The $38.5 billion state budget introduced Monday under Senate Bill 214 – the Long Appropriations bill – was crafted by a panel with five new members, and they managed to finish crafting the budget days ahead of schedule.

Here’s five takeaways, and things to watch, as the budget moves through the House and Senate over the next two weeks.

All six members of the Joint Budget Committee are signed on as sponsors.

Sen. Rachel Zenzinger, D-Arvada, the JBC chair, is the bill’s Senate prime sponsor; Rep. Shannon Bird, D-Westminster, the vice-chair, is the prime House sponsor. The other four members of the committee are also signed on as co-sponsors. 

The JBC is viewed mostly as a “one for all and all for one” committee. During the budget process, the members advocate for rejecting virtually every amendment proposed by their colleagues. As Sens. Jeff Bridges, D-Greenwood Village and Barbara Kirkmeyer, R-Brighton, joked last week: It’s a perfect budget. Don’t mess with it. 

Why that matters: It’s the first time since 2018 that all six members of the JBC are sponsoring the budget bill. Between 2019 and 2022, the House’s Republican member on JBC, Rep. Kim Ransom of Littleton, refused to sign on as a co-sponsor, despite being a member of the committee that crafted it.

In 2021, she explained her reasons to Colorado Politics: The budget is governed, set up and approved by the majority party. 

“With the current setup of the JBC, where my caucus is definitely in the minority, it truly is a bill of the majority caucus,” Ransom had said. “I feel like my role is to represent my caucus and to stand up for the principles my caucus has asked me to, including those economically sound principles.”

What to watch for: If all six members of the JBC actually vote for the budget in its final form. That also hasn’t happened since 2018. 

The spending plan is an 8.9% increase over the previous year’s budget, or about $1.2 billion. But it’s also 15% less spending.

While that may look like illogical, it’s actually not.

Two-thirds of the increase in the budget is going to the Department of Health Care Policy and Financing (HCPF) to handle the expiration of the enhanced federal Medicaid match tied to COVID-19. During COVID, the federal government increased the Medicaid match to states from 50/50 to 60/40. The state wasn’t allowed to disenroll people during the federal government’s declared public health emergency, but that declaration is expected to end next month. That means the match goes back to 50/50.

It also means the state will have to start looking at its Medicaid rolls as anniversary dates for those additional enrollments come along. 

Under an agreement with the federal Centers for Medicare and Medicaid Services, the state is phasing out those who were added to the Medicaid rolls during COVID-19. When those anniversary dates come up, the state will start reviewing who gets to stay on Medicaid. Some 325,000 Coloradans face losing Medicaid coverage, according to estimates. 

Where the funds are going: The money to cover those who will remain on Medicaid will eat up about half of the $844 million increase allocated to HCPF. The rest goes to cover higher expenditure costs tied to inflation and provider-rate increases. The state is losing providers over low reimbursements, according to Zenzinger. The JBC agreed to provide a 5% across-the-board increase to those providers.

The state took the federal government’s offer to phase out those added to the Medicaid rolls during COVID, a plan approved by CMS. When those people come up for their anniversary dates, there will be a redetermination of who gets to stay on Medicaid. That’s $442 million of the $844 million increase.

Most of the rest covers new projected Medicaid enrollment, which is expected to be higher in the coming year due to the financial struggles experienced by many Coloradans in this era of high inflation; higher costs for expenditures, also tied to inflation; and a boost in provider rates. That what’s paid to providers of a myriad of services, both tied to Medicaid and for other state services, such as social workers, human services personnel and the like.

The JBC decided on a 3% across the board rate increase for all providers and in all agencies. Gov. Jared Polis had proposed that same increase except for HCPF providers, where he suggested a 0.5% increase. 

The general fund reserve has been at 15% of the budget for the last several years, but, as the budget grows, so does the amount required to maintain that 15% reserve. This year, it sits at $2.3 billion. The state’s emergency reserve, at 3%, is in the same situation. While the percentage doesn’t change, the amount required to maintain that percentage increases. This year’s emergency reserve is set at $543 million. 

Most of the other additional spending keeps current state programs operating at the same level.

A year of implementation, not adding new programs

The 2022 session was full of new programs, funded with one-time dollars from the federal government in areas such as housing and behavioral health. This is the year to implement those programs, which also include several new ones from 2022, notably the Department of Early Childhood. The program funds early childhood education for those age 3 and up.

The other first-year implementation is for the agreement between the state and Colorado WINS, the state employee union, which requires a new-pay plan that goes into effect on July 1, 2023.

Education funding is flat compared to 2022-23. Sort of.

Funding for K-12 increased by $485 million, or an additional $900 per pupil, under this budget.

However, the appropriation for education is actually less – by about $134 million.

Overall funding for K-12 looks like it’s flat, Zenzinger told Colorado Politics.

And while the amount of money being spent is roughly the same as it was in 2022-23, it’s $485 million more because of two factors: A decrease in student enrollment, and more funding for education coming from local property taxes. That means the state doesn’t have to backfill education funding as much.

The end result is that the state is able to increase per-pupil funding without actually increasing the overall budget for K-12. 

That budget does not include paying down the budget stabilization factor, the long-term debt to K-12 that currently stands at $321.2 million. That will be handled by the school finance act.

What to watch for: Amendments from lawmakers to pay off the budget stabilization factor, which would create a sizable hole in the budget and put it out of balance. By law, the budget has to be balanced. 

A 5% pay hike, other incentives for workers  

Like any other employer, the state is struggling to keep positions filled in several areas, such as corrections, the state mental health institute at Pueblo and in human services. 

Zenzinger explained the budget invests in boosting the state workforce through bonuses, incentives, moving people into the middle of the state pay ranges, higher pay, a 5% across-the-board pay increase (still below the rate of inflation), and reclassifying job descriptions, which often brings higher pay. 

“If we’re going to deliver on programming for constituents, we have to invest,” Zenzinger said. 

On Wednesday, the Senate will break into its party caucuses to discuss the budget and lawmakers’ proposed amendments with each caucus’s JBC members. The budget bill will head to the Senate floor for debate later in the day, with a final vote expected on Thursday.