Colorado lags others states on share of federal dollars

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The U.S. Treasury on Monday issued long-awaited guidelines for Colorado state spending of $195.3 billion tied to the federal American Rescue Plan signed into law March 11.

Colorado's share of the state money is $3.8 billion. That's money that goes just to the state, not what's also available for local governments, schools, hospitals and other entities. The bill's total spending is $1.9 trillion.

Among counties, Denver will get the largest allocation, at $141 million; El Paso County will receive $139.9 million; Weld County will get $63 million. The smallest allocations will go to San Juan at $141,405 and Mineral County at $149,369.

Interim Treasury rules say that the money has to be spent in four areas:

  • To respond to the public health emergency or its negative economic impacts, including assistance to households, small businesses and nonprofits, or aid to impacted industries such as tourism, travel and hospitality;
  • To respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers;
  • For the provision of government services to the extent of the reduction in revenue due to the COVID–19 public health emergency relative to revenues collected in the most recent full fiscal year prior to the emergency; and
  • To make necessary investments in water, sewer or broadband infrastructure.

According to the Treasury guidance, there are two areas for which the dollars cannot be used: pension funds and to offset tax revenue losses resulting from changes in laws or regulations.

The guidance notes that states, territorial, local and tribal governments have been called upon to respond to the COVID-19 pandemic, which has resulted in the highest unemployment in 70 years. That's required those governments to deal with everything from testing, enforcement of health orders and a national mobilization of vaccinations. For the economy, the guidance said, the pandemic's impacts have required more governmental assistance to unemployed workers, including housing and food assistance, as well as assistance to small businesses.

To get the money, Colorado's controller, Bob Jaros, will submit a request to the U.S. Treasury, which can be done as soon as Monday. The money will be split into two checks, one issued within 60 days and the other in a year.

Now that the guidance from Treasury is out, lawmakers will get busy quickly, trying to figure out how to spend that $3.8 billion, likely the largest pot of one-time money in state history. 

Joint Budget Committee Chair Sen. Dominick Moreno, D-Commerce City, said they now have a clearer idea on how they can spend, based on the federal guidance. 

There is the possibility that lawmakers can do things to strengthen the status of the budget, including pandemic costs and revenue losses that they can handle before the session ends, he said. The rest of the money is a multi-year conversation, he said.

The state didn't suffer a huge revenue loss, but what was problematic was that the state was experiencing strong economic growth before the pandemic. That growth was halted, and the federal guidance says they can use that anticipated growth as part of the revenue loss, likely in the hundreds of millions of dollars.

"This is the federal government's effort to ensure that economic activity generated by state and local governments plays a role in the type of growth we expect," he said, and avoid the mistakes of prior recessions, where state and local impacts were ignored.

As far as pandemic costs, the state has spent $21 million in general fund for public health infrastructure, and it also redirected state employees for pandemic responses. Those are allowable under the Treasury guidance.

"We have four years to ensure these dollars are allocated thoughtfully," Moreno said.

The guidance is fairly generous and broad, and will allow lawmakers to have a bit more of a detailed conversation on how the state has been impacted by the pandemic and how to set a better course going forward, he said. 

Senate President Leroy Garcia on Tuesday added that since the law was passed, "we have been working diligently on investment ideas for this one-in-a-liftime influx of funding." He said lawmakers are preparing, in the last days of the session, to get as much accomplished on this issue. "At the same time, it would be a mistake to rush and potentially squander this incredible opportunity we have before use." Lawmakers are considering multiple avenues, including interim committees or a special session, he said.

House Minority Leader Hugh McKean, R-Loveland, told Colorado Politics he wasn't ready to say how the announcement could shift the balance of the legislative calendar but added he would be willing to work with the executive branch to ensure lawmakers have "robust input" on spending the federal dollars coming to the state.

Monday marks the 87th day of a legislative calendar that is capped at 120 days. General Assembly leaders have previously indicated they were aiming to adjourn for the session around Memorial Day, though those projections were complicated by the need to figure out how to spend the stimulus dollars.

Legislative leaders face a looming question: When will the session end?

Whether it will be coming back for a special session or recessing and returning, as was done earlier this session, McKean said "ideally what we do is not worrying so much about timing."

Instead, he called on lawmakers to focus on "getting people back to work, getting kids back in school and working on our roads and bridges."

Senate Minority Leader Chris Holbert, R-Douglas County, believes a special session is on hand to deal with the first allocation, which could be around $1.9 billion. He told Colorado Politics that the executive committee, made up of the six legislative leaders from the two chambers, and the Joint Budget Committee, will begin work almost immediately to look at the guidelines and the areas that should be in line for stimulus dollars. 

Based on conversations with lawmakers and the governor, Holbert said it's likely the General Assembly, with a two-thirds vote in each chamber, will call itself back to the Capitol. The advantage of that, Holbert explained, is in who gets to decide the scope of the special session.

This is a rare opportunity for lawmakers to make that decision; lawmakers haven't called themselves into a special session in at least 20 years.

As to the when, Holbert estimates no sooner than the first of August, largely because both House Majority Leader Daneya Esgar of Pueblo and Emily Garnett, the wife of House Speaker Alec Garnett, are both expected to give birth in July; their due dates are a day apart. The session could be anytime between August and October, he said.

"Once we're adjourned sine die, [special session] is the last words I want to utter," Holbert said. "This is an unusual circumstance. We know the money is coming and we also know the 120th day is June 12th," he said. "My guess is that we will adjourn before June 12th," possibly the week before. 

One of the ideas being floated is whether to shift spending to the federal stimulus, freeing up general fund dollars to cover things the federal stimulus can't, such as transportation infrastructure. And there's still another funding package being debated in Congress on transportation infrastructure.

The JBC and executive committee can begin working now on the planning, which would run through June and July, he explained. The timing really doesn't matter, he said. "We don't have to allocate it all in one shot." 

Holbert also pointed to the process for putting together last year's special session and the state stimulus, which he said has now set a pattern. Out of the $3.8 billion, people should expect "silos," similar to the state stimulus, which focused on families, workforce development and small businesses.

Note: This article has been updated with Republican and Democrat response.

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