Polis submits $42.7 billion budget to JBC

The 100 members of the Colorado General Assembly returned to the State Capitol on Mon. Jan. 9, with leadership from both parties laying out their priorities for the next 120 days.

Governor Jared Polis also gave a hint about his priorities in a revision of the 2023-24 budget he sent to the Joint Budget Committee on Jan. 3.

Polis submitted a proposed budget to the JBC on Nov. 1, seeking $42.7 billion in all funds, including $16.7 billion in general funds, which is made up of corporate and individual income tax revenue and sales and use tax revenue.

That’s a total increase of about $6 billion in total funds over the current year State budget of $37.3 billion, but Polis claimed it was only an increase of 3.5 percent in all funds and seven percent in general funds. The Governor’s budget proposal also claimed the 2023-24 budget is an overall reduction from the previous year after accounting for “placeholders and deductions.” About $1 billion is being set aside to prepay state expenses in the next two budget cycles. 

State law allows the Governor to submit a revised budget after the first of the year, to allow a newly elected governor to lay out their priorities after taking office. Polis, who won handily over his Republican opponent in November, submitted the revision as is within his authority.

The governor’s initial proposal in November for K-12 education would continue to pay off the debt to K-12 education, known as the budget stabilization factor. It currently sits at $321 million, after being reduced by $250 million in the current year’s budget. While a specific dollar figure wasn’t provided, Polis’ budget submission said the debt would be reduced by another three percent, incorporated into total K-12 funding. The combination of K-12 funding increases plus the buydown of the debt means per-pupil funding would increase by $861.

Polis noted in a Jan. 3 presentation that property taxes are likely to increase dramatically with new assessments in 2023. The 2022 General Assembly set aside $700 million to mitigate those increases in both 2023 and 2024, but Polis wants to add another $200 million to that pot. Polis cited as an example that the money would allow property taxes to be exempted from the first $15,000 in home value.

He also said he would work with the legislature on long-term property tax relief, to reduce commercial property rates and to create a mechanism that would protect homeowners from being priced out of their homes.

In what’s likely to be the major issue of the 2023 session — affordable housing and land use regulations — Polis said he wants to invest $15 million in a “dynamic approach” to land use.

The approach, according to Polis as well as Democratic leaders of the General Assembly, could mean more of a statewide role in land use issues, traditionally the purview of local governments. 

It’s making some in those local governments a little nervous.

State Senator-elect Byron Pelton, R-Sterling, who swapped his hat as a county commissioner for the legislature this week, told this reporter that any notion that the State could take away land use authority from counties or municipalities — zoning, building codes, for example — is not going over well. “It scares the hell out of me,” Pelton said recently.

The approach seems to center around dealing not only with affordable housing, but climate change, green energy and water.

Polis’ Jan. 3 presentation proposes giving property owners more rights and cutting “red tape” to allow building of housing of all types and for all incomes. He confirmed that the types of housing could include what’s known as “accessory dwelling units,” such as allowing a homeowner to convert a garage or even a shed to an apartment. Authority for ADUs varies from community to community in Colorado, based on local zoning and building codes.

Polis’ plan also would make it easier for housing to be built adjacent to transit areas, which he said would lessen traffic and pollution; and to invest in “green and sustainable housing” to improve air quality.

That, however, has raised concerns for Republicans about the impact on housing costs. Senate Minority Leader Paul Lundeen said last week in a forum with the Denver Metro Chamber of Commerce that previous legislation on climate change has already added $42,000 to the cost of building a new home.

The Jan. 3 budget submittal also shows signs, for the first time, that the state may fully fund the Colorado water plan. Polis proposed $25 million, half from general fund and half from sports better revenues, that he said he wanted to leverage into $100 million from the federal government for the water plan.

The State has never been able to obtain even a third of what the water plan, first rolled out in 2015 and recently updated, called for. The initial plan sought a $30 billion investment in a variety of water projects and investments, with the State’s share estimated at $100 million per year, beginning in 2020 and running through 2050. The most the plan has ever received was $30 million in 2019 and 2022.

Another $30 million, which Polis said could be leveraged into $200 million, would go toward matching federal dollars from the bipartisan infrastructure act, which would finance clean water and drinking water infrastructure projects.

Finally, the governor proposed setting aside $10.5M for employer-based child care capacity and $10 million to reduce health insurance premiums.

The Colorado Option, the Democratic-approved state-designed health insurance plan, mandated to be offered by all health insurance carriers, has gotten off to a somewhat rocky start. 

Three carriers — Humana, Bright Health (which operates in eight Western Slope counties) and Oscar Health — all have announced their intention to withdraw from the Colorado market. The latter two are leaving in 2023; Humana will exit from the employer group market in 2024, according to a letter to brokers obtained by Colorado Politics.

Overall, health insurance costs are expected to increase by 10.4 percent for the individual market, and by 7.4 percent for the small group market. The State Division of Insurance has pointed out that those increases would have been much larger without the State’s reinsurance program, a sort of insurance that helps carriers pay the largest claims. 

Polis is slated to give his State of the State address on Tuesday, Jan. 17 when he is expected to provide more detail on his 2023 agenda.