• The hospital provider fee will be converted to a State enterprise;
• State property will be sold and re-leased to create a fund to pay for State building maintenance;
• $1.8 billion will go to transportation;
• Medicaid spending will be reined in;
• The TABOR cap will be lowered;
• Businesses will receive some State relief for business personal property taxes paid to local governments.
• An additional $50 million will go to rural schools and the State Education Fund.

State agency spending

State agency directors will be directed to submit budget requests to Governor Hickenlooper for the 2018-2019 budget year that are 2 percent less than the 2017-2018 budget requests.

Hospital funding

The State budget, which the legislature has sent to Governor John Hickenlooper (D) contains a reduction in funding to hospitals of $264 in State funds to help balance the budget, which would have been matched by an equal amount from the Federal Government.

The total funding loss would, therefore, have been $528 million, which threatened to devastate the budgets of six to 12 rural hospitals and to sharply harm some urban hospitals (such as Denver Health Medical Center, which would lose $48 million) that serve a large proportion of low-income patients, including those that receive Medicaid.

The state money comes from the hospital provider fee, which hospitals pay on a per-patient basis, which then is used to obtain matching Federal funds.  The combined State and Federal funds then go to hospitals proportionate to the number of Medicaid patients each serves.  The expansion of Medicaid in Colorado by the legislature under the Federal Affordable Care Act greatly increased the number of Medicaid patients in the state.

The compromise will convert the HPF into a state enterprise, which means that the hospital provider fee can no longer be counted as General Fund revenue, the total of which is governed by the Taxpayers’ Bill of Rights (TABOR).

State property

A $120 million fund will be created by selling and then re-leasing State buildings that will then be used for much-needed maintenance of State buildings.

Transportation

Revenue will be earmarked to sell $1.8 billion in “certificates of participation,” (COP), which is State-speak for bonds, to be used for highway projects.  Ten percent of the bond revenue will be available for multi-model transportation projects like bicycle lanes, mass transit, etc.  Twenty-five percent of the bond revenue will be allocated to counties with populations less than 50,000.

Medicaid

Republicans sought to increase all Medicaid co-pays to the maximum allowed by Federal law, to which the Democrats objected.  The compromise is to double the co-pay from $2.5 to $2.50, on average, for drugs and out-patient services.  Children’s services and women’s health services would be exempt from the increase.

In addition, the compromise reduces the fee collected by the Colorado Department of Health Care Policy and Financing to administer the HPF.

TABOR cap

TABOR limits the amount of revenue each year that the State can retain to an increase, based on inflation and population growth, over that of the prior year.

A loud and consistent message from Republicans this session has been that Democrats have been unwilling to cut spending, especially on Medicaid, to free up General Fund money for transportation.

Putting the HPF into a state enterprise would free up $550 million under the TABOR revenue cap that could be spent.    Republicans thus initially wanted to lower the TABOR cap an amount equal to the HPF, which the Democrats opposed.

Consequently, the compromise is to reduce the TABOR cap by $200 million  By lowering the cap $200 million, the additional amount under the TABOR revenue cap that can be spent becomes $350 million.

Business personal property tax

A State tax credit will be provided to a business for the local business personal property tax paid on the first $18,000 worth of equipment owned by a business.  Current law exempts the first $7,300 of equipment owned by a business.  The compromise also provides a State tax credit to businesses for the business personal property taxes paid to local governments on equipment valued at $15,000 or less.

K-12 education

The compromise will send $30 million more to rural schools and $20 million more to the State Education Fund.

For more information on SB-267, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

For news media coverage and more information about SB-267 and the debate, read:

“Colorado lawmakers reach sweeping deal to stave off $528 million cut to hospitals,” by Brian Eason, The Denver Post, May 4^th.

“Colorado legislators reach grad deal on hospitals, roads and business tax cuts,” by Ed Sealover, The Denver Business Journal, May 4^th.

“Senate Committee Endorses ‘Rural Sustainability’ Bill,” CACI Colorado Capitol Report, April 13^th.

Legislature Sends Construction-Litigation Bill to Governor

The signature achievement of the Colorado General Assembly on the thorny issue of construction-litigation reform appears to be the compromise bill, HB-1279, which finally cleared the legislature yesterday.  CACI supported the bill.

The issue of how to kick-start the construction of affordable condominiums and town homes has bedeviled the legislature for four straight years.  The bill stands out as a notable hallmark of bipartisanship and compromise this session.

Yesterday morning, the Senate gave unanimous, bipartisan approval to HB-1279 on a 33-0 vote, which sends the bill to Governor John Hickenlooper (D), who presumably will sign it into law.  Senators Kevin Priola (R-Henderson) and Vicki Marble (R-Fort Collins) were excused.

On April 24^th, the House passed the bill on final, Third Reading by a 64-0 vote, with one member, Representative Kimmi Lewis (R-Kim), excused.

Last month, as various bills seeking to address the issue died or languished, it seemed that, once again, the legislature would be stalemated on the problem for the fifth year in a row about how to ignite the construction of townhomes and condominiums across Colorado and provide affordable, entry-level multi-family homes.

Late on the night of April 18^th, however, bipartisan sponsors and interested organizations on both sides of the issue reached agreement on establishing a statutory framework that balances the interests of builders of townhomes and condominiums with that of the units’ owners.

Key provisions of the compromise include:

• A majority of homeowners–instead of a majority of a homeowner association board–must vote to approve filing a lawsuit against a developer over alleged construction defects;
• Extending the statute of limitations by 90 days during the voting period for homeowners to discover and report alleged defects before unit owners proceed with a vote on whether or not to pursue a lawsuit against the builder;
• Reducing the types of unit owners who can participate in the vote;
• Detailing more specifically the process for the election on whether or not to pursue a lawsuit, including informing homeowners of the pros and cons of a lawsuit.

For more information about HB-1279, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

For news media coverage of HB-1279, read:

“Colorado Legislature sends construction-defects bill to governor,” by Ed Sealover, The Denver Business Journal, May 4^th.

“Measure that could awaken Colorado condo construction goes to Hickenlooper’s desk,” by John Aguilar, The Denver Post, May 4^th.

“House Sends Compromise Construction-Litigation Reform Bill to Senate with 64-0 Vote,” CACI Colorado Capitol Report, April 24^th.

“Ban-the-Box” Bill Dies at the Hands of Senate Committee

On Monday, the Senate State, Veterans and Military Affairs Committee, on a party-line 3-2 vote, deep-sixed HB-1305, which sought to prohibit private-sector employers from asking job-hunters on job-applications whether or not they had criminal histories.

The CACI Labor and Employment Council opposed the bill.

The bill’s Senate sponsor was Senate Minority Leader Lucia Guzman (D-Denver).  The House sponsors were Representative Mike Foote (D-Lafayette) and Representative Jovan Melton (D-Aurora).

Although HB-1305 would have barred an employer from asking a question about an applicant’s criminal history on a job application form, the employer would not have been prohibited from asking the applicant about a criminal history during an interview.

The employer also could conduct a background check of the applicant at any time.  For example, an employer only needs an applicant’s full name and date of birth to conduct a Colorado felony background check by visiting the web site of the Colorado Bureau of Investigation and using a credit card to pay $6.85.

Here’s the summary of the introduced bill from the fiscal note that was issued April 3^rd:

This bill prohibits an employer from stating in a job posting or on any form of application that a person with a criminal history may not apply or from inquiring into or requiring disclosure of an applicant’s criminal history on an initial application. These rules do not apply if an employer is advertising a position that federal, state, or local law prohibits individuals with specific criminal convictions from holding. The bill also exempts any employer hiring as part of a program to encourage the employment of people with criminal histories. An employer may obtain a criminal background report during any stage of the hiring process.

Individuals may file complaints alleging a violation of these rules with the Colorado Department of Labor and Employment (CDLE) CDLE must investigate any complaint received within six months of the alleged violation, unless the department deems the complaint without merit. An employer who violates the law is subject to an order requiring compliance within 30 days and the following penalties:

• for a first violation: a warning;
• for a second violation: a civil penalty of up to $500 for employers with 14 or fewer employees and $1,000 for employers with more than 14 employees; and
• for a third or subsequent violation: a civil penalty of up to $1,000 for employers with 14 or fewer employees and $2,500 for employers with more than 14 employees.

CDLE must adopt rules regarding procedures for handling complaints filed against employers, including rules for providing notice to employers and requirements for retaining and maintaining relevant employment records during an investigation.

CDLE is the Colorado Department of Labor and Employment.

CACI’s Loren Furman, Senior Vice President, State and Local Relations, spoke before the Committee in opposition to the measure.  Here’s an edited version of her prepared testimony:

I am not insensitive to the witnesses here.  They had or have circumstances that are unique, which should not preclude them from obtaining employment.

I am here to speak from the perspective of the employers that CACI represents across the state who believe in giving individuals a second chance.  Choosing the best candidate for a job is an exhaustive process for an employer.

First, we’ve heard over and over again from our members that employers need all of the information they can get about an applicant to make sure he or she is the right match for the job.  If there is a situation in which an applicant had a “circumstance” in his life, he or she has an opportunity to explain that in the application.

Second, I would like to point out that recent studies have shown that this kind of policy can have unintended consequences on the same people it is trying to help.  Studies have shown that providing more information about applicants actually increases hiring, and taking away information decreases opportunities.

Third, CACI has concerns that the bill could create costly liability risks for employers.  The average settlement for a lawsuit claiming that an employer was negligent in its hiring is $1 million.  And, 75 percent of the time, employers lose those lawsuits.

This bill could potentially put many companies out of business.  Again, it’s important for an employer to have every piece of information about a potential worker at the beginning of the process when the employer is evaluating the applicant.

Finally, this bill only targets the private sector, not the public sector.  In other states where these types of bills have been introduced, the bills have applied to both sectors.

I would think that the witnesses here in support of the bill are interested in jobs in both the public and private sectors.  Consequently, I’m concerned that the bill narrows its scope only to the private sector simply to avoid a fiscal impact on the bill.

In closing, CACI believes there are avenues in this bill that would work for employers and workers.  I have expressed these ideas to the House sponsors, but they were not interested.

CACI is always willing to find a way to work through legislation that ensures a fair balance between employers and their workers.

Also testifying for CACI against the bill on her own behalf was Cammie Redpath, a member of the Colorado Society of Human Resource Managers (SHRM, which) is a CACI member.  Cammie is Chief Human Resources Officer, Black Creek Capital, Dividend Capital and DCT Industrial Trust.

On April 24^th, the Democrat-controlled House passed HB-1305 on a 36-to-28 vote.  One Democrat—Representative Matt Gray of Broomfield—voted against the bill.  Representative Kimmi Lewis (R-Kim) was excused.

HB-1305 was a part of a package of “messaging bills” introduced by progressive House Democrats that target the Colorado business community under the rationale of helping the economic well-being of low-income workers.

For more information on HB-1305, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

For news media coverage of HB-1305, read:

“Colorado Senate again kills ‘Ban the Box’ bill shielding job seekers with a past,” by Ed Sealover, The Denver Business Journal, May 1^st.

Senate Committee Nixes CACI-Opposed “FAMLI” Bill

On Wednesday, the Senate State, Veterans and Military Affairs Committee, on a party-line 3-2 vote, torpedoed  HB-1307, the paid family-and-medical leave proposal.

The CACI Labor and Employment Council opposed the measure.

The bill was entitled “Family And Medical Leave Insurance Program Wage Replacement.”  Representative Faith Winter (D-Westminster) was the House sponsor of the bill.  Democrat Senators Rhonda Fields (Aurora) and  Dominick Moreno (Commerce City) were the Senate co-sponsors.

HB-1307 would have created a paid family-and-medical leave insurance program as a state enterprise that would have been funded by every worker in Colorado, whether in the public sector or the private sector.  A worker at a company with a benefit plan that covered paid family-and-medical leave would, in effect, have been subsidizing workers at firms that lacked such plans.  The insurance premium per worker could not have exceeded 0.99 percent of total annual taxable wages.

Another controversial provision of the bill was that the premium would have been set by only one person who would have been free of any oversight whatsoever, including oversight by the legislature: the director of the newly created FAMLI Division in the Colorado Department of Labor and Employment.  The director also could have imposed an insolvency surcharge on workers without any restrictions or oversight.

Businesses would have been required to administer the program and establish the proper payroll deduction scheme to send workers’ premiums to the FAMLI fund.  According to the bill’s fiscal note, the CDLE “must determine the nominal and reasonable assistance to provide to employers to offset the initial costs of creating the payroll deduction from the FAMLI Fund.”  Beyond this thin reed of help, employers would have received no “assistance” down the road for costs incurred with administering the new program.

In addition, the FAMLI Division director would have been authorized to create a “fine structure” for employers who violated the bill’s prohibition against maintaining a worker’s benefits while the employee was on leave or discriminating against the worker in some other way.

From an employer’s perspective, there were many other reasons to have been concerned about the bill, not the least is the creation of a new state bureaucracy employing more than 220 new workers by the state’s 2019-2020 fiscal year.

CACI’s Loren Furman, Senior Vice President, State and Federal Relations, testified against the bill before the House Business Affairs and Labor Committee on April 11^th and again yesterday before the Senate State, Veterans and Military Affairs Committee.  Here’s an edited version of her prepared testimony for yesterday’s hearing of the bill by the Senate State, Veterans and Military Affairs Committee:

CACI is opposed to HB 1307.  CACI has several concerns about this bill beyond the scope of just employers and their workers.  Many employers across the state have a variety of benefit programs that cover leave for workers for medical or family reasons.  Consequently, it’s important to make this point at the beginning: “No size fits all.”

First, this bill is significantly different from the Federal Family Medical Leave Act, which employers with 50 or more workers have followed since 1993.  Complying with the Federal FMLA is not easy for employers, and this proposal would complicate compliance even more for businesses.

The reason for this additional complication for employers is that this bill would be a mandate on any size of employer, even a company with one or two employees;

One of the most concerning provisions of the bill is the requirement that would  guarantee a worker the same or an equivalent position after taking the leave–even if the worker had only been  employed for 30 days!

A small employer obviously can’t afford to find and hire another skilled, temporary worker while continuing to pay a worker who may be gone for up to twelve weeks.

Second, the bill is not clear on whether or not it allows a worker to collect unemployment insurance benefits at the same time the workers is collecting paid leave as stipulated by HB-1307.  Based on a worker’s ability to collect both benefits, CACI is concerned that there would be no incentive for an individual to return to work.

Third, the FAMLI program is projected to cost a half billion dollars, and it would require 220 new state employees to run the program.  The program would rely on employees’ premium payments to fund it.  In addition, workers might have to pay an additional “solvency surcharge” to keep the program actuarially sound.

CACI las learned that other states, which have adopted similar legislation, didn’t accurately project participation by workers.  Colorado should not so assume that all workers will pay into this program because individual workers would be able to “opt out.”

The three state—California, New Jersey and Rhode Island–that have adopted programs similar to HB-1307 have utilization rates ranging from 1.5 percent to 5 percent, which is incredibly low.

Finally, CACI has a few more concerns about the bill, including the following:

• There is a lack of predictability that the FAMLI program would survive;
• Workers who choose to participate in the FAMLI program face the risk that they may not receive the leave they were relying and or which they paid an insurance premium if the program goes under.
• If there isn’t enough money to keep the program solvent, will the State then require employers to fund it?

In closing, surveys of employers by CACI and the Mountain States Employers Council show that businesses across Colorado offer many different leave programs to accommodate workers’ unique needs.  Because each employee’s needs are different, the best solution is to continue to allow employers and workers to craft solutions that best suit both parties.

CACI believes that HB-1307 is a risky, expensive proposition that doesn’t have the long-term funding and reliability that employees will need for taking advantage of such a program.

HB-1307 was a part of a package of “messaging bills” introduced by progressive House Democrats that target the Colorado business community under the rationale of helping the economic well-being of low-income workers.  Such messaging bills seek to address in different ways the larger Democrat goal of tackling the issue of income inequality, which is part-and-parcel of their national and Colorado strategy of hammering the business community on the issue, whether it’s on the campaign trail or in the U.S. Congress and state legislatures.

Other Democrat messaging bills this session include:

• HB-1001, Employee Leave Attend Child’s Academic Activities  DEAD
• HB-1290, Colorado Secure Savings Plan  DEAD
• HB-1305, Limits on Job Applicant Criminal History Inquiries  DEAD
• HB-1314, Colorado Right to Rest Act  DEAD

Messaging bills have little chance of surviving the legislative process on a bipartisan basis, however,  because sponsors are “playing to the base” of their supporters for such political purposes as raising campaign money and consolidating support for individual lawmakers when they run for re-election.

Both Democrats and Republicans, of course, advocate messaging bills.  The major difference is that many Republican messaging bills involve social issues while many Democrat messaging bills are aimed at employers.

For more information on HB-1307, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

For news media coverage of the bill, read:

“Family-leave program for employers meets its end in Colorado legislature,” by Ed Sealover, The Denver Business Journal, May 3^rd 

“Bill to create mandatory paid-family-leave program gets Colorado House approval,” by Ed Sealover, The Denver Business Journal, April 28^th.

“House Sends Paid Family-and-Medical Leave Bill to Senate,” CACI Colorado Capitol Report, April 28^th.

Senate Committee Blocks Bill to Eliminate Non-Economic Damages Cap for Wrongful Death of a Child

A Democrat House bill that would eliminated of the cap on non-economic damages for the wrongful death of a minor child died Wednesday in the Senate State, Veterans and Military Affairs Committee, on a party-line 3-2 vote.  CACI opposed the bill.

The Senate sponsor was Senator Daniel Kagan (D-Cherry Hills Village).  The House co-sponsors were Majority Leader KC Becker (D-Boulder) and Representative Joe Salazar (D-Thornton).  Among the bill’s supporters was the Colorado Trial Lawyers Association.

Here’s the summary of HB-1254, which was entitled “Noneconomic Damages Cap Wrongful Death Of Child”:

The bill eliminates the cap on noneconomic damages for the wrongful death of a minor child. The bill clarifies that, for purposes of the wrongful death statutes, ‘minor child’ is defined using the general statutory definition of ‘minor’, which is ‘any person who has not attained the age of twenty-one years’.

The bill’s fiscal note contains more details:

Background

Noneconomic loss or injury means nonmonetary harm for which damages are recoverable by the person suffering the direct loss or injury including grief, pain and suffering, loss of companionship, and emotional stress.

Under current law, in any wrongful death civil action occurring other than medical malpractice in which damages for noneconomic loss may be awarded, the cap on the award is $250,000, adjusted for inflation. This limit was last adjusted for inflation in 2008 and the current cap is $436,070. Under the Governmental Immunity Act, for state agencies and local governments involved in such an action the cap is $350,000 per person and $990,000 per incident. This cap will be adjusted for inflation on July 1, 2018.

CACI’s Loren Furman, Senior Vice President, State and Local Relations, spoke before the Committee in opposition to the measure.  Here’s an edited version of her prepared testimony:

First, let me say that this is a very, very difficult issue, and I have the utmost sympathy for the prior witnesses who have lost a child.

I’m speaking today, however, to try to convey what the effect of a bill like this could have on Colorado businesses, including the following:

• Any company that manufacturers a product;
• Any company that delivers a product;
• Health-care providers;
• Retailers; and
• Restaurants.

For more than 30 years, Colorado has relied on caps on non-economic damages because they have protected businesses from outrageous judgments that could ultimately cause them to shut their doors.

Prior to caps being established in 1996, insurance was either unattainable or unaffordable for businesses.  Without those caps, insurance companies cannot–or it’s close to impossible–assess the type and degree of risk that a business will experience and determine how to appropriately insure that business.

This dilemma triggered the need for then-Governor Dick Lamm to create a commission that developed legislation that created the caps that are in place now.  The legislation that created the caps passed on a bipartisan vote by the General Assembly.

Since that time, businesses have been able to secure affordable insurance to cover risk in their operations.

Consequently, CACI encourages the Committee to oppose this bill and maintain the current caps that have been in place for more than three decades.

On April 28^th, the House approved the bill on final, Third Reading, by a narrow 33-to-31 vote.  Although the vote generally split along party lines, with Democrats voting to advance the bill and Republicans voting against it, the vote was noteworthy because four Democrats broke ranks and voted to oppose the bill:

• Representative Jeni Arndt (Fort Collins)
• Representative Leslie Herod (Denver)
• Representative Edie Hooton (Boulder)
• Representative Donald Valdez (La Jara)

Republican Representative Larry Liston was excused.  Democrats control the House 37-to-28.

For more information on HB-1254, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

Federal News Blink

• Healthcare: U.S. House passes the American Health Care Act (AHCA) by a vote of 219 – 217, sending their Obamacare revisions to the Senate with a margin of just one vote.  A timeline has not been announced but Senators on both sides of the aisle have expressed skepticism about passing this version of a healthcare reform bill.
• Government Shutdown Avoided:  The U.S. Senate approved a $1 trillion spending bill to fund the U.S. government through September 2017.
• Possible Labor Changes:  On Tuesday, the House passed a bill (229-197) which would voluntarily allow employers and employees to implement a program that lets workers voluntarily give up overtime pay in order to receive more paid time off.   For the “Working Families Flexibility Act,” if employees change their minds about trading overtime, they can request their PTO be cashed out and employers would have 30 days to comply.  The bill will likely be read and sent to the Senate Health, Education, Labor & Pension (HELP) Committee for review.
• Save-the Date:  CACI’s Next Federal Policy Council is June 6^th!

CACI's Legislative Agenda

Below is a list of bills and their status on which CACI Policy Councils and the Board of Directors have taken positions.  For more information on the bills, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.