Senate Democratic Leader Lucia Guzman on Tuesday asked a committee to kill legislation that would have restructured the Hospital Provider Fee, saying she is working on a bipartisan fix.

Sen. Jerry Sonnenberg, R-Sterling, the president pro tem, is working with Guzman, though he declined to offer details on the proposal, which is still being crafted.

Lawmakers say they have permission to introduce legislation in the last 50 days of the session.

Stakeholders who are part of the conversation say the measure would include a compromise on restructuring the Hospital Provider Fee, a thorny issue that has plagued the legislature as lawmakers search for a way to free money for critical services and programs.

The proposal would address funding for rural hospitals, in addition to money for rural roads and schools.

It would look similar to a proposal highlighted by Sonnenberg last week when he suggested a supplement to a centerpiece transportation funding bill. Sonnenberg’s proposal would provide $100 million for projects in rural Colorado.

The major transportation funding bill – which is sponsored by legislative leaders in both the House and Senate – calls for a 20-year 0.62 percent sales tax increase to fund transportation projects, raising about $677 million per year.

The tax increase would have to be approved by voters.

The legislation also would allow for $3.5 billion in bonding, in which voters would approve a loan for transportation funding, and it would lower vehicle registration fees.

Sonnenberg said last week that his supplement for rural Colorado, which is likely to become the bipartisan bill mentioned by Guzman, would rely on Senate Bill 228 funds. Those funds were passed in 2009 as a supplement to the $200 million annual infusion from higher vehicle registration fees, which were required in 2009 by the Funding Advancements for Surface Transportation and Economic Recovery Act, or FASTER.

Senate Bill 228 is triggered when personal income rises by 5 percent, but it’s limited by refunds caused by the Taxpayers’s Bill of Rights.

Under Sonnenberg’s proposal, the $100 million per year for rural Colorado would be covered by about $1.3 billion in bonding, he said.

“I’m working on doing something without a tax increase,” Sonnenberg said last week.

The proposed legislation is also said to address entitlement spending, including Medicaid.

Hospitals, especially in rural Colorado, are concerned after Hickenlooper proposed reducing collections of the Hospital Provider Fee to balance the state budget.

Maximum allowed collections of the fee would be reduced by $195 million, thereby lowering taxpayer refunds prescribed in the Taxpayer’s Bill of Rights. The fee helps trigger refunds by contributing to TABOR spending limit calculations.

“Now more than ever, with the continued pressure on the state budget and uncertainty at the federal level, it makes sense to consider putting the hospital fees in a separate fund,” said Steven Summer, president and chief executive of the Colorado Hospital Association, which has been working with Sonnenberg.

The bill Guzman spiked on Tuesday would have restructured the Hospital Provider Fee as an enterprise fund, or government-owned business. The idea is popular with Democrats, though largely toxic within Republican circles. Some Republicans, however, have come around.

Senate President Kevin Grantham, R-Canon City, made it clear this year that the Hospital Provider Fee proposal was not going to pass the divided legislature.

The provider fee is assessed on hospitals to force a match of larger federal health care dollars, which generates about $700 million per year. Guzman’s legislation would have exempted the hospital fee from TABOR, lowering taxpayer rebates set aside in the general fund, thereby freeing money for spending.

Sonnenberg has maintained that he would support a restructuring of the provider fee if the overall base of state tax revenue is also addressed. By reducing the base, which determines the TABOR spending cap, taxpayer refunds would be protected for years to come.

“I proposed six months ago taking the Hospital Provider Fee and doing exactly what TABOR says,” Sonnenberg said. “Take the Hospital Provider Fee, move it out to an enterprise, and lower the cap by the same amount.”

Guzman said there is hope for a bipartisan compromise.

“As I stated before my colleagues in the Senate Finance Committee, I am looking forward to continued work on a solution to tackle the fiscal issues facing Colorado’s rural hospitals,” Guzman said in a statement shortly after she asked the committee to kill her bill.

“Ensuring rural hospitals have access to critical funds that increase delivery of care is of the utmost importance to their survival. With 50 days left in the legislative session, it is my hope we can achieve a bipartisan solution that will go even farther to achieve this goal, which is why I decided to shelve Senate Bill 57 in committee today, in order to move forward.”

Gov. John Hickenlooper, a Democrat who first proposed the Hospital Provider Fee change in 2015, said he is open to a compromise.

“Everyone has felt that if there’s ever going to be any progress on the HPF or transportation, that it’s going to have to be bipartisan,” Hickenlooper said. “I think this is a good sign.”