[30:19] right

[30:25] good morning. The joint

[30:26] budgetgetittee will come to

[30:27] order

[30:30] and today we'll be receiving the

[30:31] September quarterly revenue

[30:35] forecast from legislative

[30:37] council and OSPb and then we

[30:40] have ive different interim

[30:41] supplemental funding requests so

[30:42] we will

[30:47] we'll start with the forecast

[30:50] and we have our staff from

[30:51] legislative council here with

[30:54] us. chief economistzbetsky

[30:55] would you like to begin? Good

[30:57] morning madam Chair for the

[30:58] record Greg Subetsky, chief

[30:59] economist with leggislative

[31:01] council staff pleased to be

[31:02] before the committee this

[31:04] morning as every quarter to

[31:06] present our expectations for the

[31:08] economy revenue and the budget

[31:09] before we begin I'd just like to

[31:11] thank my staff for their work on

[31:14] this forecast it is a a an

[31:14] incredible burden but an

[31:15] incredible

[31:17] joy to bring this before you as

[31:20] always madam chairir before I

[31:23] give

[31:26] I find joy in my work and I

[31:28] think that you Well I

[31:31] I suppose you'll find out soon

[31:32] enough but

[31:33] but madam chair to

[31:35] to begin our presentation this

[31:37] morning doctorctorRaymi seated

[31:39] to my left is able to present

[31:40] and willing to present and

[31:41] excited to present our

[31:43] expectations for the economy.

[31:44] right DrRay

[31:47] thank you madam chair for the

[31:49] record ElizabethRay principal

[31:50] economist legislative council

[31:50] staff

[31:54] here to present to you our

[31:56] economic outlook that informs

[31:56] our revenue forecast

[31:59] so first of all we start with

[32:01] the big picture of the economy

[32:03] the economy overall has been

[32:05] growing at rates consistent with

[32:06] a moderate expansion

[32:09] over the past several years and

[32:11] as you can see there growth is

[32:12] expected to be steady throughout

[32:14] the forecast period at just

[32:14] above 2%.

[32:19] the second quarter of 2026

[32:21] growth stands at 1.5% and this

[32:24] was a slowdown from the previous

[32:27] quarter. um, although domestic

[32:28] consumption and investment

[32:30] remains strong there was a surge

[32:33] an increase in imports that

[32:35] dragged down quarter togdp

[32:38] growth but we do expect don't

[32:41] expect that to continue AI we

[32:43] expect AI related investment to

[32:44] continue to boost overall

[32:45] business spending

[32:47] while consumer spending is

[32:48] expected to remain resilient

[32:52] consumer spending is the largest

[32:54] component of GDP. it accelerated

[32:56] in the second quarter, but as

[32:58] you know from previous forecasts

[32:59] it faces headwinds such as

[33:02] risingnergy prices slower jobs

[33:04] growth fragile household

[33:06] finances and now a higher

[33:09] interest rates so overall this

[33:11] outlook is for a continued

[33:14] moderate economic expansion but

[33:17] with some unique aspects things

[33:18] that don't normally go with a

[33:18] moderate expansionary period

[33:19] like this one

[33:23] and so these are the things that

[33:24] we're interested in keeping an

[33:26] eye on and those are the things

[33:26] I want to highlight for you

[33:27] today.

[33:31] the first of those things is

[33:32] slow employment growth.

[33:35] Employment growth in the state

[33:37] remains stuck in what has been

[33:39] characterized as a low higher

[33:42] lowfi environment meaning that

[33:44] both employers and workers are

[33:46] reluctant to make significant

[33:48] job moves in the face of

[33:48] continued uncertainty

[33:52] so indicators don't point to

[33:54] either an imminent rebound or a

[33:55] coming collapse in the labor

[33:56] market but rather a steady but

[33:57] slow

[34:00] growth in the rate of

[34:01] employment. Employment growth

[34:03] for the state and the nation is

[34:05] expected to remain low, but

[34:07] then to accelerate slightly in

[34:08] 2027 and 2028.

[34:13] on the right hand side of that

[34:14] chart you can see that labor

[34:17] force has declined as

[34:19] employment growth has slowed in

[34:21] Colorado this has been happening

[34:23] over the past two years and more

[34:24] recently in the US

[34:27] and as I think we've mentioned

[34:29] to you before a declining labor

[34:31] force over the long term is a

[34:33] concern for employment growth as

[34:34] it becomes a constraint on the

[34:35] supply of workers

[34:41] vice chairir Bridges thank you

[34:42] madam chairir. just real quick

[34:44] is that it is that people

[34:45] choosing to leave the labor

[34:47] force choosing to leave the

[34:50] state choosing to stay at

[34:51] home and stop looking for a job

[34:52] like what's the what's the

[34:52] underlying cause of that

[34:53] decline?

[34:54] Drctor Amy

[34:57] thank you madam Chair Senator

[34:59] Bridges I do have a the next

[35:01] slide maybe it will address that

[35:03] question so if you still have a

[35:06] question after that maybe you

[35:06] raise it again.

[35:09] but in the meantime, so we do

[35:13] still have a low unemployment

[35:14] consistent with a sluggish but

[35:15] stable labor market, the

[35:17] unemployment rate has remained

[35:19] low and steady. This is partly

[35:21] however boosted by exits from

[35:24] the labor force the official

[35:27] rate of unemployment on the left

[35:28] masks some underlying fragility

[35:30] as you can see on the right hand

[35:32] side the share of those

[35:35] unemployed 27 weeks or more or

[35:36] the long term unemployed in the

[35:37] total number

[35:41] of unemployed people was 27% in

[35:42] August. that was the highest

[35:44] level that it's been since 2016

[35:46] outside the pandemic so this

[35:48] is concerning as long term

[35:50] unemployment takes a heavier

[35:52] toll on households finances and

[35:55] it also impacts workers'

[35:56] ability to reenter the labor

[35:57] force.

[35:58] the labor market.

[36:03] OK so to your question Senator

[36:05] Bridges this chart shows the

[36:07] impacts of labor market

[36:09] conditions by different age

[36:11] group younger and older workers

[36:13] are more likely to be impacted

[36:14] by current labor market

[36:15] conditions then prime age

[36:18] workers and the prime age is

[36:19] defined as workers ages 25 to54.

[36:23] so this shows the change in the

[36:25] proportion of the employment

[36:27] to the population in each group

[36:29] of these workers since

[36:31] January2023.

[36:34] the share of the pri age working

[36:36] population has been relatively

[36:39] steady the share of older

[36:41] workers those ages55 to64 who

[36:45] are employed is down4.4% and

[36:47] those younger workers 16 to 24

[36:51] who are employed is down by 3.2%

[36:52] so for the group of older

[36:55] workers this may mean those

[36:57] considering retirement are

[37:00] opting to exit the labor

[37:01] force and employment because

[37:04] they might be benefiting from

[37:06] strong gains in stock market

[37:09] wealth and feeling like they can

[37:12] exit their jobs they might be

[37:14] responding to Ai related changes

[37:16] to their work. in any case

[37:17] they're opting to leave

[37:19] employment sooner so this could

[37:21] be one reason that we see this

[37:22] decline in the labor force

[37:24] but for younger workers this is

[37:26] more concerning. It might mean

[37:27] that they're bearing the brunt

[37:29] of a low higher low fire labor

[37:31] market in that they're

[37:32] struggling to enter their

[37:34] first jobs as employers are

[37:35] reluctant to hire.

[37:35] so

[37:39] does that answer your question

[37:40] Senator Bridges

[37:45] sort of so do you think that the

[37:47] the decline in labor force is

[37:48] driven by

[37:52] seniors then but in in the the

[37:55] increase in

[37:58] long term unemployment is driven

[37:58] by young people?

[37:59] go ahead

[38:05] thank you senator thats would be

[38:07] a fair statement and an

[38:09] interpretation we are also

[38:10] seeing

[38:14] and so the labor force

[38:15] participation rate of younger

[38:17] workers has been more steady and

[38:19] has declined a little bit so

[38:21] some of that reduction in the

[38:23] labor force is due to younger

[38:24] workers maybe becoming

[38:27] marginally attached and maybe

[38:28] giving up on actively searching

[38:30] for employment for the time

[38:32] being but we have seen that

[38:34] the participation rate of older

[38:37] workers has declined further so

[38:40] it's a combination of both if

[38:40] we're looking at each

[38:42] face your bridges thank you

[38:43] madam chairir. do we have this

[38:44] data for Colorado because it

[38:45] feels

[38:47] what we what we hear from the

[38:49] business community is that there

[38:50] are unique things happening in

[38:51] Colorado that are driving

[38:56] workers away and employers away

[38:58] and and all of this I don't

[39:01] quite believe all of it but

[39:02] I'd be interested to see

[39:03] something like this for that

[39:05] Coloradopecific data given that

[39:06] Colorado seems to have had a

[39:07] steeper decline over the last

[39:09] two years in labor force

[39:11] specifically than the rest of

[39:12] the country is that because

[39:13] we're older we have more folks

[39:15] retiring in Colorado

[39:18] what's going on

[39:20] thank you madamir Senator

[39:23] Bridges so the state levell data

[39:24] is more

[39:27] like it's a smaller survey so it

[39:30] tells us less really about

[39:32] the state picture but I'm happy

[39:34] to share that with you I did

[39:35] look at it Colorado does have

[39:39] a rapidly aging workforce and

[39:41] moreor and because it has been

[39:43] younger than that of the nation

[39:45] as a whole so I would say that

[39:46] is a factor in Colorado.

[39:49] Thanks

[39:57] ok yes. all right. So now moving

[39:59] on from the labor market just to

[40:00] to look a little bit about

[40:02] what's going on maybe inside

[40:05] households. consumer spending

[40:07] continues to advance in the face

[40:09] of slow employment growth,

[40:11] rising inflation and

[40:12] historically low consumer

[40:14] sentiment. this trend is

[40:15] expected to continue throughout

[40:16] the forecast period

[40:20] on the left since you can see

[40:22] that since 2023 spending by

[40:23] higher income households this is

[40:26] at the US level has outpaced

[40:28] middle and lower income

[40:29] household spending this has

[40:32] likely boosted supported overall

[40:35] consumer activity as you can see

[40:36] all income levels have pulled

[40:38] back spending in the second

[40:39] quarter of 202 the first quarter

[40:43] of 2026 with a slight uptick in

[40:45] the second quarter that

[40:46] uptick may be related to elev

[40:49] ated tax refunds due to the OA,

[40:51] the federal tax policy change

[40:52] and that happened last summer

[40:55] on the right you can see that

[40:57] something interesting is

[41:00] happening consumer sentiment has

[41:03] been at historic lows even lower

[41:06] than during the pandemic and so

[41:07] there's been this disconnect

[41:09] recently between what consumers

[41:11] are doing and how they're

[41:14] feeling about the economy

[41:15] especially in the post pandemic

[41:17] period there are a couple of

[41:19] explanations for why this might

[41:21] be the case. one of them is

[41:22] vibes consumers

[41:25] have a long memory and so they

[41:27] remember before the rapid

[41:30] inflation in 2022 and they still

[41:31] feel like everything is too

[41:33] expensive they're worried about

[41:35] affordability and ongoing

[41:37] inflation but they're still

[41:39] spending because they need to

[41:41] another explanation is that they

[41:43] changed the way they do this

[41:44] survey and collect this

[41:46] information. it went from being

[41:50] phonebas to online in 2024 and

[41:52] people who answer things online

[41:52] are more likely

[41:56] to be more negative or it could

[41:57] be the case that people who are

[41:58] more likely to answer things

[41:59] online are already more

[42:02] negative. so in any case

[42:06] there's been this but don't know

[42:06] what is the

[42:09] theory on that? why why people

[42:11] online are just mean. I think

[42:14] it's

[42:17] like that on social media it

[42:19] could be more anonymous so that

[42:20] you're not like having a

[42:21] personal interaction

[42:23] as much as you are on a

[42:25] phonebased survey so you're my

[42:27] more likely to be more negative.

[42:29] I I haven't looked at that

[42:31] research behind that but it's a

[42:32] good question

[42:42] DoctorRainey please

[42:48] oh sorry senator weissman thanks

[42:50] madamir small question the

[42:53] binning of under4040 to125

[42:55] and125 plus I think those are

[42:57] just made up by the New York Fed

[43:00] as part of that survey OK if

[43:02] we know either nationwide or if

[43:04] you can sort of crosswalk to

[43:04] Colorado

[43:10] 125K household income fits where

[43:11] in terms of income distribution

[43:17] thank you madam Chair. Senator

[43:19] weissman so this would be

[43:23] where does it fit in terms of

[43:27] like top xcent yeah sorry I

[43:29] think actually Senatormabile

[43:30] several of these ago mentioned a

[43:32] data point I think this was

[43:34] Colorado the bottom of our

[43:37] highest decile for example is

[43:40] about 180 so 125 maybe puts you

[43:40] somewhere in the the second

[43:41] highest

[43:44] decile I I guess what I'm

[43:45] driving at policy wise is you

[43:46] know one

[43:50] bluntly 125k has always struck

[43:50] me as a

[43:53] healthy household income it's

[43:55] also not what it used to be so

[43:57] to the extent that we are seeing

[44:00] aggregate levels propped up by

[44:00] spending

[44:03] at the 125k level we're not

[44:04] going to be able to keep banking

[44:06] on that as we have been because

[44:09] the same pressures that have

[44:11] just kind of swallowed everybody

[44:12] at a lower income level or

[44:14] coming for that stratum next as

[44:14] my fear

[44:21] thank you madam chairsenator

[44:23] weissman it I would have to look

[44:26] again at the Federal Reserve

[44:28] data and how they've segmented

[44:30] what percentage of the

[44:30] households that represents

[44:31] and get back to you

[44:37] OK I think we're ready to move

[44:44] OK. so this maybe

[44:47] gets at a point that Senator

[44:50] Weissman was just asking about

[44:53] so this chart gives us a little

[44:54] these charts give us a little

[44:56] bit of a look into household

[44:59] finances delinquency rates

[45:00] represent the percentage of

[45:01] outstanding loan debt that is

[45:04] past due by 90 days or more as

[45:05] shown in the figure on the left

[45:07] and as we've discussed with you

[45:09] before delinquency rates for

[45:12] several loan types have jumped

[45:13] over the past few years in

[45:14] particular loans that lower

[45:15] income

[45:17] lower and middle income

[45:18] households are more likely to

[45:21] rely on including credit card,

[45:23] auto loan and student loans

[45:25] mortgage delinquencies have been

[45:28] relatively steady until recently

[45:30] they've also begun to rise and

[45:31] this is some indication that

[45:33] middle and higher income

[45:35] households are also starting to

[45:37] feel squeezed alongside those

[45:39] lower income households that

[45:40] have felt squeezed for a little

[45:43] bit longer and this should weigh

[45:44] on consumer spending as we

[45:45] mentioned through the forecast

[45:47] period on the right hand side

[45:49] you can see another sign that

[45:51] household finances are strained

[45:53] is the continued low historic

[45:55] historically low savings rate

[45:56] meaning that households are

[45:57] spending more of their

[45:59] disposable income just to

[46:00] maintain their standards of

[46:00] living.

[46:07] So now just a little bit on

[46:08] inflation and monetary policy

[46:13] the oil shocked had a s a swift

[46:15] impact on inflation as energy

[46:16] prices jumped.

[46:20] early before the summer and in

[46:21] spite of receding over the

[46:23] summer inflationary pressures

[46:25] have remained elevated compared

[46:27] to healthy levels and well above

[46:29] the feder reserve's target rate

[46:33] of 2% nationally energy and

[46:34] transportation prices are key

[46:37] sources of inflationary pressure

[46:39] as in the as in the Denver area

[46:41] as well. but in the Denver area,

[46:42] which we have a

[46:45] a not as recent reading for

[46:47] Denver in July. those

[46:49] inflationary pressures are more

[46:50] broadbased nationally we have a

[46:51] rating for August so

[46:54] it's hard to tell what's

[46:55] happening right now in the Dunar

[46:57] area inflation but that's what

[46:59] we know as of July we expect

[47:01] inflation to remain elevated in

[47:03] both the state and the nation

[47:05] through 2026 before beginning to

[47:06] abate in 2027.

[47:08] and you think it will abate

[47:09] because

[47:14] thank you madam chairir we do we

[47:16] have we did get as you can

[47:18] see there was this downtick in

[47:20] inflation in the summer and so

[47:21] on the basis of that we have

[47:23] lowered our expectations for

[47:24] energy prices, oil prices in

[47:27] particular and through the

[47:30] remainder of 2026 and so we

[47:31] expect that those pressures will

[47:32] continue to abate

[47:33] into 2027

[47:38] Chiefzebetsky thank you madam

[47:39] Cha. just to add to that quickly

[47:41] I I think it's important to

[47:43] remember that while the sticker

[47:44] shock is incurring I think most

[47:50] acutely in gas prices and retail

[47:51] goods prices that the largest

[47:54] component of the CPI is housing

[47:57] and we haven't seen a an

[47:59] attendant rise in home price

[48:01] inflation or in not home price

[48:04] inflation in rents and what the

[48:05] the BLS calls owner's equivalent

[48:06] rents which is how they

[48:09] denominate the costs of housing

[48:10] for homeowners

[48:14] those costs are not increasing

[48:15] consistent with a high inflation

[48:16] environment for the purposes of

[48:18] the CPI which doesn't

[48:19] necessarily mean the same thing

[48:21] as prices will become less

[48:23] painful for consumers because

[48:24] again consumers are most

[48:26] attentive to things other than

[48:27] those housing prices but

[48:29] particularly in Colorado where

[48:31] we've seen a slowdown in rent

[48:33] inflation, I think that that is

[48:34] contributing to lower inflation

[48:35] expectations in our forecast

[48:36] over the next couple of years as

[48:38] well if you are curious there

[48:39] is in our supplemental slides a

[48:40] break down

[48:42] by component and that is in

[48:44] the the hard copy of the side

[48:45] deck that you have and also if

[48:46] you have the electronic version

[48:48] you can pitch through to it.

[48:48] thank youreptewart

[48:52] thank you madam Chair. going

[48:56] back to the savings side with

[48:57] the savings rate being so low is

[49:00] that an indicator of a recession

[49:01] like looking back could it be an

[49:02] indicator?

[49:04] DoctorRay

[49:08] thank you madam Chair

[49:10] Representative not necessarily

[49:11] it

[49:15] I mean I guess it looks like it

[49:19] did proceed the last episode

[49:21] of a prolonged recession but it

[49:23] it's just something it is a

[49:25] source of financial fragility

[49:26] among households and it's

[49:28] something that we are monitoring

[49:31] but it has been also impacted by

[49:33] disruptions during the pandemic

[49:34] and significant drawdown of

[49:37] debts during that period and so

[49:39] it's a little bit hard to tell

[49:42] if this is a s like related to

[49:42] the recession or it's just kind

[49:46] of still normalizing from

[49:47] pandemic related disruptions but

[49:48] it it is concerning.

[49:51] Chiefvetsky and just to opine on

[49:52] the savings rate as a leading

[49:54] indicator. I think that the

[49:55] chart on the screen is actually

[49:56] pretty instructive so you can

[49:57] see that before the great

[49:59] recession the savings rate did

[50:00] decrease but it decreased around

[50:04] 2005 and so that yes preceded

[50:05] the great recession but it

[50:06] preceded the great recession by

[50:07] a long enough period of time

[50:09] that if you had interpreted the

[50:10] decrease in the savings rate in

[50:12] the mid-2000s as indicative of a

[50:14] coming recession you would have

[50:16] had to wait three years before

[50:17] you were right about that in

[50:18] the

[50:20] and you can also see cases where

[50:22] you see a a pretty pronounced

[50:23] decrease in the savings rate in

[50:26] 2013 or 2014 in that chart where

[50:26] there's a big

[50:29] collapse in the level of the

[50:30] savings rate that at that time

[50:33] probably felt pretty acute and

[50:34] didn't portend a recession at

[50:36] all so it's a bad sign it's

[50:38] indicative of households that

[50:40] are struggling and not able to

[50:41] save as much of their money but

[50:44] that's not intrinsically a

[50:45] recessionary indicator, I guess

[50:47] what I'd say too is what you

[50:48] heard us say earlier about

[50:51] consumer resiliency is why we

[50:52] think the economy is continuing

[50:54] to expand so in a world where

[50:56] households are instead inclined

[50:56] to save a lot more of their

[50:57] money

[51:01] and stop spending that also has

[51:02] economic consequences because

[51:05] now businesses aren't bringing

[51:06] in the levels of revenue that

[51:07] they need to sustain and grow

[51:10] and a recession is just the

[51:11] economy shrinking and not

[51:12] growing if you don't have growth

[51:12] you have a recession.

[51:14] vice chairir Bbridges

[51:17] thank you madam chairir is

[51:20] is that lag in part because when

[51:22] savings declines more people are

[51:23] when the savings rate

[51:25] declines we assume that there's

[51:26] an ever increasing number of

[51:28] folks that are drawing down on

[51:29] their savings and it takes a few

[51:30] years to draw down on your

[51:32] savings before that really ends

[51:34] up for for enough families to

[51:34] draw down enough of their

[51:35] savings before that ends up

[51:38] really affecting the overall US

[51:39] economy and leading to some kind

[51:41] of recession is it like a time

[51:42] based thing or is it

[51:43] just a a thing that happens

[51:45] in in other words is it causal

[51:46] somehow

[51:47] ve t s k y

[51:48] so

[51:51] important to remember that

[51:54] a significant portion of US

[51:55] households don't have

[51:59] a big amount of savings to draw

[52:00] on and so the idea that

[52:04] you're talking about a multiyear

[52:06] drawdown of household savings is

[52:06] I think

[52:10] immediately sort of fraught and

[52:10] and represents only part of

[52:14] the household distribution in

[52:15] the economy

[52:18] I think it's very clearly the

[52:20] case that we had this savings

[52:22] glut like during the pandemic

[52:23] that's something that's well

[52:25] documented where essentially

[52:27] people lose the ability to spend

[52:28] money on things that they want

[52:29] to spend money on and as a

[52:30] result there's this big savian

[52:32] slut and I think that that is

[52:34] contributory to the like post

[52:36] pandemic inflationary episodes

[52:38] that we observed at this

[52:41] point that narrative I think is

[52:43] perhaps less helpful just

[52:44] because

[52:47] the best information that we

[52:50] have which is incomplete as all

[52:52] economic information is is that

[52:55] households are strained by you

[52:57] know rising prices and you know

[52:58] poor

[53:01] employment growth, poor wage

[53:03] pressure in the labor market. I

[53:05] think that those are sort of the

[53:07] more immediate indicators of

[53:08] this problem

[53:12] the longer termism I think it's

[53:14] probably present there too and I

[53:14] and there's probably

[53:17] a multifaceted explanation for

[53:19] this phenomenon bridge thank you

[53:20] madam Chair that's the perfect

[53:22] setup for a question that I was

[53:23] going to save until closer to

[53:25] the end but I think you you've

[53:27] really teed me up here. The

[53:28] Kshaped economy right? yeah of

[53:30] course most households don't

[53:31] have a lot of savings they can

[53:33] draw down. Most households

[53:36] are right now increasing how

[53:37] much they're spending on credit

[53:39] cards just to stay afloat to

[53:42] have the same level of quality

[53:43] of life they had last year

[53:44] this year so

[53:47] I I don't think that's something

[53:48] that we named explicitly in this

[53:49] but I know in in past

[53:50] presentations we've talked about

[53:53] that thatkshaped economy how

[53:55] it's sort of the top third of

[53:56] spending that is keeping the

[53:57] entire rest of the economy

[53:59] afloat are we still seeing that

[54:00] are we seeing any changes in

[54:01] that you did say something about

[54:02] how the

[54:07] the delinquency rates indicate

[54:09] that maybe that that top third

[54:11] is starting to feel some of the

[54:13] the challenges in this

[54:14] economy where like every other

[54:16] indicator we have says we should

[54:17] probably be headed towards a

[54:19] recession and yet the economy

[54:21] remains strong so can you

[54:22] just talk about that Kshaped

[54:23] economy and how that is looking

[54:24] right now.

[54:25] Dr. Amy

[54:28] thank you madam Chair. Senator

[54:28] Bridges

[54:29] yes

[54:35] We, I do think that we this

[54:36] is us saying there's a cases

[54:38] shaped economy but not saying

[54:39] that there's a K-shaped economy.

[54:41] there has been a divergence in

[54:43] the experiences of higher income

[54:45] households and lower income

[54:47] households and a widening

[54:49] divergence in that experience

[54:50] since in the post pandemic

[54:51] period and

[54:57] I think these set of data that

[54:58] we're presenting to you

[54:59] indicates that that is still the

[55:03] case and that higher income

[55:05] consumers have been boosting

[55:07] consumer spendings if not

[55:08] supporting it

[55:11] for some several quarters now

[55:12] and

[55:16] that might be they might be

[55:18] feeling some more of the pinch

[55:22] now as we see that downtick

[55:24] in every all the household

[55:27] grouping spending on the left

[55:29] hand side of the chart and then

[55:31] we saw the increase in mortgage

[55:33] delinquency rates as well.

[55:34] and indicating

[55:37] that yes the Ks shaped economy

[55:39] is still impacting the way the

[55:40] economy is working.

[55:41] at the moment

[55:50] also just in terms of the

[55:53] savings rate declining before

[55:55] the great recession that was in

[55:58] the context of a run up in

[55:59] housing values that allowed

[56:02] people to draw down savings and

[56:03] borrow like and have negative

[56:07] savings against those values

[56:09] so we're in a different context

[56:11] right now so interpreting that

[56:12] there's a different

[56:14] interpretation for both of those

[56:15] situations and as Chief Sabetsky

[56:16] mentioned it was a long

[56:20] time period for that housing

[56:23] bubble to inflate at that time

[56:24] and we're in a different

[56:26] situation now so now we're

[56:28] seeing yeah we're in a different

[56:28] situation now so

[56:30] just to add to that explanation

[56:31] OK.

[56:38] so we are seeing persistent

[56:40] inflationary pressures along

[56:42] with this relatively stable

[56:44] although slow moving labor

[56:46] market and these have tipped the

[56:48] balance towards monetary policy

[56:51] tightening just recently. this

[56:53] is against our expectations that

[56:55] we came to you with in March for

[56:57] monetary policy easing

[57:01] throughout 2026. but we did

[57:03] see the fed raise the target

[57:04] federal funds rate in it

[57:04] September meeting just a

[57:07] couple years ago a couple of

[57:10] days ago a couple days ago sorry

[57:12] and it's widely expected to

[57:14] raise them once again before the

[57:16] end of 2026 to cool inflationary

[57:20] pressures this means by slowing

[57:22] borrowing and spending. So

[57:24] somewhat slowing in economic

[57:27] activity is how this monetary

[57:28] policy tightening is expected to

[57:31] work to cool inflationary

[57:34] pressures rate changes in 2027

[57:34] will depend on how inflation and

[57:35] employment

[57:36] evolve over the next year

[57:40] so in the next slide, you

[57:42] can see that in its quest to

[57:44] tame inflation the fed faces

[57:46] headwinds from continued

[57:49] volatility in oil prices after

[57:50] they receded over the summer

[57:52] they've jumped again as the

[57:53] conflict in the Middle East has

[57:55] escalated once again the average

[57:58] price reached $99 per barrel

[58:00] last week and it topped $100 for

[58:02] the first time since May this

[58:02] week

[58:06] and again another headwind

[58:08] that the fed is facing for

[58:10] tighter monetary policy is trade

[58:10] policy

[58:14] in the next slide the impact of

[58:17] tariffs on price to trade policy

[58:20] is uncertain and its impact on

[58:22] consumers prices and prices

[58:24] consumers and businesses also

[58:26] uncertain tariff revenues have

[58:27] fallen below their peak last

[58:29] fall. we expect them to

[58:32] remain elevated with trade

[58:34] conflicts continuing continuing

[58:37] to bubble up and a significant

[58:39] source of ongoing uncertainty

[58:40] and so that's all the data I

[58:41] really

[58:43] have to present now we just have

[58:44] the upside and downside risks to

[58:45] the forecast.

[58:49] we do have upside risks in

[58:52] the form of consumer activity

[58:54] we've focused a lot on what's

[58:55] happening with consumer activity

[58:57] and that it's remained resilient

[59:00] in the face of all these

[59:02] developing headwinds it is

[59:03] possible that inflationary

[59:05] pressures could subside

[59:07] quickly more quickly than we've

[59:09] anticipated and consumer

[59:11] activity could reaccelerate if

[59:13] consumers start to feel like

[59:14] that's possible and

[59:17] a good good idea we could

[59:20] also see AI related

[59:23] investment it's also has been

[59:24] proper boosting economic

[59:28] activity it could expand boost

[59:30] that boost more than we have

[59:30] anticipated and

[59:34] expand GdP beyond our current

[59:37] forecast and AI related

[59:39] investment is also associated

[59:41] with increasing productivity and

[59:43] this could help boost

[59:44] investment related incomes.

[59:49] it's quite different than the

[59:51] general public's perspective on

[59:52] Ai at the moment

[59:57] thank you madam chairir. It's

[59:58] it plays a key role in the

[1:00:00] upside and the downside risks as

[1:00:03] you can see there so again on

[1:00:05] the downside risks we might see

[1:00:06] inflation not for

[1:00:09] responding to higher interest

[1:00:12] rates and if the fed has to keep

[1:00:13] tightening interest rates if

[1:00:16] interest rates remain above

[1:00:18] anticipated levels for longer

[1:00:19] than we anticipate these

[1:00:22] pressures will weigh more on

[1:00:24] spending and investment and

[1:00:25] could decrease economic activity

[1:00:29] this would also further weaken

[1:00:32] household finances or and in

[1:00:34] the context of weak employment

[1:00:36] growth could also impact

[1:00:38] consumer spending beyond what

[1:00:40] we've anticipated or create some

[1:00:43] financial instability and

[1:00:45] finally on the AI related

[1:00:46] disruptions

[1:00:50] this may cause a

[1:00:52] divergence from our expectations

[1:00:55] this could come from further or

[1:00:57] more dramatic disruptions to

[1:00:59] employment than we've seen or

[1:01:00] anticipated in the forecast. it

[1:01:02] could come from a stock market

[1:01:05] correction if AI fueled stock

[1:01:08] values decline and it could also

[1:01:11] come from a potentially unknown

[1:01:12] threat that we had not

[1:01:14] previously considered but

[1:01:15] something that's popped on the

[1:01:16] horizon recently as we've

[1:01:19] seen some of the AI related like

[1:01:23] rogue activity unfolding over

[1:01:24] the summer so

[1:01:27] significant upside and downside

[1:01:28] risk from Ai related things.

[1:01:33] with that I'll representative

[1:01:34] tiger

[1:01:36] Thank you madam chairir

[1:01:40] I I guess the question having

[1:01:40] lived through

[1:01:44] running a large company in 2009

[1:01:46] and watching our fourth quarter

[1:01:46] go to

[1:01:51] go down significantly I'll

[1:01:53] leave it at that

[1:01:55] is

[1:02:00] there was a perfect storm that

[1:02:03] took place in the real estate

[1:02:04] market that that obviously

[1:02:08] created that that significant

[1:02:09] downturn

[1:02:14] are are there any forces out

[1:02:15] there I know we're seeing a

[1:02:17] gradual decrease right now in

[1:02:21] home values and Colorado and

[1:02:23] seeing seeing rental prices

[1:02:24] are

[1:02:25] is there any

[1:02:28] potential of that perfect storm

[1:02:32] arising again because we did see

[1:02:34] a rapid rapid inflation

[1:02:39] in housing values between 22 and

[1:02:41] 25 probably

[1:02:44] is there anything there we need

[1:02:46] to be concerned about or is that

[1:02:48] just that perfect storm just

[1:02:50] isn't going to repeat itself for

[1:02:51] a variety of reasons

[1:02:54] Chiefzevitsky

[1:02:57] thank you madam Chair. thank you

[1:02:58] Representative Taart. I think

[1:02:59] Drctor Ay and I may both have

[1:03:01] something to say about that

[1:03:02] so I'll I'll start and then I

[1:03:03] want to hear what she has to

[1:03:04] offer as well

[1:03:08] I think with respect to home

[1:03:08] prices in particular

[1:03:12] I was quite concerned about the

[1:03:14] level of appreciation that we

[1:03:17] observed in the early 22iess and

[1:03:20] I think frankly that the

[1:03:21] trajectory of home prices over

[1:03:24] the past two years or so has

[1:03:26] been sort of the best possible

[1:03:28] set of outcomes given the rapid

[1:03:29] inflation that we had observed

[1:03:30] prior to that

[1:03:33] which is to say home prices

[1:03:36] have declined a little bit again

[1:03:37] this is in one of the

[1:03:38] supplementary sides and since

[1:03:38] we're at the end of the deck

[1:03:40] here I'll just page forward to

[1:03:42] it so you can see so these are

[1:03:45] home price indices the two

[1:03:47] the gold line and the the dotted

[1:03:49] line there are composite indices

[1:03:51] for different groups of metro

[1:03:53] areas across the United States

[1:03:54] and then the teal line at the

[1:03:57] top is or until recently at the

[1:03:59] top is the the index for the

[1:04:00] Denver metro

[1:04:01] which is the only

[1:04:05] comparable natural national

[1:04:06] index that we have

[1:04:09] so this is the front range and

[1:04:10] like heavily concentrated on

[1:04:12] Denver. I think Representative

[1:04:13] Taggart that's important to

[1:04:14] answering your question about

[1:04:15] home prices in Colorado

[1:04:17] generally it is very

[1:04:18] different from what's going on

[1:04:20] in your district the western

[1:04:21] slope housing market is just

[1:04:22] different from the front range

[1:04:23] housing market and always has

[1:04:24] been but

[1:04:26] what I'd note here is just that

[1:04:28] because of this sort of

[1:04:33] progressive stagnation in home

[1:04:35] prices I'm less concerned about

[1:04:38] a real estate bubble on the

[1:04:39] front range now or to the extent

[1:04:40] that there was a real estate

[1:04:42] level on the front range. I

[1:04:44] think it has deflated in a way

[1:04:47] that is less disruptive to the

[1:04:49] front range economy then

[1:04:50] something like the deflation of

[1:04:52] the housing bubble proceeding

[1:04:53] and during the great recession.

[1:04:55] I'll also just note something

[1:04:57] that that I have always found

[1:04:58] interesting which is that the

[1:04:58] front range housing market

[1:05:02] didn't exhibit the same bubble

[1:05:03] like characteristics during the

[1:05:05] great recession economy as or

[1:05:07] the economy preceding the great

[1:05:08] recession as most areas of the

[1:05:10] rest of the United States

[1:05:11] again different on the western

[1:05:12] slope the grand junction

[1:05:15] metropolitan area did

[1:05:17] experience a housing market

[1:05:19] bubble and a pretty significant

[1:05:21] collapse akin to you know other

[1:05:24] areas of the western US

[1:05:26] Vegas, Salt Lake City, Phoenix

[1:05:28] the the front range market

[1:05:29] didn't experience that and so

[1:05:31] actually the market correction

[1:05:32] that we're seeing or have seen

[1:05:34] for the past couple of years is

[1:05:36] as significant here as it had

[1:05:37] been on the front range during

[1:05:38] the great recession and you can

[1:05:40] see that in the history here

[1:05:42] which again I I find pretty

[1:05:42] interesting but I'm I'm less

[1:05:43] worried about

[1:05:45] that particular future Drctor

[1:05:46] Amy did you have anything

[1:05:46] further to add on on this?

[1:05:47] DrRaie

[1:05:50] thank you madam Chair

[1:05:51] Representativeucker I would say

[1:05:56] I had something in my mind to

[1:06:00] say until you pointed to me

[1:06:00] that

[1:06:03] there was also

[1:06:06] it's like a shift in

[1:06:10] home lending behavior during the

[1:06:12] great recession that we have not

[1:06:12] seen

[1:06:17] here during that that recent run

[1:06:19] up in prices in Colorado and the

[1:06:21] US so I mean we don't have they

[1:06:23] had the ninja loans no income no

[1:06:25] job and you could still get a

[1:06:27] loan that was help you know

[1:06:31] participating and inflating that

[1:06:33] housing bubble our bubble has

[1:06:35] been supported by our bubble

[1:06:36] it's not I would say it's not a

[1:06:39] bubble it's a how like a run up

[1:06:41] in housing values maybe

[1:06:42] partially overshooting

[1:06:46] fundamentals but it was

[1:06:47] supported by it has been

[1:06:48] supported by employment growth

[1:06:49] and growth in the state

[1:06:52] population and the that

[1:06:53] construction just hasn't been

[1:06:55] caught up with demand for

[1:06:57] housing so it's a different set

[1:07:01] of drivers for house price

[1:07:03] inflation and then it's been a

[1:07:04] diff so then it's been a

[1:07:05] different set of drivers in the

[1:07:06] stagnation

[1:07:14] Thank you'd like to pursue this

[1:07:16] housing point that Rep Taggart

[1:07:17] raised just a bit and then one

[1:07:18] more line of inquiry

[1:07:21] until about June of 22 if you

[1:07:22] had

[1:07:24] decent credit good credit you

[1:07:25] could get a mortgage at 3% then

[1:07:27] within about 90 days due to

[1:07:31] federaleral reserve action it

[1:07:34] was 6% I have sensed that the

[1:07:35] increase in mortgage rates as

[1:07:38] workday downward pressure on

[1:07:39] home prices if you want to sell

[1:07:40] anything

[1:07:42] you have to take what people can

[1:07:43] afford net of mortgage costs

[1:07:45] into account to the extent the

[1:07:48] fed continues to raise rates for

[1:07:49] the reasons that you've alluded

[1:07:51] to that would be expected to

[1:07:53] have a comparable knock on

[1:07:54] effect in mortgage rates and

[1:07:55] thus perhaps incrementally

[1:07:58] further downward pressure on

[1:07:59] housing prices so as to avert

[1:08:00] bubble concerns

[1:08:02] valid question mark

[1:08:06] DoctorRayy

[1:08:11] de madam Chair Senator Weissman

[1:08:13] yes we would expect that the

[1:08:16] federal monetary policy would

[1:08:19] have among an impact on longer

[1:08:20] term interest rates and mortgage

[1:08:21] rates included and

[1:08:23] that that would

[1:08:26] further slow housing market

[1:08:26] activity

[1:08:31] we're already seeing an increase

[1:08:34] a decline in sales in Colorado

[1:08:37] and longer days on the market

[1:08:39] and so we would expect that to

[1:08:40] continue but not in the

[1:08:43] like a sudden drop off kind of

[1:08:46] way but in a way the continuing

[1:08:47] a trend that we're currently

[1:08:51] seeing. I did readid recently

[1:08:53] that average mortgage long term

[1:08:57] rates are above7% on average and

[1:08:59] so we're still below the long

[1:09:00] term average so just for some

[1:09:00] context

[1:09:04] en ator weissman thank you back

[1:09:06] to Ai I'm not going to get

[1:09:07] into here whether it's going to

[1:09:10] build viruses or launch nuclear

[1:09:11] warheads maybe we'll have that

[1:09:12] conversation across the street

[1:09:15] in January but for here let me

[1:09:16] state a concern and I'll invite

[1:09:16] either of you to

[1:09:19] find in that concern a question

[1:09:20] and then answer it or we can

[1:09:21] take it offline

[1:09:25] the top three companies in the

[1:09:27] S&P500 are 20%

[1:09:30] of that 20 trillion of market

[1:09:31] cap.

[1:09:33] 20 trillion of the total70

[1:09:35] trillion market cap in the

[1:09:37] S&P500 depending on the day.

[1:09:40] the top maybe7 companies or more

[1:09:42] like 30% all of those are Ai

[1:09:43] exposed in the case ofnvidia you

[1:09:45] know they're about that's about

[1:09:46] an Ai pure play anymore.

[1:09:49] point being if we see a

[1:09:51] correction in that space you

[1:09:53] think there are analogies to the

[1:09:54] fiber overbuild

[1:09:54] and not the

[1:09:59] multideca billion dollar dot com

[1:10:01] bubble but the $2 trillion

[1:10:02] telecom bubble of the early

[1:10:03] aughts

[1:10:06] point being it's not just those

[1:10:07] companies that are going to hurt

[1:10:09] it's everybody with any exposure

[1:10:10] to index funds which is

[1:10:12] pretty much any

[1:10:15] any government or any household

[1:10:19] with any investment at all that

[1:10:22] is the contagion fear that that

[1:10:22] I have

[1:10:25] we lost what 3040% ofera in the

[1:10:29] the Wall Street crash of of e9.

[1:10:30] I don't know how exposed we are

[1:10:33] I've invitederra to tell me

[1:10:34] about whether they're hedging

[1:10:35] that risk with derivatives you

[1:10:36] can now get that will pay out

[1:10:38] when these things crash. I

[1:10:38] didn't get an answer

[1:10:41] anyway

[1:10:44] this is a concern that I have

[1:10:46] for households in Colorado

[1:10:47] and and for everything that

[1:10:49] we have to solve for in this

[1:10:51] place that you help us try to

[1:10:52] think about so

[1:10:54] would love to know how you're

[1:10:54] thinking about that stuff.

[1:10:55] DoctorRay.

[1:10:59] thank you madam chairir. Senator

[1:11:01] Weissman so we are thinking

[1:11:04] about that in and it's why we

[1:11:06] raised it in the risks slide

[1:11:10] so a financial market

[1:11:12] correction, um, is a possibility

[1:11:13] and it's

[1:11:16] something that we have

[1:11:17] considered it's important also

[1:11:21] the things the concerns that you

[1:11:24] raise are important so that when

[1:11:24] we see this

[1:11:27] abroadbas if there's a broadbas

[1:11:29] decline in financial market

[1:11:31] values then we might see a

[1:11:33] reversal of those wealth effects

[1:11:35] that I talked about impacting

[1:11:36] the labor market so allowing

[1:11:38] older workers to leave the labor

[1:11:40] force and retire early that

[1:11:41] might we might see that

[1:11:43] happening in reverse and if

[1:11:44] households feel less wealthy

[1:11:46] then they'll stop spending and

[1:11:48] like Chief Savetsky mentioned

[1:11:50] that spending is the engine that

[1:11:52] we need to fuel the economy

[1:11:54] so it's definitely a downside

[1:11:54] risk and it's there in

[1:11:57] the slide for that reason but

[1:11:59] also important to remember the

[1:12:01] stock market has fluctuated

[1:12:04] widely in the past without a

[1:12:08] concomitant commitment and com

[1:12:10] an accompanying

[1:12:13] a companying shifts in economic

[1:12:17] activity and or that shift in

[1:12:19] economic activity could be much

[1:12:21] smaller than the shift in the

[1:12:24] financial market and in terms

[1:12:24] of

[1:12:29] income tax revenue in particular

[1:12:31] I would say we would see that

[1:12:32] show up in estimated payments in

[1:12:36] cash with returns and unless it

[1:12:37] became more of a broadbased

[1:12:41] slowdown we would still see

[1:12:43] resilience in wage withholding

[1:12:44] which is by far the largest

[1:12:47] component of income tax revenue

[1:12:48] there's also risk on the

[1:12:50] spending side so I think

[1:12:52] shesasti wants to say something

[1:12:54] OK and then I think we should

[1:12:54] probably move on to the

[1:12:57] revenue and budget forecast

[1:12:58] given I know members have got

[1:12:59] some hard stops today and we

[1:13:00] still have

[1:13:03] lots to do. Chief Sebetsky I'm

[1:13:04] OK.

[1:13:04] we can move forward

[1:13:07] so madam chair members thank you

[1:13:09] for your attention to our

[1:13:10] expectations for the economy

[1:13:11] we'll move now to talk about

[1:13:13] expectations for revenue in the

[1:13:14] budget and very soon I will

[1:13:15] answer Senator Kirkmeyer's

[1:13:16] question from the beginning of

[1:13:17] the meeting about whether you

[1:13:18] should feel happy or not

[1:13:27] joyous or not just to set

[1:13:29] sort of the stage for what we

[1:13:31] know and don't know we have

[1:13:33] fiscal year 2025-26 is over it

[1:13:34] ended on June 30th. you know

[1:13:36] that we have preliminary revenue

[1:13:38] data for that year but we don't

[1:13:38] have final accounting for the

[1:13:39] year

[1:13:42] one of the things that we get in

[1:13:44] September on September 1st is a

[1:13:47] certification of revenue for the

[1:13:48] completed fiscal year from the

[1:13:49] state auditor or excuse me from

[1:13:50] the state controller that

[1:13:53] certification is complete it

[1:13:55] shows notably for example

[1:13:57] that the state did not incur a

[1:14:00] taor surplus during FY2526 which

[1:14:01] we'll talk about in a moment

[1:14:03] there is an audit of that

[1:14:05] certification that comes out on

[1:14:08] September 1fth, so Tuesday of

[1:14:11] this week and the audit is

[1:14:12] interesting. it's the

[1:14:14] transmittal letter provided by

[1:14:16] the state auditor indicates that

[1:14:16] the certification is

[1:14:19] not able to be

[1:14:22] audited essentially that there

[1:14:23] there's missing information that

[1:14:25] wasn't furnished to the auditor

[1:14:27] in time for them to verify the

[1:14:28] figures that are in that

[1:14:29] certification. The reason I am

[1:14:31] pointing that out is just that

[1:14:32] we know less than we would like

[1:14:33] to at this stage it seems like

[1:14:35] some numbers could still move as

[1:14:37] conversations continue between

[1:14:38] the controller and the auditor

[1:14:40] to make sure that those numbers

[1:14:42] are in good shape. there was a

[1:14:45] significant revision of73

[1:14:46] million dollars to the initial

[1:14:47] certification that happened a

[1:14:48] week after the initial

[1:14:49] certification was released

[1:14:51] I think frankly this is

[1:14:52] a

[1:14:54] an outcome of the many

[1:14:59] I'll say creative budget

[1:15:00] actions that the general

[1:15:01] assembly has taken in the past

[1:15:03] couple of years the different

[1:15:04] movements of money between

[1:15:05] enterprises not enterprises

[1:15:07] counting stuff as subject tota

[1:15:08] not counting it as subject to

[1:15:09] taor making transfers across

[1:15:11] Tabor district boundaries etc.

[1:15:13] all just increases the amount of

[1:15:15] work for the controller and just

[1:15:16] means that these data take a

[1:15:16] little bit longer to come in.

[1:15:22] we have in the forecast some

[1:15:23] still projected transfer amounts

[1:15:26] for FY2526. those aren't final

[1:15:28] because they're transfers of

[1:15:29] fund balances but we didn't know

[1:15:31] at the time that we made the

[1:15:32] projection exactly what the fund

[1:15:33] balance would be on the day of

[1:15:35] the transfer and we don't have

[1:15:36] final accounting for those yet

[1:15:36] so that could still move

[1:15:39] and then most importantly for

[1:15:40] your purposes even more

[1:15:41] important than the taber

[1:15:43] certification issue is that in

[1:15:46] our budget overview we do not

[1:15:48] account forY2526 reversions of

[1:15:48] general fund appropriations yet

[1:15:51] and so the budget

[1:15:54] big picture will actually get a

[1:15:55] little bit better between now

[1:15:58] and December because the we will

[1:16:00] have a a full accounting of

[1:16:01] reversions and those will add to

[1:16:04] the year end balance for FY2526

[1:16:07] this is all like with the

[1:16:08] exception of the audit issue

[1:16:10] that I mentioned pretty normal

[1:16:11] stuff for this part of the

[1:16:13] forecast process where we're

[1:16:15] after the end of the fiscal year

[1:16:16] but the books haven't been

[1:16:16] closed yet.

[1:16:21] So the takeaways for this

[1:16:23] forecast as we'll get into

[1:16:24] presenting it is that the

[1:16:26] revenue forecast has improved

[1:16:28] both on actual collections for

[1:16:30] the elapsed fiscal year and

[1:16:33] going forward FY26 revenue beat

[1:16:35] our June forecast by about $220

[1:16:37] million and that is just revenue

[1:16:39] that is now in the general fund

[1:16:41] budget in the sense that because

[1:16:43] revenue beat expectations but

[1:16:44] still fell below the ref CA

[1:16:46] that's a dollar for dollar

[1:16:47] increase in the amount of the

[1:16:48] reserve and available to be

[1:16:49] spent or

[1:16:51] saved in excess of the june

[1:16:52] forecasts going forward

[1:16:55] we expect revenue in FY27 to

[1:16:59] grow 9.5%. joyous look at all

[1:17:00] the joy

[1:17:02] well we're we're we're gonna get

[1:17:03] to whether or not you're joyous.

[1:17:05] where that's at the bottom of

[1:17:09] the slide

[1:17:11] we had yesterday indeed

[1:17:17] for FY28 and FY29 are growth in

[1:17:19] revenue is going to be moderated

[1:17:21] by the presence of the

[1:17:22] familymilyffoability tax credit

[1:17:24] and the expended earned income

[1:17:27] tax credit we now are

[1:17:28] including partial

[1:17:31] triggers on for those credits in

[1:17:34] tax year 2028 and tax year 2029

[1:17:37] that will result in slower

[1:17:38] growth in revenue you'll see in

[1:17:39] a moment that revenue is still

[1:17:40] expected to be above their FC

[1:17:42] capp in those years so it is not

[1:17:45] have a direct budget

[1:17:46] implication but does slow

[1:17:47] revenue growth because of those

[1:17:48] large tax credits.

[1:17:51] so the budget bottom line

[1:17:53] includes only minor changes that

[1:17:55] are attributable to the revenue

[1:17:58] forecast. but the so the

[1:17:59] forecast alone just the stuff

[1:18:01] that we do revenue forecasting

[1:18:03] abor cash funds transfers that

[1:18:06] sort of thing would improve the

[1:18:09] FY27 bottom line by about 190

[1:18:10] million relative to what we

[1:18:10] presented in June.

[1:18:14] and improve the outlook for FY28

[1:18:14] by just 25 million.

[1:18:17] the reason it's smaller next

[1:18:19] year is because we also have as

[1:18:20] you heard from doctorctorRami

[1:18:22] reduced our inflation

[1:18:23] expectations which means a

[1:18:25] slower growth rate in the level

[1:18:26] of the taber limit which means

[1:18:27] that less of that additional

[1:18:28] revenue would be permitted to be

[1:18:29] retained fire safed.

[1:18:32] so those are the changes from

[1:18:35] our forecast work. The reason

[1:18:37] that your budget outlook is far

[1:18:38] worse in this forecast than it

[1:18:39] was in June is all on the

[1:18:41] expenditure side it's everything

[1:18:42] that you heard yesterday. we've

[1:18:43] incorporated that so we have now

[1:18:47] built in to both of our well our

[1:18:49] current law forecast the over

[1:18:51] expenditures that were occurred

[1:18:53] in mostly hickpuff but also

[1:18:55] throughout the budget in FY26

[1:18:57] that's now in our general fund

[1:18:58] overview and then in our

[1:18:59] scenario B we have

[1:19:01] significantly increased our

[1:19:04] expectations for what you would

[1:19:06] need to spend for medicaid to

[1:19:07] keep services at their current

[1:19:09] law level based on the newICPA

[1:19:11] forecast and we've also added an

[1:19:12] expenditure for Snap.

[1:19:14] we'll get into that when we get

[1:19:16] to scenario B. The reason why

[1:19:17] you're not joyous today is not

[1:19:18] because of changes to our

[1:19:20] forecast it is because of

[1:19:22] changes to our expectations for

[1:19:24] budget pressure for the

[1:19:25] expenditure side of the budget

[1:19:26] and that has been incor

[1:19:34] Sure.

[1:19:37] I I mean I don't I don't think

[1:19:38] that I'm going to be able to

[1:19:39] speak you know more

[1:19:41] intelligently about the medicaid

[1:19:43] budget then the long discussion

[1:19:44] that you had yesterday, right?

[1:19:45] like it's in it's incorporated

[1:19:46] in our forecast you'll see it

[1:19:48] but you you had I think a a

[1:19:49] robust and necessary

[1:19:51] conversation about that at the

[1:19:52] commission meeting that you

[1:19:52] had yesterday.

[1:19:57] we are about to show you that

[1:19:58] we're increasing our revenue

[1:19:59] expectations for future years

[1:20:01] but I wanted to first stop and

[1:20:03] just point out how unusual that

[1:20:04] feels right now. you can see

[1:20:06] in general

[1:20:09] we expect that state revenue

[1:20:10] increases over time and that had

[1:20:13] been the case for the entirety

[1:20:14] of the 20 tons and into the

[1:20:16] early 202iess but over each of

[1:20:17] the last four fiscal years

[1:20:19] including Fi 2526 which just

[1:20:22] ended we had either you're on

[1:20:23] year declines in revenue or

[1:20:25] you're on your increases in

[1:20:26] revenue that were less than 1%.

[1:20:27] that's

[1:20:31] unusual and surprising and I

[1:20:33] wanted to explain what had

[1:20:34] happened during that time period

[1:20:36] which is I think to some extent

[1:20:37] a little bit of economic

[1:20:39] slowdown but more importantly

[1:20:41] from my perspective three things

[1:20:42] that occurred in the policy

[1:20:42] space.

[1:20:45] the first was in 2022 at the

[1:20:47] november election, voter

[1:20:49] approved a ballot measure that

[1:20:50] reduced the state income tax

[1:20:53] rate from4.55% to4.4%. that's a

[1:20:55] 1f basis point cut in the income

[1:20:57] tax rate and because thatac

[1:20:58] occurred at the november

[1:21:01] election the half year impact of

[1:21:03] that for tax year 2022 wasn't

[1:21:05] accrued back to FY2122. and so

[1:21:07] you see a 1.5 year impact of

[1:21:09] that policy change occurring in

[1:21:11] F2223 and that's the first of

[1:21:12] those years of quite low revenue

[1:21:13] growth.

[1:21:17] after that in the 2024 session

[1:21:19] the general assembly passed the

[1:21:21] familymifoability tax credit and

[1:21:22] the expanded earned income tax

[1:21:23] credit to very large tax credits

[1:21:25] that reduced income tax revenue

[1:21:28] that reduces revenue for tax

[1:21:31] year 2024, tax year 2025, the

[1:21:32] credits were unconditionally

[1:21:35] available in tax year 2024 and

[1:21:36] while they were conditionally

[1:21:37] available in tax year 225 they

[1:21:38] in fact were available at their

[1:21:39] full level in that year and so

[1:21:41] you have two years for which

[1:21:42] we're seeing on the order of 1.2

[1:21:43] to1.

[1:21:46] 5 billion in tax credits going

[1:21:48] out the door to on a refundable

[1:21:50] basis to low income families

[1:21:53] across Colorado that's also a

[1:21:54] drag on general fund growth and

[1:21:55] you can see that especially in

[1:21:57] the declining individual income

[1:21:58] tax collections over that

[1:21:58] period.

[1:22:01] and then you have oba so

[1:22:07] 2025 Hr1 that occurs as a again

[1:22:09] 1.5 year impact on revenue for

[1:22:11] FY2526 and suppresses revenue

[1:22:13] growth in that year and there

[1:22:14] you mostly see the shrinking

[1:22:15] occurring on the corporate

[1:22:15] income tax side.

[1:22:16] so

[1:22:19] our forecast is unusual relative

[1:22:21] to your recent experience in

[1:22:22] that we're actually expecting

[1:22:23] growth in general fund revenue

[1:22:25] over the next couple of years

[1:22:27] again under current law setting

[1:22:29] aside any potential future

[1:22:32] policy changes that's a 9.5%

[1:22:35] growth rate in FY2627 and then

[1:22:37] slowing in each of the next two

[1:22:38] years as those credits trigger

[1:22:38] back on

[1:22:40] these are our changes relative

[1:22:40] to June

[1:22:43] We made upgrades to our

[1:22:45] individual income tax forecasts

[1:22:47] throughout except that after we

[1:22:48] accounted for the triggers the

[1:22:51] net change with those triggered

[1:22:53] credits is a reduction in the

[1:22:54] 2728 outlook

[1:22:57] we also upgraded our corporate

[1:22:59] income tax forecast. we also

[1:23:01] downgraded our forecast for

[1:23:03] insurance premium taxes and this

[1:23:04] is just me putting a button on a

[1:23:07] conversation we had in June I

[1:23:08] said at that time that we had

[1:23:09] seen this like pretty dramatic

[1:23:11] turnabout in insurance premium

[1:23:13] taxes since the start of

[1:23:16] calendar year 2026. I

[1:23:17] expected at that time that that

[1:23:19] was a sort of filing problem

[1:23:20] where money that we expected to

[1:23:21] come in the door just wasn't

[1:23:23] because of the way that insurers

[1:23:24] were remitting those taxes we've

[1:23:26] now changed our perspective on

[1:23:28] that we think that this is a

[1:23:29] real decline in insurance

[1:23:31] premium tax collections that is

[1:23:33] mostly related to insurers

[1:23:34] taking advantage of state income

[1:23:35] tax credits so the

[1:23:37] Coloradolimber credit the

[1:23:39] conservation easement tax credit

[1:23:41] being two of the big ones

[1:23:42] that are transferable and have

[1:23:43] been transferred to insurers and

[1:23:45] then going forward to the tax

[1:23:47] credits that you sold pursuant

[1:23:48] to legislation that you passed

[1:23:50] in the special session in 2025

[1:23:51] and so that's an offset to our

[1:23:53] corporate income tax forecast

[1:23:54] where we've shown some

[1:23:54] increase

[1:23:58] s as a result the changes to the

[1:23:59] total general fund revenue

[1:24:01] outlook are essentially the same

[1:24:03] as our changes to expectations

[1:24:04] for individual income tax.

[1:24:09] Revenue fell short of the

[1:24:11] referendumcapP in FY2526 and I

[1:24:14] wanted to say here so just a

[1:24:15] moment ago I showed you hey

[1:24:16] revenue has been flat for the

[1:24:17] last four years

[1:24:20] but that has not been a pinch on

[1:24:23] your budget until just FY2526

[1:24:26] because over that period you had

[1:24:28] taber surpluses so the fact that

[1:24:30] general fund revenue growth you

[1:24:31] know decreased as a result of

[1:24:34] the tax cuts in 2022 and

[1:24:36] decreased as a result of the

[1:24:39] fatsy and the expanded EITC did

[1:24:40] cut into your cushion it cut

[1:24:42] into your taber surpluses it

[1:24:44] didn't cut the amount available

[1:24:46] for your budget until just one

[1:24:47] year just last year when the

[1:24:50] current certification shows that

[1:24:51] revenue fell below the refcAP by

[1:24:56] $176 million. Now you passed a

[1:24:58] bill in 2026, House Bill1419

[1:25:00] that essentially is going to

[1:25:02] offset that

[1:25:05] deficit relative to the ref Capp

[1:25:07] by reducing futureta refund

[1:25:09] obligations because it

[1:25:11] identifies the portion of the

[1:25:13] 2425 surpluses and over refund.

[1:25:14] we'll get to that here in a

[1:25:16] moment but that's the only time

[1:25:17] when revenue has actually

[1:25:19] falling below the refcapp so

[1:25:20] revenue was an effective

[1:25:21] reduction in the amount

[1:25:22] available for your budget.

[1:25:25] Going forward we do expectta

[1:25:27] surpluses through the forecast

[1:25:29] period um800 millionish for the

[1:25:31] current year and then decreasing

[1:25:37] to575 or so next year and 650 or

[1:25:40] so in the out year you all have

[1:25:41] been on the committee for long

[1:25:42] enough to understand not to put

[1:25:45] a lot of stock in the exact

[1:25:46] expectations for those taber

[1:25:48] refund obligations that's just

[1:25:50] highly variant and it's it's the

[1:25:51] last dollar in so it'll move as

[1:25:52] a function of our forecast going

[1:25:54] forward.

[1:25:55] now

[1:25:57] notably

[1:26:01] repaggart

[1:26:04] thank you madam chairir.

[1:26:07] ef Sebeski

[1:26:11] I think you said it but just if

[1:26:17] you'd reinforce so 272829

[1:26:18] forecast graphs here

[1:26:22] to assume that the trigger's

[1:26:23] on for those two big tax credits

[1:26:26] am I correct there or incorrect?

[1:26:29] Chief Sevetsky thank you madam

[1:26:30] Chair. thank you Representative

[1:26:31] Taggart

[1:26:34] you'll see this in two slides

[1:26:35] and I I think I'd rather just

[1:26:36] save it for that

[1:26:39] so

[1:26:45] the taor refund expectations are

[1:26:46] less than our expected surplus

[1:26:47] amounts for two reasons

[1:26:51] you can see our expectations

[1:26:52] for the refund obligations

[1:26:56] that appear on this slide. I

[1:26:57] guess before I launch into the

[1:26:58] reasons for the difference from

[1:26:59] the

[1:27:02] surplus forecast, I just wanted

[1:27:03] to point out yes bec this is

[1:27:05] something you've already

[1:27:06] budgeted for but because we did

[1:27:09] not have a taor surplus in 2526

[1:27:12] the homestead exemption payments

[1:27:15] that occur this year 2627 are

[1:27:17] general funded that is a

[1:27:19] decision that you all made

[1:27:20] during your figure setting

[1:27:21] and that's accounted for in your

[1:27:23] budget that also means though

[1:27:25] that because we expect a surplus

[1:27:28] to occur in 2627 which should be

[1:27:28] collected in 2627 that you would

[1:27:32] expect the homestead exemption

[1:27:35] payments for FY2728 to be paid

[1:27:37] out of the refund obligation

[1:27:39] which effectively means year on

[1:27:41] year there's more available

[1:27:43] general fund budget space next

[1:27:44] year because that obligation

[1:27:44] goes away.

[1:27:49] The two reasons for the

[1:27:49] difference between the surplus

[1:27:52] forecast and the refund forecast

[1:27:53] our number one House Bill1419

[1:27:57] this is the bill that you passed

[1:27:59] that declares that a portion of

[1:28:01] theY2425 surplus was an over

[1:28:04] refund it reduces future year

[1:28:07] refunds by half of the amount of

[1:28:09] that over refund in each of the

[1:28:10] next two years when there's a

[1:28:11] sufficiently large surplus to

[1:28:13] allow for such a reduction

[1:28:16] that's88 million as a reduction

[1:28:18] in the refund obligation in both

[1:28:22] FY2627 and sorry the obligation

[1:28:23] for FY2627 and for FY2728.

[1:28:29] and then the second is this new

[1:28:31] issue that has come to light

[1:28:33] which is just that relative to

[1:28:34] all of the state's prior taor

[1:28:37] refund obligations the state has

[1:28:38] over refunded to taxpayers about

[1:28:42] $275 million compared with what

[1:28:44] was owed to taxpayers for those

[1:28:46] refund obligations. this is not

[1:28:49] a 1419 issue this is just a

[1:28:50] setting the refund mechanisms at

[1:28:52] the right level issue and so

[1:28:53] I wanted to call that to your

[1:28:55] attention because you can see it

[1:28:56] in our general

[1:28:58] overview accounting essentially

[1:29:00] this nets to zero over multiple

[1:29:02] fiscal years you neither are

[1:29:05] hurt by nor benefit from having

[1:29:06] paid those refunds effectively

[1:29:09] in advance going forward we will

[1:29:10] reduce refund obligations to

[1:29:11] account for the fact that you

[1:29:13] have already refunded some money

[1:29:15] upfront but when you refunded

[1:29:16] that money there's an accounting

[1:29:17] adjustment to account for the

[1:29:18] fact that that's just

[1:29:20] counting against a future

[1:29:22] obligation it doesn't actually

[1:29:23] improve your budget space

[1:29:23] temporarily.

[1:29:23] or vice versa

[1:29:31] This is the answer to

[1:29:32] Representative Taggart's

[1:29:33] question from a moment ago.

[1:29:36] Wait before you move on,

[1:29:36] Senatormoy's got a question?

[1:29:38] there's some time value to that

[1:29:39] money

[1:29:41] that we over refunded in

[1:29:42] previous

[1:29:44] not yeah

[1:29:45] Chiefzevetsky

[1:29:48] thank you madam chairir Senator

[1:29:49] May

[1:29:51] sort of so

[1:29:55] I I had a much longer

[1:29:58] explanation of this issue in the

[1:29:59] draft of this presentation that

[1:30:01] I gave to my team yesterday and

[1:30:03] the consensus among the team was

[1:30:05] man that's a long walk for not

[1:30:07] very much information which

[1:30:09] is why I've removed it from the

[1:30:10] presentation today

[1:30:14] I can go into a lot of detail

[1:30:17] about this and I'm trying not to

[1:30:18] essentially but but the

[1:30:22] the time value of the money is

[1:30:25] in an accounting adjustment that

[1:30:27] wasn't really ever available for

[1:30:29] you to have budgeted and so it

[1:30:31] doesn't seem to me that it

[1:30:34] affected your flexibility to

[1:30:35] make appropriations in prior

[1:30:37] years or that it will going

[1:30:40] forward I could explain why

[1:30:43] but again I don't know

[1:30:43] especially given the hard stops

[1:30:44] so that's worth our time right

[1:30:45] now.

[1:30:47] OK fine. we can get to it if

[1:30:48] it's important later. Senator

[1:30:51] Weissman I love a long walk so I

[1:30:52] was going to invite

[1:30:53] Misterabbetsky to perhaps email

[1:30:54] me the the draft for later

[1:30:55] fair enough.

[1:31:04] so

[1:31:06] let's go to the revenue forecast

[1:31:07] policy outcomes. This

[1:31:08] ispresentativeiger's question

[1:31:08] from a moment ago.

[1:31:10] I think you

[1:31:14] because we have gone into so

[1:31:15] much detail on this and earlier

[1:31:16] forecasts the committee is well

[1:31:17] aware of the dynamics here which

[1:31:19] is that the triggers resolve on

[1:31:22] a taxier basis and they all

[1:31:23] depend on the december forecast

[1:31:25] from the agency whose forecast

[1:31:27] you selected for budgeting from

[1:31:29] the december that begin that is

[1:31:30] immediately before the tax year.

[1:31:33] so 2026 current tax year the

[1:31:34] credits are off we know that

[1:31:37] that's over and done with.2027

[1:31:38] our forecast expects that these

[1:31:39] credits will also be off

[1:31:42] the actual value of the

[1:31:44] credits will be a function of

[1:31:44] the OSPB December 2026 forecast.

[1:31:49] we now expect that the credits

[1:31:51] will be partially on for both

[1:31:53] tax year 2028 and tax year 2029.

[1:31:55] this is an increase in

[1:31:56] expectations for the credits

[1:31:57] relative to our June forecast

[1:31:59] for 2028. We had expected that

[1:32:01] they would be off in that year

[1:32:02] we revised up our revenue

[1:32:04] forecast which means that Kagger

[1:32:05] value increases and we now

[1:32:07] expect that they would be

[1:32:08] partially on at the third

[1:32:09] highest tier or the middle tier

[1:32:12] for tax year 2028. we're a long

[1:32:13] way away from that actually

[1:32:15] resolving that will depend on

[1:32:16] the december forecast from 2027.

[1:32:19] and we now even have a forecast

[1:32:21] for tax year 229 that's new in

[1:32:22] the September forecast. We

[1:32:23] expect that they will be on at

[1:32:25] the second highest tier in that

[1:32:26] year we're a very long way off

[1:32:27] from that but I

[1:32:29] thinkpresentative Taggart's

[1:32:30] question is still important

[1:32:32] which is does the forecast

[1:32:33] account for the presence of

[1:32:34] these credits and the answer is

[1:32:37] yes it does when I showed you

[1:32:38] expectations for revenue and for

[1:32:39] the taor surplus that is already

[1:32:41] netting out the lost revenue

[1:32:42] attributable to the partial

[1:32:44] availability of the products so

[1:32:45] if the credits become available

[1:32:48] the expectation is that they

[1:32:49] would be reducing the amount in

[1:32:51] the taber surplus and not the

[1:32:52] amount available for your

[1:32:53] budget. that is how theAggar is

[1:32:55] designed to work and how it

[1:32:57] works under current law unless

[1:32:59] we have a very weird sort of

[1:33:00] revenue situation where

[1:33:03] you know there's a huge

[1:33:04] recession that wasn't accounted

[1:33:06] for in the in the forecast that

[1:33:07] was used to set the availability

[1:33:08] of the credits for example

[1:33:13] We also just continue to monitor

[1:33:15] the healthy school meals for all

[1:33:18] propmM amount. this is the

[1:33:21] comparison relative to the $95

[1:33:22] million that was in the ballot

[1:33:24] question for propMm at the 2025

[1:33:25] election. we continue to expect

[1:33:27] that revenue will exceed that.

[1:33:29] Our current forecast is 132

[1:33:32] million for HSMA revenue

[1:33:35] attributable to propmm that is

[1:33:36] greater than the $95 million

[1:33:37] blueook estimate. The fiscal

[1:33:38] year that matters here is the

[1:33:39] current year FY2627

[1:33:44] you all have the opportunity if

[1:33:44] you want to

[1:33:46] refer a measure

[1:33:50] in 2027 the vice chair

[1:33:53] is is out on that idea

[1:33:58] I don't know that I have

[1:33:59] anything I can add to that

[1:34:09] So this slide starts with a now

[1:34:11] for the bad news but this is the

[1:34:12] bad news that you already are

[1:34:15] well aware of so I've written

[1:34:16] so sorry Golddilocks the

[1:34:18] forecast is no longer just right

[1:34:18] we

[1:34:23] we had FY2526 over expenditures

[1:34:25] of 213 million. this is

[1:34:27] different than the number that

[1:34:28] you heard yesterday. the reason

[1:34:29] it's different than the number

[1:34:31] that you heard yesterday is

[1:34:32] because this is just over

[1:34:35] expenditures and not netting

[1:34:37] back any revergence. so the

[1:34:38] number that I think you were

[1:34:39] delivered yesterday was

[1:34:43] something like 158 million that

[1:34:45] might not be included they just

[1:34:46] showed all the numbers

[1:34:49] and that and that number is

[1:34:51] after accounting for some

[1:34:52] positive reversions that we

[1:34:55] expect in hickpuff. We do not

[1:34:56] have reversions for all state

[1:34:58] agencies and so we made a

[1:34:59] decision not to include

[1:35:00] reversions in this forecast

[1:35:01] because they would be partial

[1:35:02] and incomplete and hard to

[1:35:03] reconcile with future forecasts

[1:35:06] so that number will get a little

[1:35:07] bit less bad as those reversions

[1:35:08] come in.

[1:35:10] because of those over

[1:35:12] expenditures we now expect that

[1:35:15] the FY2526 year end balance was

[1:35:18] $141 million below the 13%

[1:35:18] reserve requirement

[1:35:21] you budgeted to the 13% reserve

[1:35:22] requirement which is what you

[1:35:24] were required to have done

[1:35:25] and so that doesn't

[1:35:26] independently have a consequence

[1:35:27] other than the fact that the

[1:35:31] year end balance is below where

[1:35:32] we expected it to be in june and

[1:35:34] that flows through for future

[1:35:36] fiscal years we do think that

[1:35:37] that picture will get a little

[1:35:38] bit better with reversions.

[1:35:43] Senator kirkmeyer sorry just to

[1:35:45] back up a little bit so what if

[1:35:46] NN passes how does that affect

[1:35:47] those tax credits?

[1:35:51] Chiefzevetsky thank you madam

[1:35:52] Chair.

[1:35:54] Senator Kirkmeyer, I've thought

[1:35:54] about this a lot

[1:35:57] I will give you the answer that

[1:35:59] I've given when asked before

[1:36:00] that I think it's still correct

[1:36:02] which is that the

[1:36:05] the way the proposition NN works

[1:36:07] is proposition NN does not

[1:36:09] change the amount of state

[1:36:11] revenue subject to taor. It

[1:36:13] effectively allows more money to

[1:36:15] be retained and spent but it

[1:36:17] doesn't create an exemption from

[1:36:20] taor or a deeper scene like

[1:36:23] say the sporting goods

[1:36:25] conservation measure does it

[1:36:26] instead is just increasing the

[1:36:27] allowance that the state can

[1:36:29] retain and spend or safe. So the

[1:36:30] amount of state revenue subject

[1:36:32] to taor if prop NN passes is the

[1:36:32] same as under current

[1:36:34] law.

[1:36:37] the Kager calculation is

[1:36:38] based on that amount.

[1:36:41] it's based on the amount of

[1:36:42] state revenue subject to taor.

[1:36:44] so my expectation is that if

[1:36:45] prop NN passes

[1:36:47] in our forecasting is exactly

[1:36:50] the same for revenue that the

[1:36:51] credits will trigger on as they

[1:36:52] would under current law.

[1:36:54] that's still noteworthy though

[1:36:57] because the way that the hagger

[1:36:58] is designed to work under

[1:37:01] current law is so that it makes

[1:37:02] it such that the credits only

[1:37:03] reduced revenue when there's a

[1:37:04] taber surplus.

[1:37:06] but in the propNN situation we

[1:37:07] don't expect there to be a taor

[1:37:08] surplus for a very long time

[1:37:11] and so in the prop and end

[1:37:13] situation those credits are now

[1:37:14] not reducing the taor surplus

[1:37:15] they're reducing the amount

[1:37:16] available for the budget.

[1:37:19] Vice Chair Bridges thank you

[1:37:21] madam Chair, which would be true

[1:37:23] of every single tax credit that

[1:37:25] we have in the state of Colorado

[1:37:27] all those tax credits from from

[1:37:31] familyfoability to the child tax

[1:37:34] credit like all all tax credits

[1:37:36] now fall below what it is the

[1:37:38] state would be able to retain

[1:37:42] with that increase in caused

[1:37:44] by propnet so essentially all

[1:37:46] tax credits now are dollars that

[1:37:48] could be used elsewhere or

[1:37:49] theoretically at least could be

[1:37:51] used for general fund

[1:37:54] purposes whereas with this taber

[1:37:55] capp we just sort of like have

[1:37:57] this money over and above that

[1:37:58] we can't use anyway and the

[1:37:58] legislature has found

[1:38:00] all sorts of ways to use it

[1:38:00] through tax credits

[1:38:03] wouldn't you agree? thank you

[1:38:04] madam Chair Senator ridges yes

[1:38:05] that's

[1:38:09] I do think it's worth noting

[1:38:10] though that that's already true

[1:38:11] for all of those other tax

[1:38:12] credits whereas it's not

[1:38:13] currently true for the fatsi and

[1:38:14] the expanded EITc because of the

[1:38:15] calculation

[1:38:19] because of the triggers right

[1:38:21] the the premise of those credits

[1:38:22] is that they are they are

[1:38:23] designed only to become

[1:38:25] available when they don't damage

[1:38:27] the budget other credits are

[1:38:29] sort of just available

[1:38:30] regardless of their budget

[1:38:30] consequence.

[1:38:35] And Senator Kkirkland the then

[1:38:36] could you tell us though also

[1:38:38] about then 137 you were gonna

[1:38:38] you said something about the

[1:38:39] that measure

[1:38:43] ve t s k y thank you madamir.

[1:38:44] we're getting yes I can I

[1:38:47] thelue Book project was an

[1:38:48] interesting one this year

[1:38:51] in the world of so 137 is the

[1:38:53] sporting goods sales tax measure

[1:38:54] what it does is it says revenue

[1:38:55] attributable to sporting goods

[1:38:57] is identified pursuant to a

[1:38:58] whole bunch of makes codes or

[1:38:59] product codes that exist in that

[1:39:02] measure and then that revenue is

[1:39:02] identified as taber exempt

[1:39:06] and then it gets put towards

[1:39:07] various conservation purposes

[1:39:11] because it identifies that

[1:39:12] revenue as taber exempt. It

[1:39:13] would normally have the

[1:39:15] consequence of affecting the

[1:39:16] availability of the trigger tax

[1:39:19] credits. We pointed this we

[1:39:20] legislative council staff

[1:39:21] pointed this out to proponents

[1:39:22] of that measure during their

[1:39:23] review and comment hearing the

[1:39:24] way that they chose to address

[1:39:25] that in their measure is by

[1:39:27] putting a mechanism in that

[1:39:30] measure that turns itself off if

[1:39:32] the debruce would cause that

[1:39:34] revenue would cause the trigger

[1:39:35] tax credits to either be

[1:39:37] triggered down or become

[1:39:38] unavailable and so

[1:39:40] the way that that works is in

[1:39:41] december if the the

[1:39:45] presence of prop 137 affects the

[1:39:46] availability of the triggers

[1:39:48] then prop 137 just turns itself

[1:39:48] off and doesn't do anything.

[1:39:55] Senator Mobley so

[1:39:58] it turns itself off.

[1:40:00] but if an end passes

[1:40:02] then what happens

[1:40:05] Chiefzevetsky

[1:40:09] thank you madam Chair. thank

[1:40:10] you, Sen May

[1:40:14] the the those two measures don't

[1:40:15] really interact with each other

[1:40:19] prop 137 would still debruce

[1:40:21] money and still require that

[1:40:22] that money to be spent that that

[1:40:23] money be spent for conservation

[1:40:26] purposes and and still increases

[1:40:29] the level of the taber limit and

[1:40:31] lets the money in excess of of

[1:40:34] the current Ref CAp be spent for

[1:40:35] things including the positive

[1:40:37] factor that's in propNN and then

[1:40:39] other programs benefiting

[1:40:40] children for the 1st 10 years of

[1:40:40] that measure.

[1:40:42] the

[1:40:46] the outcome of 137 and NN is

[1:40:47] sort of that 137

[1:40:50] results in some of the money

[1:40:52] that may otherwise have been

[1:40:53] directed to the NN purposes

[1:40:55] going to conservation instead

[1:40:57] but it doesn't have a different

[1:40:58] impact for the fatsy and the

[1:40:59] expanded EITc then just 137

[1:41:00] passing by itself.

[1:41:07] Senator Muley have follow up

[1:41:11] OK

[1:41:13] we were here

[1:41:17] for FY2627 current fiscal year

[1:41:22] our current law expectation is

[1:41:23] that the excess reserve will

[1:41:25] exceed the 13% reserve

[1:41:26] requirement that you all put in

[1:41:30] law by $125 million so we still

[1:41:32] have your budget in balance and

[1:41:35] then some for FY2627 even after

[1:41:37] accounting for that $213 million

[1:41:39] over expenditure last year

[1:41:40] that's mostly owing to the fact

[1:41:41] that we upgraded the revenue

[1:41:42] forecast or the revenue came in

[1:41:45] above expectations and so

[1:41:46] that's that's the picture there

[1:41:50] but that current law estimate

[1:41:52] does not include what you heard

[1:41:53] yesterday which is an

[1:41:55] anticipated over expenditure for

[1:41:56] hickpuff relative to your

[1:41:56] current law appropriation.

[1:42:00] if you were to pass a

[1:42:01] supplemental then increased

[1:42:03] hickbuff appropriations by

[1:42:05] the443 million dollars that

[1:42:07] you've heard then you would end

[1:42:08] up with an excess reserve that

[1:42:11] is or a reserve that is $376

[1:42:12] million below the 13% reserve

[1:42:12] requirement.

[1:42:16] that's not assumed in our

[1:42:18] current law expectations but it

[1:42:18] is assumed in scenario B.

[1:42:26] In FY2728 under current law we

[1:42:28] expect that you would be able to

[1:42:29] increase appropriations relative

[1:42:31] to the current law FY2627

[1:42:35] appropriations by $686 million

[1:42:36] or 3.7%.

[1:42:39] I all know I was able to page

[1:42:41] through the OSPB forecast. our

[1:42:43] forecasts are similar both in

[1:42:45] terms of the current law outlook

[1:42:47] for FY2627 and our expectations

[1:42:51] for 2728 to refresh your memory

[1:42:52] now that we're back in taor

[1:42:54] surplus land the real driver of

[1:42:55] the difference between the two

[1:42:57] forecasts in terms of available

[1:42:58] budget space is expectations for

[1:42:59] cash fund revenue subject

[1:43:01] totaor. I've highlighted those

[1:43:02] in our presentation. they're

[1:43:03] essentially the same as they

[1:43:05] were injune. we we changed them

[1:43:06] very little but our

[1:43:08] expectations are below the OSPb

[1:43:11] expectations so in the LCS

[1:43:12] forecast there's slightly more

[1:43:14] available budget space for both

[1:43:15] the current fiscal year and next

[1:43:16] fiscal year under current law.

[1:43:19] Senator Kirkmeyer thank you

[1:43:21] ma'am. thank you madam chairir.

[1:43:23] So in the FY2627 are the

[1:43:25] reversions in or out in this

[1:43:26] calculation.

[1:43:29] you know of the excess reserve

[1:43:32] now estimated at 125 million.

[1:43:32] Chief Sebetsky

[1:43:34] thank you madam Chair, thank you

[1:43:35] Senator Kirkmeyer. We have not

[1:43:36] incorporated the reversions yet

[1:43:39] so once reversions come in that

[1:43:40] amount will become more

[1:43:40] positive.

[1:43:48] So one of the last pieces of

[1:43:49] content I have to present this

[1:43:50] morning is scenario B.

[1:43:52] I like this chart a lot and I

[1:43:54] think it communicates a lot of

[1:43:55] information. I have gotten some

[1:43:56] feedback that this can be hard

[1:43:58] to follow and so I'm going to

[1:43:58] attempt to make it easier to

[1:43:59] follow here.

[1:44:05] so everything that's being shown

[1:44:08] here is our expectations for the

[1:44:08] reserve relative to the reserve

[1:44:09] requirement.

[1:44:13] the reserve requirement in

[1:44:16] FY2728 under current law is 15%

[1:44:18] your legislation to reduce the

[1:44:19] reserve requirement only applied

[1:44:22] for FY2526 and FY2627 so under

[1:44:24] current law that reserve

[1:44:24] requirement goes back to 15%.

[1:44:29] what I'm showing you here is how

[1:44:30] the different assumptions that

[1:44:31] we've included in scenario B

[1:44:33] affect your end balance relative

[1:44:34] to that requirement.

[1:44:37] so as you just heard under

[1:44:39] scenario A current law if you

[1:44:42] spend exactly as much as it's

[1:44:45] currently appropriated for the

[1:44:46] current year you would be able

[1:44:50] to grow appropriations next year

[1:44:51] by 686 million.

[1:44:51] that's an amount that you're

[1:44:52] going to

[1:44:54] likely spend in order to meet

[1:44:55] your budget obligations next

[1:44:56] year

[1:44:58] LCS does not forecast those

[1:44:59] budget obligations. The only

[1:45:01] expenditure side forecast that

[1:45:02] we do is school finance you'll

[1:45:03] see that on the next slide

[1:45:05] everything else is something

[1:45:07] that you get to make decisions

[1:45:08] about right and you get to makes

[1:45:09] decisions about school finance

[1:45:10] we don't know what decisions

[1:45:11] you're going to make. We work

[1:45:13] with your staff to get some

[1:45:15] assumptions about where current

[1:45:17] law programs may drive

[1:45:19] expenditure needs and then we

[1:45:20] incorporate those with the

[1:45:21] understanding that these are

[1:45:22] placeholder amounts and that

[1:45:23] you're going to make budget

[1:45:24] decisions that will differ from

[1:45:25] these

[1:45:27] the first thing that we include

[1:45:30] in scenario B is that assumed

[1:45:33] FY2627 over expend for hickath.

[1:45:35] that changes the amount that

[1:45:37] would be available heading into

[1:45:39] 2728 by443 million because that

[1:45:40] amount would be spent for

[1:45:41] hickpuff in the current year and

[1:45:43] then not be in the year end

[1:45:44] balance going forward to next

[1:45:44] year.

[1:45:47] and so you get to that black dot

[1:45:49] in terms of what's available to

[1:45:50] be spent or saved going into

[1:45:51] next year's budget.

[1:45:55] then when we make some

[1:45:57] assumptions for next year's

[1:45:59] budget we have to assume how

[1:46:00] much expenditures are going to

[1:46:02] grow relative to the current law

[1:46:04] appropriations because again the

[1:46:06] scenario A out back here is what

[1:46:07] if you spent exactly as much as

[1:46:09] you currently have appropriated

[1:46:10] for 2627.

[1:46:12] this is well we know you're not

[1:46:13] going to do that and here's

[1:46:14] where we expect some increases

[1:46:14] to occur.

[1:46:18] the largest by far is Hickpuff.

[1:46:19] you heard about this yesterday.

[1:46:21] we are now assuming a change

[1:46:24] relative to the current law FY27

[1:46:26] appropriation of860 million

[1:46:29] dollars. This is not a year on

[1:46:30] year increase per se because

[1:46:32] we're also assuming that443

[1:46:33] million dollars in the current

[1:46:34] year amount

[1:46:35] that would increase and so the

[1:46:37] increase year on year is more

[1:46:38] like420 million

[1:46:41] but it's still of course a an

[1:46:43] enormous year on year increase

[1:46:45] that eats up all of your

[1:46:46] available budget space in next

[1:46:48] year's budget by itself before

[1:46:48] accounting for anything else

[1:46:49] here.

[1:46:52] our placeholder amount for

[1:46:55] school finance is 175 million.

[1:46:57] We actually expect that the

[1:46:58] state share obligation will

[1:46:59] increase year on year by 165

[1:47:01] million. you'll see that on the

[1:47:03] next slide that's our assumption

[1:47:05] from June we wanted to preserve

[1:47:06] it here for compatibility

[1:47:09] new in this forecast is also an

[1:47:11] assumption for costs associated

[1:47:13] with the SA programme this is

[1:47:15] using the state's payment error

[1:47:17] rate of just over 10% which

[1:47:21] requires state spending for 15%

[1:47:23] ofsnap benefits so this is the

[1:47:25] estimate for 15% of Snap

[1:47:26] benefits costs for the three

[1:47:28] quarters of federal fiscal year

[1:47:30] 2028 that overlap with state

[1:47:33] fiscal year 2027-28 this

[1:47:35] assumes here that all of those

[1:47:36] costs are paid from the general

[1:47:37] fund there are

[1:47:39] other sources of funding that

[1:47:41] you may consider for Snap for

[1:47:42] right now we've just put it all

[1:47:43] as a general fund expense again

[1:47:45] to show you show you sort of the

[1:47:47] worst case scenario and then you

[1:47:48] would make you know different

[1:47:49] decisions based on that

[1:47:53] the higher ed assumption here is

[1:47:54] an inflationary increase that we

[1:47:55] worked out with Mrham in june.

[1:47:57] it's the same as was in the June

[1:47:59] forecast and the total comp

[1:48:00] increase is again the same as in

[1:48:03] June for salary survey and

[1:48:04] healthalthlife Dental

[1:48:06] not that there is not an assumed

[1:48:07] increase in appropriations for

[1:48:09] provider rates we're trying to

[1:48:10] be consistent with the actions

[1:48:11] that the committee has taken in

[1:48:13] previous instances last year of

[1:48:15] course you cut the provider

[1:48:17] rates we did not assume a cut

[1:48:18] here but we're also not assuming

[1:48:19] an increase a provider rate

[1:48:20] increase would add to this

[1:48:20] amount.

[1:48:22] For capital

[1:48:26] the $32 million amount is the

[1:48:27] out your costs of projects that

[1:48:29] you have currently funded for

[1:48:31] 2627. The other amount the 283

[1:48:33] is an assumption for controlled

[1:48:35] maintenance. we use the state

[1:48:37] architect's recommendation which

[1:48:38] is 1% of current replacement

[1:48:39] value you will make a different

[1:48:41] appropriation for this again

[1:48:42] we're trying to be consistent

[1:48:43] with how we've shown scenario B

[1:48:44] over time.

[1:48:47] And so where that puts you

[1:48:52] is a reserve first of all you

[1:48:54] have to reserve an amount equal

[1:48:55] to 15% of those increased

[1:48:59] appropriations that's a $197

[1:49:00] million increase in the reserve

[1:49:01] requirement relative to the

[1:49:02] scenario A assumption.

[1:49:05] so where that puts you is a

[1:49:10] deficit of 1.58 billion relative

[1:49:10] to that 1f% reserve

[1:49:12] so again that's taking

[1:49:15] what you had available if you

[1:49:16] made exactly the same

[1:49:17] appropriations and then instead

[1:49:19] of making the exact we the same

[1:49:20] appropriations making all the

[1:49:22] appropriations in the gold bar

[1:49:22] and making the transfers in the

[1:49:23] red bar.

[1:49:25] and making the additional

[1:49:26] reserve requirement in the tel

[1:49:27] bar.

[1:49:29] that is relative to the reserve

[1:49:31] requirement this shakes out to I

[1:49:33] think a 6 point I want to say

[1:49:34] 6.4% reserve

[1:49:37] so you are still the general

[1:49:38] offence still ends the year in

[1:49:39] the black in the sense that

[1:49:41] there's money there it

[1:49:43] doesn't over obligate the amount

[1:49:44] that we expect to be in the

[1:49:45] general fund but you would

[1:49:46] either need to change

[1:49:50] state fiscal policies such that

[1:49:51] you don't end up in this hole or

[1:49:53] change the reserve requirements

[1:49:54] such that you're willing to

[1:49:55] tolerate being in this whole

[1:49:56] relative to the 1f% reserve in

[1:49:57] current law.

[1:50:00] p re s ent ative row n just a

[1:50:01] think

[1:50:05] where does 13% reserve put us

[1:50:06] given that's what we're doing

[1:50:07] this year

[1:50:11] is that is that give us I could

[1:50:12] do the math but maybe you know

[1:50:13] it off the top of your head it's

[1:50:14] still like a billion dollars

[1:50:15] million

[1:50:20] and something million yeah 10

[1:50:21] thank you madam chairir. thank

[1:50:23] you Representative Brown for the

[1:50:25] question. I I have that in my

[1:50:27] workbook I don't have it off the

[1:50:29] top of my head unfortunately my

[1:50:31] guess is it's going to be about

[1:50:32] 1.2 1.25 billion.

[1:50:36] I think maybe OSvB's got that

[1:50:36] slide

[1:50:43] school finance

[1:50:50] the the most important

[1:50:50] determinants of the school

[1:50:51] finance outlook are things that

[1:50:54] we update in December so that's

[1:50:55] our tel enrollment forecast and

[1:50:57] our Ss values forecast we will

[1:50:58] be updating both of those in the

[1:51:00] December forecast. we're

[1:51:03] giving you a an amuse bouche if

[1:51:07] you will with respect to what

[1:51:08] you're going to hear in December

[1:51:10] about the school finance outlook

[1:51:11] and based on our December 2025

[1:51:13] expectations your current

[1:51:15] appropriation the phase in of

[1:51:16] the new formula which we expect

[1:51:17] to continue as scheduled

[1:51:20] in the current law this the

[1:51:21] total programme obligation is

[1:51:23] expected to increase by 210

[1:51:25] million and the local share is

[1:51:26] expected to increase by45

[1:51:27] million which means that the

[1:51:29] state share would increase year

[1:51:32] on year for FY28 by about $165

[1:51:33] million that can be paid from

[1:51:35] the general fund the state aed

[1:51:36] fund the state public school

[1:51:37] fund or some combination of of

[1:51:40] those funds

[1:51:41] table in our forecast

[1:51:43] document shows four different

[1:51:45] scenarios for how you may choose

[1:51:46] to strategize around the state a

[1:51:47] fund balance

[1:51:50] and gives you a menu of

[1:51:51] options for how general fund

[1:51:52] appropriations would need to

[1:51:54] change over time to preserve the

[1:51:54] SEF balance at different levels.

[1:51:58] I'll close on risks to the

[1:51:58] budget outlook

[1:52:03] we noted this in June, I'm not

[1:52:04] going to go into a lot more

[1:52:06] detail here other than to say

[1:52:08] that revenue expectations in

[1:52:10] March were too low. actual

[1:52:12] revenue collections in for tax

[1:52:13] year 2025 were greater than we

[1:52:15] anticipated we don't 100%

[1:52:16] know why yet. we don't know if

[1:52:18] that's because the economy

[1:52:19] supports a greater level of

[1:52:20] revenue collections than we had

[1:52:21] previously thought or if this is

[1:52:23] related to credits or to federal

[1:52:25] policy or to changes in taxpayer

[1:52:27] behavior but all of those things

[1:52:28] are plausible explanations and

[1:52:30] we won't have a full rundown of

[1:52:30] exactly what's

[1:52:33] going on with the oba until we

[1:52:34] get data from the IRS which we

[1:52:35] do not have yet

[1:52:38] and so because of those

[1:52:39] multiple plausible explanations

[1:52:41] there's bidirectional risks to

[1:52:43] our our revenue outlook. you've

[1:52:44] seen what ours is we've flip

[1:52:46] flopped with OSPB we're now the

[1:52:47] forecast that anticipates a

[1:52:48] greater level of revenue

[1:52:49] collections through the forecast

[1:52:52] period and so that's I think

[1:52:53] noteworthy going forward as you

[1:52:55] as you see our our respective

[1:52:56] forecasts

[1:53:00] there are late breaking changes

[1:53:00] to accounting and I noted that

[1:53:01] already

[1:53:03] obviouslybviously the most

[1:53:04] important risk to your budget is

[1:53:05] expenditure side pressures you

[1:53:06] know that better than I do.

[1:53:09] and then finally risks of a

[1:53:11] recession is risk to the budget.

[1:53:12] I would characterize current

[1:53:13] recession risk as moderate. I

[1:53:14] would have characterized

[1:53:17] recession risk in December 2025

[1:53:19] or March 2026 as something

[1:53:21] higher than moderate and so

[1:53:23] we're now at a perspective where

[1:53:24] a recession is absolutely

[1:53:25] possible in the current forecast

[1:53:27] period and could occur. it's not

[1:53:28] something that we've priced in I

[1:53:29] think we're correct not to be

[1:53:30] doing that but that would of

[1:53:32] course exacerbate your budget

[1:53:32] problems immensely.

[1:53:36] that's all I have. thanks madam

[1:53:37] chair thanks committee I think

[1:53:38] don't think it was joyous

[1:53:41] think this is my last time to

[1:53:42] speak to this iteration of the

[1:53:43] committee and I just wanted to

[1:53:47] to say that it's been it's

[1:53:48] been really an honor to address

[1:53:49] the six of you. I appreciate so

[1:53:51] much the work that you've done

[1:53:52] and these conversations over the

[1:53:54] years and I'll I'll miss this

[1:53:55] version of the committee next

[1:53:57] year so thank you always for

[1:53:58] your attention and the

[1:53:58] outstanding questions that

[1:53:59] you've raised.

[1:54:00] you

[1:54:01] vice chairirbridges

[1:54:05] thank you madam Chair back at

[1:54:07] you I know for sure well

[1:54:08] maybe not yeah

[1:54:09] I will not be running for JBc

[1:54:12] again even if I am still in

[1:54:13] the senate next year so it's

[1:54:14] been

[1:54:16] it's been real

[1:54:17] thank you

[1:54:23] Yes this forecast does pose the

[1:54:24] question why would anyone want

[1:54:25] to do this job again

[1:54:32] and yet thank you the

[1:54:32] feeling is mutual.

[1:54:40] all right thank you so much

[1:54:42] Chief Sebetsky and DoctorRay

[1:54:46] next we will hear our forecast

[1:54:46] from OSPB.

[1:54:48] think everyone has

[1:54:50] the materials in front of them

[1:55:59] Director Fiorentino, whenever

[1:56:00] you would like to begin the mic

[1:56:01] is yours. Thank you madam Chair

[1:56:04] Marcerrandio, director of OSPB

[1:56:06] you will hear from Mama a very

[1:56:09] similar story as Mrabettsky's

[1:56:11] shared as he as he said our

[1:56:14] forecasts are pretty aligned

[1:56:15] they actually are higher as

[1:56:19] he said than we are so with

[1:56:20] that I'll turn it over to our

[1:56:21] deputy director Mr Cook.

[1:56:27] Thank you madam Chair for the

[1:56:28] record. my name is Bryce Cook

[1:56:31] I am a deputy director at OSPB I

[1:56:33] want to thank my team for all

[1:56:34] the hard work that they put into

[1:56:36] this. and highlight that in

[1:56:37] addition to

[1:56:39] directorerranino and Mr Mixon up

[1:56:42] here Annia Shropshire is

[1:56:44] joining us for the first time up

[1:56:44] here so welcome

[1:56:48] getting to the economics

[1:56:51] we expect the economy to remain

[1:56:53] resilient this year but with

[1:56:54] anticipated inflationary

[1:56:54] pressures

[1:56:57] continuing into next year.

[1:56:59] Economic growth in our opinion

[1:57:01] will start to slow as sustained

[1:57:04] price growth negatively impacts

[1:57:04] consumer and labor demand

[1:57:09] we also expect that while the

[1:57:11] economy in aggregate will appear

[1:57:12] healthy in some of those

[1:57:13] aggregate data reports

[1:57:16] that cracks will be forming if

[1:57:18] you start to look at a more

[1:57:19] disaggregated level at the

[1:57:20] cohorts within the data.

[1:57:25] we're revising up the US GdP

[1:57:29] forecast for 2027 and 2028.

[1:57:32] but it still remains below what

[1:57:33] the external forecasters are

[1:57:35] that we track as well as below

[1:57:36] LCS's forecast

[1:57:39] this is due to high prices in

[1:57:41] our opinion that are negatively

[1:57:43] impacting both household

[1:57:44] finances as well as a

[1:57:47] restrictive monetary policy

[1:57:49] environment that is dampening

[1:57:50] business investments

[1:57:53] with our expectations of lower

[1:57:55] labor demand as well compared to

[1:57:57] some of the external forecasters

[1:57:59] that we track. we do expect the

[1:58:00] unemployment rate to tick

[1:58:01] slightly up over the forecast

[1:58:03] period but remain below5%.

[1:58:07] we also expect that jobs growth

[1:58:09] will be relatively flat for the

[1:58:11] forecast period. one of the

[1:58:12] things here though is that

[1:58:13] historically if you had such

[1:58:15] slow jobs growth it would lead

[1:58:16] to much higher unemployment

[1:58:17] outcomes but that's not the case

[1:58:19] in the environment we're in

[1:58:21] right now. that's because of

[1:58:22] dropping labor force

[1:58:23] participation rates for both

[1:58:25] Colorado and for the US

[1:58:28] there are a couple of things

[1:58:29] that are going on there that we

[1:58:31] want to dive deeper into and

[1:58:34] the55 plus age category there

[1:58:35] are demographic effects with

[1:58:37] baby boomers retiring but also

[1:58:41] older enXers are also retiring

[1:58:43] because they are seeing elevated

[1:58:44] amounts in their retirement

[1:58:48] accounts on on the younger

[1:58:50] 16 to 24 year old cohort as well

[1:58:53] we're also seeing slight drops

[1:58:55] However, there are some other

[1:58:57] dynamics that we're looking into

[1:58:59] there that we want to talk

[1:59:01] through that that dive into

[1:59:03] figure 6 here. while figure5

[1:59:05] on the previous slide has a more

[1:59:07] looks further back to 2022

[1:59:10] and this figure we're just

[1:59:11] looking at what's happened in

[1:59:13] 2026 seeing that women are

[1:59:15] leaving the labor force in

[1:59:17] greater rates than men are

[1:59:19] overall. A big part of this is

[1:59:23] the 16 to 24 year old age

[1:59:24] cohort where men are actually

[1:59:24] joining

[1:59:27] this year 100,000 men have

[1:59:29] joined the labor force over this

[1:59:32] year whereas543,000 women at the

[1:59:35] US level have left the labor

[1:59:37] force. we think there's a

[1:59:38] couple of dynamics that are

[1:59:39] happening there. one of the

[1:59:41] things is is higher education.

[1:59:44] there is a shift in the share of

[1:59:46] people that are attending forms

[1:59:48] of higher education largely it's

[1:59:50] increasingly women but there

[1:59:53] are also women in that that age

[1:59:54] category that are having

[1:59:54] children

[1:59:57] and there are potential

[1:59:59] tradeoffs between deciding to

[2:00:00] work versus the costs

[2:00:03] that come with that and so they

[2:00:05] may be deciding to then leave

[2:00:06] the labor market as a result

[2:00:11] in the55iv the 25 to54 prime

[2:00:13] workforce age group both men and

[2:00:15] women are actually leaving the

[2:00:16] labor force in one of the major

[2:00:17] things that we think is

[2:00:19] happening there is frustration

[2:00:21] we've highlighted this in

[2:00:24] previous presentations.

[2:00:26] Basically it's a low higher

[2:00:27] environment out there and so if

[2:00:29] you can't find a job

[2:00:30] continuously month after month

[2:00:31] you might just drop out of the

[2:00:33] workforce. That being said,

[2:00:34] women are leaving it's slightly

[2:00:35] more rate higher rates than men

[2:00:36] are and so

[2:00:39] there is a possibility as well

[2:00:40] and we've seen this in a couple

[2:00:42] of survey data and a little bit

[2:00:43] of survey data that we've looked

[2:00:44] at

[2:00:47] that one of the contributors

[2:00:48] that households are facing is

[2:00:50] the cost of child care and elder

[2:00:52] care as well and that people

[2:00:53] might be choosing to leave the

[2:00:55] the labor market as a result of

[2:00:56] that tradeoff.

[2:01:00] when it comes to total income

[2:01:04] that is made up at a US

[2:01:06] aggregated level about half of

[2:01:08] it is wage income and about half

[2:01:08] of it is non wage income.

[2:01:12] so for the half that's wage

[2:01:12] income

[2:01:15] that's been slowing we think

[2:01:16] that's slowing largely due to

[2:01:20] decreases in labor demand

[2:01:21] putting downward pressure on

[2:01:23] wage growth. However there is

[2:01:25] also concerns with with

[2:01:28] declining growth in non wage

[2:01:28] income which is

[2:01:31] in part due to sluggish

[2:01:32] proprietorship and rental

[2:01:32] incomes.

[2:01:36] now that was nominal growth when

[2:01:38] we add in inflationary pressures

[2:01:40] there as well. We see that real

[2:01:43] disposable income growth in 2026

[2:01:47] is just0.3% thus far this year

[2:01:49] and we expect it to hover around

[2:01:52] flat for the continuation of

[2:01:52] 2026.

[2:01:59] despite that real flat

[2:02:01] personal income and having very

[2:02:03] low savings rates as was

[2:02:05] mentioned bylCS we are revising

[2:02:06] up

[2:02:10] our services and goods forecast

[2:02:12] on spending and this is

[2:02:13] important for our GDP forecast

[2:02:15] because spending makes up the

[2:02:17] majority of what contributes to

[2:02:18] overall Gdp growth

[2:02:21] and those revisions up which are

[2:02:22] the solid lines compared to the

[2:02:23] dash lines which we had in our

[2:02:24] last forecast

[2:02:27] are largely due to wealth

[2:02:29] effects. So what what we are

[2:02:32] expecting is that particularly

[2:02:34] with the revision up in services

[2:02:36] that high income households that

[2:02:38] have higher amounts of wealth

[2:02:40] are able to sustain that amount

[2:02:42] of spending more than we

[2:02:43] expected them to in the last

[2:02:46] forecast. That being said there

[2:02:48] are downside risks like a stock

[2:02:49] market downturn

[2:02:51] that would limit those wealth

[2:02:53] effects and could place risks

[2:02:55] ongdp growth and spending growth

[2:02:57] going forward and spending

[2:02:59] growth has downstream effects

[2:03:01] into corporate profits which

[2:03:03] then could spiral into even

[2:03:05] lower jobs growth and so forth

[2:03:07] and so on. Good news byrges

[2:03:09] thank you madam Chair. going

[2:03:11] back to slides I think

[2:03:12] related to the one that you just

[2:03:13] presented and probably related

[2:03:14] moving forward because we've

[2:03:17] had this Kshaped economy where

[2:03:18] essentially spending which

[2:03:18] you've all

[2:03:21] everyone agrees in these

[2:03:21] presentations today is what

[2:03:23] drives the economy most of that

[2:03:25] spending has been driven by

[2:03:27] those folks at the top the top

[2:03:29] third of Coloradans and in top

[2:03:31] third of Americans broadly if we

[2:03:33] only see0.3% growth that's

[2:03:35] averaged of course across the

[2:03:37] entire economy whether those are

[2:03:39] the whether it's that top third

[2:03:42] or the the bottom 2/3 are we can

[2:03:43] you separate that out and and

[2:03:47] are we seeing a Mr Subetsky

[2:03:48] mentioned this that

[2:03:51] you know I I would love to to

[2:03:53] sort of get some idea of are we

[2:03:56] starting to see that the changes

[2:03:58] in the economy are affecting

[2:04:01] that top 13 and are their wages

[2:04:02] stagnant or their wages still

[2:04:04] going up and up and up and then

[2:04:05] wages for everybody else

[2:04:07] continue to go down where they

[2:04:08] can't afford they they have

[2:04:09] fewer dollars in their pocket

[2:04:11] this year than they had last

[2:04:12] year and that's part of why

[2:04:13] you're seeing credit card

[2:04:14] spending go up and all of those

[2:04:15] things you can you break those

[2:04:16] out

[2:04:20] thank you for the question.

[2:04:23] so this data is based on Bureau

[2:04:25] of Economic analysis data which

[2:04:27] doesn't have that monthly data

[2:04:29] broken down by income grouping

[2:04:31] we can look in and try and come

[2:04:33] back with other resources in

[2:04:35] the future that do have some

[2:04:37] more nuanced breakouts of

[2:04:39] categories but this data series

[2:04:40] that we've been most focused on

[2:04:41] doesn't have that information.

[2:04:44] thank you madam chair just if if

[2:04:45] we're depending on the top third

[2:04:47] of people to carry the economy

[2:04:49] then it would be good to see

[2:04:51] what the economic outlook for

[2:04:53] those folks look like and

[2:04:55] also just how bad it is for

[2:04:57] everybody else and I think that

[2:04:59] these numbers can disguise a

[2:05:01] worsening economic environment

[2:05:03] for households across

[2:05:04] Colorado and across the country

[2:05:05] that we miss if we sort of

[2:05:07] aggregate everyone together so I

[2:05:08] would like to see that thank

[2:05:09] you.

[2:05:10] deputy director

[2:05:11] thank you

[2:05:15] and yes we can come back and try

[2:05:16] and find some more data for

[2:05:16] future presentations there.

[2:05:20] to build on the the spending

[2:05:21] that we're talking about before

[2:05:23] in the revisions up one of the

[2:05:25] other things we've seen that

[2:05:26] we've been a little bit

[2:05:27] surprised by is that despite

[2:05:29] these high increases in year

[2:05:32] over year spending on gas

[2:05:34] that there is still up to this

[2:05:36] point pretty broadbased overall

[2:05:36] spending on retail?

[2:05:41] across groups that being said as

[2:05:43] we move into 2027 we're

[2:05:45] expecting inflationary pressure

[2:05:47] to continue and so we do think

[2:05:48] that this will become more

[2:05:49] concentrated in spending on

[2:05:51] necessities rather than being as

[2:05:52] broadbased as as it is today.

[2:05:57] one of the other things looking

[2:05:58] regionally across the state

[2:06:00] there has been a there was a

[2:06:03] slow ski season last season and

[2:06:05] we do think that there are risks

[2:06:07] out there that it might lead to

[2:06:09] for this year as well looking at

[2:06:10] retail spending in certain areas

[2:06:11] of the state

[2:06:15] so overall there was a 24% drop

[2:06:16] in visitation year over year

[2:06:20] a lot of that obviously is due

[2:06:21] to the weather concerns but

[2:06:24] there was also a drop off in

[2:06:27] Canadian tourism as well. So

[2:06:28] advanced tickets thus far are

[2:06:30] down about 10% for the most

[2:06:31] recent data that we have which

[2:06:33] is through May so it's a little

[2:06:35] bit stale but I think it proves

[2:06:37] the point that more people are

[2:06:39] waiting and seeing and holding

[2:06:40] off on and seeing how things

[2:06:42] might shake out this ski season

[2:06:43] with the weather and so on

[2:06:45] before deciding to make those

[2:06:46] trips and so we do see that as

[2:06:49] a risk to spending in in certain

[2:06:50] areas of the state going forward

[2:06:55] looking more at gas prices

[2:07:00] we went to print a couple of

[2:07:02] day yesterday and yet we I think

[2:07:04] there's an update here that we

[2:07:05] already need to make on what's

[2:07:07] happening with with US and

[2:07:10] Colorado retail gas as of today

[2:07:12] the numbers are447 for the US

[2:07:15] and440 for Colorado. they

[2:07:15] have been moving around a little

[2:07:19] bit but basically the point

[2:07:20] remains that

[2:07:23] they are still elevated above4

[2:07:25] dollars a gallon. what's even

[2:07:26] more extreme here is that we've

[2:07:30] hit record prices on diesel

[2:07:32] and and that's something that we

[2:07:35] expect to actually have more

[2:07:37] effects on the broader economy

[2:07:38] because it will impact

[2:07:39] manufacturing costs it will

[2:07:42] impact shipping costs and so one

[2:07:43] of the things when we're looking

[2:07:45] at our inflationary forecast is

[2:07:47] that despite the fact that we do

[2:07:49] expect energy inflation's

[2:07:50] component to start

[2:07:51] ticking down over the rest of

[2:07:52] the year

[2:07:55] that we do see because of those

[2:07:58] diesel costs more inflation

[2:08:01] making its way into food, goods

[2:08:03] and services inflation as a

[2:08:04] result and so that's why we're

[2:08:07] actually expecting inflation to

[2:08:09] rise year over year between now

[2:08:10] and the end of the year. So

[2:08:11] that's that's one of the things

[2:08:12] we're keeping an eye on in

[2:08:17] in the Denver CPI we are making

[2:08:19] a revision down I want to

[2:08:21] highlight that that's largely

[2:08:22] because of shelter inflation and

[2:08:23] what's happening there. I think

[2:08:24] that was previously mentioned

[2:08:25] too for the LCS forecast but

[2:08:29] instead of4.4% growth it's now4%

[2:08:31] in our forecasts that'll impact

[2:08:32] the i 28 taber growth

[2:08:32] calculation.

[2:08:35] I'm sorry you're saying that

[2:08:36] you're expecting energy prices

[2:08:37] to get better?

[2:08:40] we're expecting that they will

[2:08:42] not be contributing more than

[2:08:43] they are already today

[2:08:47] to inflationary pressures and

[2:08:49] that the impact on the other

[2:08:51] components and the impact of the

[2:08:52] other components is going to

[2:08:53] bleed in and then that's going

[2:08:55] to lead to a worsening

[2:08:56] inflationary outcome which is

[2:08:57] why we're

[2:09:00] relatively pessimistic compared

[2:09:01] to the external forecasters

[2:09:02] we're we're tracking or40

[2:09:02] currently

[2:09:06] 4 dollars40 cents for gas

[2:09:07] currently in Colorado yes

[2:09:08] Representative Taggart

[2:09:12] thank you madam chairir

[2:09:16] you're much more optimistic

[2:09:18] there than I am because we're

[2:09:20] now having significant problems

[2:09:20] in the Red Sea

[2:09:24] in addition to the straits

[2:09:27] and there's far more

[2:09:31] there's far more oil that moves

[2:09:33] through there because it's the

[2:09:34] saudi oil

[2:09:36] that is that that

[2:09:40] comes to us then certainly came

[2:09:40] through the straits so

[2:09:44] I hope you're right but I'm not

[2:09:44] as optimistic

[2:09:47] that this is going to come down

[2:09:48] I think it's going going to go

[2:09:49] the other way

[2:09:54] Thank you Representative Taggart

[2:09:55] and I I would agree it's in our

[2:09:57] in our risks I think one of our

[2:09:59] highlighted risks is that

[2:10:00] pressure that could negatively

[2:10:00] impact the economy.

[2:10:10] so because of that inflationary

[2:10:11] pressure that we're concerned

[2:10:12] about

[2:10:15] also I want to highlight that

[2:10:17] inflation expectations look very

[2:10:19] different today than they did in

[2:10:22] 2019 in the University of

[2:10:22] Michigan survey data

[2:10:26] they're one year ahead of

[2:10:27] inflation expectations back then

[2:10:29] was 2.5%. so that's kind of in

[2:10:31] the range of what the Federal

[2:10:33] Reserve's target is now in the

[2:10:35] most recent report we had it in

[2:10:39] July it was4.2% and so it seems

[2:10:40] like there's more acclamation to

[2:10:43] this high price environment

[2:10:45] which causes the fed to have to

[2:10:47] react so as was mentioned on

[2:10:49] Wednesday they the the Federal

[2:10:52] Reserve voted 120 to raise the

[2:10:53] federal funds rate by 25 basis

[2:10:54] points

[2:10:56] they communicated in their

[2:10:57] summary of economic projections

[2:10:58] that they'll raise it again by

[2:11:00] another 25 basis points before

[2:11:02] the close of the year and

[2:11:03] they're expecting the rate to

[2:11:05] remain above 3.5% through the

[2:11:08] end of 2028. As a result of that

[2:11:09] what you're seeing here is

[2:11:10] Moody's expectations

[2:11:12] on what

[2:11:15] different parts of the

[2:11:17] interest rate curve will look

[2:11:18] like over time and it's

[2:11:19] basically flat and so that's

[2:11:21] gonna continue to put upward

[2:11:23] pressure on both corporate and

[2:11:25] government debt and there's no

[2:11:27] expected relief that we're we're

[2:11:29] going to see on mortgage rates

[2:11:30] as well and so that's something

[2:11:31] we're keeping an eye on

[2:11:34] and on those mortgage rates

[2:11:36] tied to a high interest rate

[2:11:38] environment we we have seen

[2:11:41] continued low buyer demand and

[2:11:42] more expensive lending costs

[2:11:45] which limits construction that

[2:11:46] being said, Colorado housing

[2:11:49] struction permits have begun

[2:11:51] begun to grow in 2025 we're

[2:11:52] expecting them to grow again in

[2:11:54] 2026 based on the data we have

[2:11:56] thus far and that's at odds with

[2:11:58] US permitting which is still

[2:11:58] declining over that time period

[2:12:03] also in early 2025, Colorado

[2:12:04] shifted towards a higher ratio

[2:12:07] of multifamily developments in

[2:12:09] terms of both new square footage

[2:12:11] and construction permits it's

[2:12:14] unclear what exactly all the

[2:12:15] causes are of this. I wouldn't

[2:12:17] want to make too too much of an

[2:12:19] overemphasis on the direct links

[2:12:20] between this and affordable

[2:12:22] housing policies in the state

[2:12:24] but it does seem to be one

[2:12:25] likely factor on the the

[2:12:26] separation between the US and

[2:12:27] Colorado.

[2:12:33] looking at oil production as

[2:12:34] well as natural gas production

[2:12:38] we have seen declines during the

[2:12:39] pandemic but we are starting to

[2:12:42] rebound but remain below those

[2:12:44] historic record levels that we

[2:12:44] saw in 2019 in the state

[2:12:48] Production for oil over the next

[2:12:50] year is expected to be flat and

[2:12:51] then grow very slightly in

[2:12:54] future years in natural gas we

[2:12:57] expect slightly better growth

[2:12:58] and with natural gas production

[2:13:00] to possibly outpace those record

[2:13:01] levels by 2028.

[2:13:05] ur ning to trade policy

[2:13:09] so over the course of the

[2:13:10] year it's been pretty volatile

[2:13:12] the the supreme court struck

[2:13:13] down theternational

[2:13:15] emergencyconomics Power Act or

[2:13:18] IEpa tariffs after that there

[2:13:20] were the section 122 tariffs

[2:13:22] that were temporary for 150 days

[2:13:25] which inflated tariff rates

[2:13:27] again. Those have since been

[2:13:29] removed but they have been

[2:13:30] replaced with section 301

[2:13:31] tariffs on perceived forced

[2:13:32] labor practices

[2:13:36] and those applied to countries

[2:13:39] that provide 99% of US imports

[2:13:41] so that is a major factor on

[2:13:42] where we expect the effective

[2:13:43] tariff rates to be to remain

[2:13:45] elevated in a similar place to

[2:13:46] where we were last year

[2:13:50] there's also the the

[2:13:52] intensifying trade war with

[2:13:53] Canada as of right now the

[2:13:55] section 338 tariffs are only

[2:13:58] applying to a small minority of

[2:14:00] of goods that we import from

[2:14:00] Canada

[2:14:00] but

[2:14:05] colorado actually has a Canada

[2:14:06] is its largest trading partner

[2:14:09] unlike the US and so we will

[2:14:10] feel it a little more acutely

[2:14:13] here than the nationwide

[2:14:13] figures as a whole

[2:14:16] one of the other things with the

[2:14:18] tariffs is that once those ipa

[2:14:20] tariffs were struck down refunds

[2:14:21] started going out to businesses

[2:14:23] largely to some of those

[2:14:25] large retailers that we're

[2:14:28] seeing a lot of the impacts with

[2:14:30] that and with the new tariffs

[2:14:31] it's still a question mark on

[2:14:33] how those refunds might be able

[2:14:35] to possibly delay future

[2:14:38] potential price increases but it

[2:14:39] it's a hope or an upside risk

[2:14:42] maybe that even though the

[2:14:43] new tariffs are coming online

[2:14:44] that because those re

[2:14:46] f und s exist there might be

[2:14:48] some delay before prices

[2:14:50] increase again. that being said

[2:14:52] there is economic literature out

[2:14:53] there that's raising concerns

[2:14:54] about the possibility of

[2:14:57] cascading price effects from all

[2:14:58] of these

[2:15:00] combined effects which could

[2:15:02] make price stability a little

[2:15:02] bit harder to achieve.

[2:15:05] I mean based on history if we

[2:15:06] look at what happened during the

[2:15:08] pandemic and re defflation and

[2:15:11] what indication is there that

[2:15:14] prices aren't just going to

[2:15:16] get worse for consumers.

[2:15:17] for the sake of profits

[2:15:23] in our thank you madam chair in

[2:15:25] our baseline forecast we do

[2:15:26] expect things to start having a

[2:15:27] broadening

[2:15:29] price inflationary effect but I

[2:15:31] think what I'm trying to

[2:15:31] highlight is there is an upside

[2:15:33] risk that those refunds might

[2:15:36] delay that and and make the

[2:15:37] inflationary impacts less bad

[2:15:38] than we might expect in our

[2:15:38] forecast.

[2:15:46] Moving to our our risks and

[2:15:47] chances of recession over the

[2:15:48] next 12 months we still expect

[2:15:50] there to be a40% chance of

[2:15:51] recession despite upward

[2:15:52] revisions to our baseline

[2:15:53] forecast

[2:15:56] this reflects a view that I

[2:15:58] think we have a broadening

[2:16:00] possible set of outcomes in the

[2:16:02] economy compared to what we

[2:16:04] looked at previously. We'd also

[2:16:06] like to take this opportunity to

[2:16:07] thank the governor's revenue

[2:16:09] estimating advisory committee

[2:16:11] which is made up of business

[2:16:13] leaders economists and other

[2:16:14] subject matter experts across

[2:16:14] the state

[2:16:17] theirir feedback has started to

[2:16:19] become more varied though with

[2:16:22] our takeaway largely being that

[2:16:24] in aggregate there seems to be a

[2:16:25] relatively healthy income but

[2:16:27] once you start to look under the

[2:16:28] hood at some of the

[2:16:30] disaggregated cohorts that there

[2:16:32] are growing cracks that could

[2:16:32] create economic risks

[2:16:37] to the downside risks I think

[2:16:39] that the top one is broadening

[2:16:40] geopolitical engagement in the

[2:16:42] Middle East as well as rising

[2:16:43] trade barriers and vul

[2:16:46] vulnerabilities in the financial

[2:16:48] system. We do have Ai as both an

[2:16:50] upside and downside risk similar

[2:16:52] to LCS I think that is one of

[2:16:53] the larger outstanding question

[2:16:55] marks that we have that could

[2:16:56] shape the short term outlook

[2:16:59] and with that I'll open it up to

[2:17:00] any questions before turning it

[2:17:01] over to Mr Mixon.

[2:17:04] Mixon

[2:17:08] thank you madam Chair and

[2:17:10] committee Will Mixon OSPb I'm

[2:17:12] going to turn now to the revenue

[2:17:13] section of the forecast. I'm

[2:17:14] going to walk through a few

[2:17:15] slides on the high levelvel

[2:17:17] revenue takeaways from this past

[2:17:18] fiscal year that we just closed

[2:17:19] out FY26 and walk through the

[2:17:22] forecast for FY27 through FY29

[2:17:24] before I handed off to

[2:17:26] Misshropshire to talk through

[2:17:27] some of the individual revenue

[2:17:30] forecast. so overall we

[2:17:32] finished this past fiscal year

[2:17:34] state revenue was about $175

[2:17:35] million below the cap that

[2:17:36] was largely align

[2:17:38] ed with the expectations we

[2:17:40] we've had over the past year

[2:17:41] I'll get into that a little bit

[2:17:43] more in this next slide. we

[2:17:44] are expecting revenue to exceed

[2:17:46] the cap over these next over the

[2:17:48] forecast period but they are

[2:17:49] narrow and there is significant

[2:17:50] risk of revenue falling below

[2:17:50] the cap again.

[2:17:54] so this is a slide we've shown

[2:17:55] the past couple of forecasts

[2:17:57] wanted to show it when last time

[2:17:59] to kind of close out FY26 if

[2:18:00] we look all the way back to

[2:18:04] March of 25 we had a taber

[2:18:06] surplus expectation of 643

[2:18:08] million and there's been two

[2:18:09] major items or multiul more than

[2:18:10] that but two major items at

[2:18:12] since in that dropped the that

[2:18:14] forecast liberation dayy from

[2:18:17] April25 HR1 was signed July4th

[2:18:20] at 25 and so with that we came

[2:18:21] to you in August of last year to

[2:18:22] prev present an updated

[2:18:24] forecast where we were740

[2:18:26] million below the cap and then

[2:18:28] after special session we came

[2:18:30] back in September we were at 219

[2:18:32] million and and since that last

[2:18:33] September's forecast we've kind

[2:18:35] of been hovering around within a

[2:18:37] couple 100 million of of of

[2:18:39] where we expected revenue to

[2:18:40] land in the end it did land at

[2:18:43] 176 million relative to themarch

[2:18:45] forecast which you most recently

[2:18:46] budgeted to in March 26th that's

[2:18:49] fi3 million better than that

[2:18:51] forecast it did come in under

[2:18:52] what our June expectations were

[2:18:52] when we had revis

[2:18:55] ed up. so generally speaking

[2:18:57] after that early volatility in

[2:18:59] the from March through September

[2:19:00] of last year over this past year

[2:19:02] it has been more aligned with

[2:19:03] where we expected it to be.

[2:19:07] so that when we look at the

[2:19:08] revisions to the forecast from

[2:19:11] last this past June from the

[2:19:13] June forecast. so FY26 we

[2:19:15] revised down about 150 million

[2:19:18] we saw a positive increase from

[2:19:20] corporate income. we had a

[2:19:21] strong stronger than expected

[2:19:23] June quarterly payment that came

[2:19:25] in the increased state education

[2:19:27] fund in prop 123 diversions are

[2:19:30] a loss to general fund revenue

[2:19:31] because they're diverted out to

[2:19:33] other funds that's 107 million

[2:19:34] from aligning with legislative

[2:19:35] counc

[2:19:37] staff on that and then there's

[2:19:39] some other other items with

[2:19:40] downward revenue revisions where

[2:19:42] we land at the 150 or so and and

[2:19:45] FY27 and 28 we have small upward

[2:19:49] revisions 180 million NFY27

[2:19:51] and 160 million inY28

[2:19:53] relative to 18 and19 billion

[2:19:54] dollars pretty small uppward

[2:19:56] revisions but with slightly

[2:19:57] better economic expectations

[2:19:59] also revising up general fund

[2:20:00] revenue slightly

[2:20:03] turning to cash fund revenue

[2:20:06] pretty stable here very small

[2:20:09] upward revision as we ended

[2:20:11] FY26 basically aligned with

[2:20:12] expectations. FY26 we did see

[2:20:14] strong 9.5% growth in cash fund

[2:20:16] revenues however a lot of that

[2:20:18] was one time in nature the $200

[2:20:19] million in tax credit sales

[2:20:21] other items and so we expect

[2:20:23] slower growth over the forecast

[2:20:25] period as the that one time

[2:20:26] nature ofY26 growth rolls off

[2:20:30] and so when we look at overall

[2:20:32] ta surpluses of course we did

[2:20:35] not have one in FY26176 million

[2:20:37] below the cap there. we do

[2:20:38] expect them to return over the

[2:20:40] forecast period but be narrow.

[2:20:42] our largest saber surplus

[2:20:43] is expected in the current

[2:20:46] fiscal year FY27 we have 607

[2:20:48] million forecasted before

[2:20:49] they're much more narrow in the

[2:20:51] out years FY28 at 287 million

[2:20:56] FY29 at 334 million and as

[2:20:58] LCS walked through those these

[2:20:58] are the pure revenue

[2:21:00] surpluses because of some of

[2:21:02] those accounting adjustments

[2:21:03] those numbers will be a little

[2:21:04] bit lower.

[2:21:06] annikashropshire walked through

[2:21:08] that momentarily but those are

[2:21:10] the revenue surplus surplus

[2:21:11] forecast.

[2:21:16] And so Chief Sebetsky walked

[2:21:18] through a similar

[2:21:21] kind of a discussion on on this

[2:21:23] and and this slide kind of gets

[2:21:27] at a similar theme where we saw

[2:21:29] significant taber revenue growth

[2:21:33] back in FY22 over nearly 20%

[2:21:35] over taberap growth back in FY22

[2:21:37] and with that it created a very

[2:21:40] large buffer if you will

[2:21:41] betweenta revenue and the taor

[2:21:43] capp. Since then however over

[2:21:45] the past few years taorapp

[2:21:47] growth has increased quite a bit

[2:21:48] with elevated inflation

[2:21:52] and revenue has a tapered off

[2:21:54] and declined. Now and there's a

[2:21:56] few reasons to that we that

[2:21:57] there's slowing economic growth.

[2:21:59] we had a very strong recovery

[2:22:01] after the pandemic and so you

[2:22:03] saw a lot of significant tax

[2:22:04] revenue increases so that's

[2:22:05] decelerated from those levels

[2:22:07] but also both state and federal

[2:22:09] tax policies playing a role

[2:22:11] there so revenue has really

[2:22:13] converged with the taberapp and

[2:22:16] so the main takeaway that we're

[2:22:17] thinking about here is that as

[2:22:18] we look at those out there the

[2:22:19] forecasts

[2:22:22] hereY27th or FY29 it's much more

[2:22:23] narrow. we're not in that you

[2:22:25] know 1 billion to 3 billion

[2:22:27] surplus situation where our

[2:22:29] forecasts when we come to you

[2:22:31] are just how how high above the

[2:22:33] cap are we? We really are

[2:22:34] starting to view this as there

[2:22:37] is more risk that we could fall

[2:22:39] below the cap given that the

[2:22:41] the surpluses are so narrow it

[2:22:43] only takes a very small forecast

[2:22:45] error for us to land below the

[2:22:47] cap and so that's one of the

[2:22:48] the main takeaways here and on

[2:22:51] the next slide it kind of gets

[2:22:52] at a more disaggregated

[2:22:53] breakdown it shows it kind of in

[2:22:55] a different way of where that

[2:22:56] revenue growth was coming from

[2:23:00] and so you know and the main the

[2:23:01] main there's kind of like three

[2:23:04] main areas here. We have FY18

[2:23:06] through FY22 where taber revenue

[2:23:08] grew faster than theap4 out of

[2:23:10] those ive years and then we have

[2:23:13] four straight years FY23 through

[2:23:16] FY26 where revenue revenue

[2:23:18] growth was below the cap and a

[2:23:19] lot of that is highlighted by

[2:23:20] individual income tax and so

[2:23:24] if we look from FY18 through 22

[2:23:26] taorapp growth grew by a

[2:23:29] cumulative 2.7 billion.come tax

[2:23:31] and FY22 alone grew by 2.6

[2:23:33] billion. so that really created

[2:23:35] that buffer that's now gone

[2:23:36] away because income tax revenue

[2:23:39] has declined by417 million from

[2:23:41] FY22 through 26 again the

[2:23:43] decline driven more so by policy

[2:23:45] than than pure economics I

[2:23:47] think you know economic growth

[2:23:49] we would have seen in increased

[2:23:50] income tax revenue but then we

[2:23:51] look at the for ca

[2:23:54] years again FY27 through 29. we

[2:23:55] do expect the current fiscal

[2:23:57] year revenue to grow above capp

[2:23:59] growth but then it to be below

[2:24:02] or hover around it and so as we

[2:24:03] as we look forward to these next

[2:24:05] to this fiscal year and these

[2:24:06] next couple of years and we're

[2:24:07] thinking about the taber revenue

[2:24:08] forecast

[2:24:13] a 1-2% forecast error will would

[2:24:15] put us below the cap and because

[2:24:17] 1% is about 200 million in taor

[2:24:19] revenue is about a 1% forecast

[2:24:21] error errors about $20 billion

[2:24:23] inta revenue so 200,400 million

[2:24:24] that would put us below the cap

[2:24:25] so we're we're really viewing

[2:24:27] this as a as a risk we are our

[2:24:29] baseline forecast is that we all

[2:24:31] we do have taor surpluses but it

[2:24:33] is a risk that we're attuned to

[2:24:35] as we are developing this

[2:24:36] forecast and as we'll be

[2:24:36] developing these next few

[2:24:37] forecasts

[2:24:39] that concludes my portion I'm

[2:24:41] just kind of given the revenue

[2:24:42] overview. I can now turn it over

[2:24:43] to Miss Shropshire or take any

[2:24:44] questions the committee

[2:24:47] Shropshire

[2:24:51] thank you madam Chair for the

[2:24:52] record, Annia Shropshire

[2:24:53] principal analyst with OSPB

[2:24:55] as you've been hearing we expect

[2:24:57] moderate revenue growth across

[2:24:58] general fund sources and cash

[2:24:59] fund sources throughout the

[2:25:00] forecast period and we can get

[2:25:01] into what that looks like on

[2:25:02] each individual source.

[2:25:05] starting with individual income

[2:25:06] you know the biggest source of

[2:25:08] the general fund we saw a

[2:25:09] little bit less than our

[2:25:10] expectations to close up by 26

[2:25:11] so a slight revision down but in

[2:25:13] the out years based on some

[2:25:15] of the underlying economic

[2:25:16] strength that we we have seen we

[2:25:17] are revising up and we can see

[2:25:19] some of the kind of swings due

[2:25:22] to policy changes in FY25 and

[2:25:23] FY26 then that decrease and the

[2:25:25] net increase so some of that is

[2:25:26] just tied to the availability of

[2:25:28] the FATc more so than the

[2:25:29] underlying economics

[2:25:31] but on the whole an improved

[2:25:33] picture here compared to when we

[2:25:34] were with you in Ju.

[2:25:37] a big reason to the outear

[2:25:38] you can see the decline is tied

[2:25:40] to our wage and salary forecast

[2:25:41] as we discussed kind of the

[2:25:42] weakness in the labor market is

[2:25:44] leading to less upward pressure

[2:25:46] on wages and the stagning job

[2:25:47] growth withholdings for

[2:25:49] income tax is the biggest source

[2:25:51] of revenue for that and that

[2:25:52] largely tracks wage and salary

[2:25:53] growth so to the degree that

[2:25:55] wages and salary growth is kind

[2:25:56] of slowing down, coming closer

[2:25:58] to zero we'd expect individual

[2:25:59] income tax collections to kind

[2:26:00] of mirror that and slow down

[2:26:01] over the forecast period.

[2:26:05] the other big feature of

[2:26:07] individual income is the status

[2:26:08] of the big tax credits as we

[2:26:09] talked about as we've been

[2:26:11] saying we expect those to be off

[2:26:13] in tax year 27 that will be

[2:26:14] determined in the next forecast

[2:26:16] for real but given our

[2:26:17] current positioning at 2.1% on

[2:26:19] the Keer growth it seems

[2:26:20] unlikely we'd be able to revise

[2:26:21] up enough to have that on by

[2:26:23] December but we will see we do

[2:26:25] expect it to be closer but still

[2:26:27] often taxier 28 and our early

[2:26:28] look at taxxo 29 would have it

[2:26:31] on at the second tier. LCS was a

[2:26:32] little bit different as you

[2:26:32] recall they had it on for tax

[2:26:35] of 28 I believe the third level

[2:26:37] perhaps the second level and on

[2:26:38] at a similar level in texture

[2:26:40] 29. The other note that I'll

[2:26:41] make is the September

[2:26:41] forecast determines the

[2:26:43] availability of the workforce

[2:26:45] shortage credit underhp 241365

[2:26:47] that is determined by both

[2:26:49] LCS and OSPB and requires a4%

[2:26:51] growth rate and taber surplus or

[2:26:54] taper revenue we do expect to

[2:26:55] hit that so that credit should

[2:26:56] be fully available with its $15

[2:26:56] million cap

[2:26:58] for the next tax year

[2:27:02] pivoting to corporate income

[2:27:07] we do expect I'm sorry yes

[2:27:10] corporate we did see a

[2:27:11] decline in FY26 it came in a

[2:27:13] little bit above our

[2:27:14] expectations for the june

[2:27:15] revenue collection and we are

[2:27:17] revising up in the outears based

[2:27:19] on the improved corporate profit

[2:27:20] data that we have been seeing

[2:27:23] and also the roll off of some of

[2:27:25] the major HR one impacts that

[2:27:26] were kind of front loaded we

[2:27:27] expect this to recover over the

[2:27:29] course of the forecast period,

[2:27:30] not quite to where it has been

[2:27:32] but above where it was to

[2:27:35] close FY26 and if you look at

[2:27:36] the kind of fourth bullet

[2:27:37] there a lot of the data that

[2:27:39] we're seeing is tied to higher

[2:27:41] refunds and lower estimated

[2:27:42] lower cash with returns which is

[2:27:45] kind of reflecting past year

[2:27:46] data and kind of cleanup of the

[2:27:47] tax filings and then the

[2:27:49] estimated payments are down a

[2:27:50] little bit lower and that's more

[2:27:50] towards what's going to be

[2:27:51] coming in the

[2:27:53] door for the next tax filing

[2:27:54] season so we do see some signs

[2:27:55] that the outliers won't be quite

[2:27:56] as bad as this year was

[2:27:59] but we will certainly remain

[2:28:00] tuned to what's happening in HR

[2:28:01] one still remains a big source

[2:28:03] of uncertainty as to exactly how

[2:28:04] the timing of that might play

[2:28:04] out.

[2:28:08] Next on sales and use relatively

[2:28:10] quiet on this one as noted we've

[2:28:11] seen relative strength in

[2:28:12] consumer spending compared to

[2:28:13] our earlier expectations so we

[2:28:15] have a slight revision up in the

[2:28:16] out years and we do expect

[2:28:17] relatively steady growth. some

[2:28:19] of this tied to inflation on

[2:28:20] consumer goods leading to a

[2:28:21] higher tax base for the sales

[2:28:23] tax so that's just the nature

[2:28:24] of when you buy something it

[2:28:25] costs more there's more sales

[2:28:27] tax applied to it but on the

[2:28:29] whole pretty quiet steady growth

[2:28:30] on on the sales tax.

[2:28:32] one thing we did want to

[2:28:34] highlight on the sales tax is

[2:28:36] as we've talked about and

[2:28:37] consumers and households being

[2:28:38] squeezed them shifting their

[2:28:40] purchases towards more you

[2:28:42] know necessary goods rather than

[2:28:44] discretionary goods we exempt

[2:28:46] certain goods from the sales tax

[2:28:48] like groceries and gasoline is

[2:28:49] paid on on the fuel tax rather

[2:28:51] than sales tax so we had some

[2:28:53] concern that consumers

[2:28:53] changing towards more

[2:28:55] discretionary purchases I mean

[2:28:57] more mandatory purchases might

[2:28:58] lead to a change in the tax base

[2:28:59] and fewer goods being purchased

[2:29:00] being subject to sales tax

[2:29:03] this chart is showing that

[2:29:04] for various goods that some

[2:29:05] goods you consume gasoline

[2:29:06] there's way more increase in

[2:29:08] sales than there is on tax

[2:29:09] purchases but for other goods

[2:29:11] such as the sporting goods

[2:29:12] there's way more increase in

[2:29:13] taxable sales than there are in

[2:29:15] retail sales. The bottom bar on

[2:29:16] the net shows that we are

[2:29:16] actually seeing a slight

[2:29:19] slightly higher increase on the

[2:29:21] taxable sales than the retail

[2:29:22] sales so consumers on average

[2:29:23] are shifting towards taxable

[2:29:25] goods than nontaxable goods we

[2:29:26] do see that as a risk going

[2:29:26] forward that that could reverse

[2:29:30] you know food gas some of those

[2:29:32] core things healthcare aren't

[2:29:33] subject to the sales tax so we

[2:29:34] do have some in mind that that

[2:29:35] could change as consumers get

[2:29:37] further squeezed but for now we

[2:29:38] have seen strength and in

[2:29:38] taxable sales.

[2:29:43] and that is all on general fund

[2:29:44] if there's any questions

[2:29:46] otherwise we can talk about some

[2:29:46] Representative Taggart

[2:29:51] thank you and I appreciate that

[2:29:52] but I'm puzzled by

[2:29:54] what sporting goods

[2:29:58] have ever not been subject to

[2:29:59] sales tax

[2:30:03] I grew up in that world and I

[2:30:04] don't recall any product that I

[2:30:07] ever had that wasn't subject to

[2:30:08] sales tax in Shropshire

[2:30:10] thank you madam Chair. thank you

[2:30:11] Rep Taert for the question that

[2:30:13] is a good question I will note

[2:30:14] that hobby and miscellaneous

[2:30:15] retailers is also part of that

[2:30:17] category so it is a pretty broad

[2:30:19] catchall. some of it could be

[2:30:20] potentially tied to nonprofit

[2:30:22] organizations or other

[2:30:22] organizations that are exempt

[2:30:23] from the sales tax making

[2:30:25] purchases so it's a good

[2:30:27] question we could look into more

[2:30:28] detail on what's happening but I

[2:30:28] think on that you can see that

[2:30:31] the shift is to taxable goods so

[2:30:32] we're not necessarily seeing

[2:30:36] not items not subject to the tax

[2:30:36] being purchased there

[2:30:37] senatormoley

[2:30:43] yeah I guess I I I don't wonder

[2:30:44] across all of those but is that

[2:30:45] used stuff like in the sporting

[2:30:46] goods

[2:30:47] like a

[2:30:51] it's still pays same sales tax

[2:30:52] on used ok

[2:31:00] thank you madam chairir. you

[2:31:01] said something about the who is

[2:31:03] purchasing it could also impact

[2:31:05] that so could it be that it's

[2:31:07] like schools buying sporting

[2:31:08] equipment things like that

[2:31:13] thank you senatorbridges for the

[2:31:14] question yes plausibly I

[2:31:15] think we were looking at that

[2:31:17] specifically with furniture

[2:31:18] perhaps you know schools

[2:31:19] purchasing more chairs and desks

[2:31:20] and tables and whatnot for the

[2:31:21] classroom could potentially

[2:31:22] cause the retail sales to be

[2:31:24] higher than the taxable sales

[2:31:26] for some of this period we don't

[2:31:27] have that level of detail and we

[2:31:28] haven't really looked that deep

[2:31:29] so we could

[2:31:30] go back to you but I think on

[2:31:30] the whole

[2:31:33] it's just a a quirk of how the

[2:31:34] data comes out in some level.

[2:31:43] OK on to cash funds on the whole

[2:31:44] we're expecting slow cash fund

[2:31:45] growth over the forecast period

[2:31:47] particularly after certain

[2:31:49] legislative actions taken in the

[2:31:50] most recent legislative session

[2:31:51] to kind of control cash fund

[2:31:53] growth there are some quirks in

[2:31:54] 26 that we'll talk about that

[2:31:55] caused kind of a spike that we

[2:31:56] expect to roll off.

[2:31:58] we're starting with severance

[2:32:00] tax this one has as you know

[2:32:02] been very volatile over the last

[2:32:03] couple of years tied to a kind

[2:32:05] of a lower price environment and

[2:32:07] some high AV credits from local

[2:32:08] property taxes working their way

[2:32:09] through the system. we did go

[2:32:11] positive for the fiscal year

[2:32:13] through August so far $2 million

[2:32:15] so that is good. we expect

[2:32:17] that most of the high refund

[2:32:18] environment has cleared or

[2:32:19] will clear by the beginning of

[2:32:20] tax 27

[2:32:22] we are keeping an eye on this

[2:32:23] one. The next slide here shows

[2:32:25] our expectations that even

[2:32:26] though it's been a slow start to

[2:32:27] the fiscal year we will end up

[2:32:29] around average at around $200

[2:32:30] million of revenue for this

[2:32:31] fiscal year and during the

[2:32:33] forecast perioder the higher oil

[2:32:35] price environment could

[2:32:37] support higher revenues on this

[2:32:38] forecast stream

[2:32:40] over the period potentially

[2:32:41] leading to some higher refunds

[2:32:42] through the AV credit in the out

[2:32:44] years and the way out years

[2:32:45] but certainly keeping an eye on

[2:32:46] this one for now

[2:32:51] on to transportation steady

[2:32:52] growth expected on

[2:32:54] transportation here we have a

[2:32:55] highlight for the gas tax. This

[2:32:56] did come in below our

[2:32:59] expectations to close FY26

[2:33:00] could be tied to EV adoption

[2:33:01] could be tied to consumers

[2:33:03] pulling back the driving and

[2:33:04] potentially issues with fuel

[2:33:06] distributors as the wholesaler

[2:33:09] tax level is paid so we

[2:33:10] expect that to be relatively

[2:33:11] stagnant but there's some

[2:33:12] statutory increases in the roads

[2:33:14] road usage fee and the roll off

[2:33:15] of some registration fee relief

[2:33:17] that are going to help support

[2:33:18] HETF revenues over the

[2:33:18] forecast

[2:33:20] period despite the kind of

[2:33:21] stagnancy on the gas tax side.

[2:33:27] On other cash funds as noted

[2:33:29] FY26 had a lot going on

[2:33:31] including the tax credit sales

[2:33:32] that were authorized during the

[2:33:33] special session a

[2:33:34] disqualification to the

[2:33:36] healthsurffoability Enterprise

[2:33:37] as well as the adams State

[2:33:39] Universityiv Enterprise

[2:33:40] caused some additional growth in

[2:33:40] this revenue stream

[2:33:43] broadly that are going to roll

[2:33:45] off into the out years we do

[2:33:47] expect kind of a lower level

[2:33:48] of cash fund revenue on that

[2:33:49] for the other cash funds and

[2:33:52] slow growth to to proceed

[2:33:52] going forward

[2:33:58] pivoting to surplus above the

[2:33:59] rest C capp and as alluded to by

[2:34:01] Chief Sobeski in the LCS

[2:34:02] presentation we do expect to be

[2:34:03] around $607 million above the

[2:34:06] cap in FY26 but because of these

[2:34:09] accounting adjustments hb 1419

[2:34:10] as well as the over refunds from

[2:34:11] prior your refunds that went out

[2:34:14] the door kind of unexpectedly we

[2:34:15] expect the state to be allowed

[2:34:16] to retain a portion of that $600

[2:34:18] million as having already gone

[2:34:19] out the door so the actual

[2:34:21] amount to be refunded andY in

[2:34:23] the current fiscal year FY27 is

[2:34:24] closer to around $240 million

[2:34:24] and in the next fis

[2:34:27] cal year will be closer to

[2:34:28] around $10098 million.

[2:34:32] we can take the long walk if

[2:34:33] you'd like otherwise we can

[2:34:34] leave it at that.

[2:34:40] so of the amount to be refunded

[2:34:41] most of this will be going to

[2:34:42] the homestead refund mechanism.

[2:34:44] it's a little bit below our

[2:34:45] expected costs in homestead for

[2:34:47] FY28s so there will be some

[2:34:48] general fund required there but

[2:34:49] for the most part going to

[2:34:50] homemestead a little bit to the

[2:34:51] sixthyear sales tax and we do

[2:34:53] not expect a rate reduction

[2:34:54] mechanism to be triggered in

[2:34:55] the forecast period.

[2:35:00] note on marijuana this one

[2:35:01] had been relatively stable on

[2:35:03] the AMR over the last couple of

[2:35:05] years there was an unexpected

[2:35:07] reduction in the AMR in Q3

[2:35:09] down to574 dollars so we did

[2:35:11] revise down this revenue stream

[2:35:13] it remains in balance for FY27

[2:35:15] even with that reduction in

[2:35:17] our AMR forecast and we'll

[2:35:18] keep an eye on on what the

[2:35:19] trajectory looks like if this is

[2:35:21] kind of the start of another

[2:35:23] cycle of downward trend in amMR

[2:35:24] or if this is just kind of a

[2:35:25] slightly lower baseline going

[2:35:26] forward we're we're expecting it

[2:35:27] to be around this level

[2:35:29] and just a slight drop

[2:35:34] and then lastly SEF we do

[2:35:35] have a revision up to the

[2:35:37] revenue into this fund tied to

[2:35:38] ledge council's estimates of the

[2:35:39] diversions they are the ones

[2:35:41] that set that and so we've

[2:35:42] chewed up with them from their

[2:35:43] june estimates so that improves

[2:35:45] the revenue outlook however

[2:35:46] this one this fund does remain

[2:35:48] structurally out of balance with

[2:35:50] expenses rapidly outpacing

[2:35:52] the revenue so in the absence

[2:35:53] of of general fund of general

[2:35:54] assembly action to

[2:35:57] to change the trajectory we will

[2:35:58] see an exhaustion of this fund

[2:36:00] in FY29 under this this

[2:36:01] forecast of course things will

[2:36:03] change but this is what we

[2:36:04] are we are looking at.

[2:36:09] So to close at the risks and

[2:36:10] highlighting what Mr Mixxon

[2:36:11] spoke to earlier we do see

[2:36:12] ourselves in a very precarious

[2:36:15] position going forward with the

[2:36:16] level of surplus being around

[2:36:18] $200 million to $300 million

[2:36:19] barely enough to cover

[2:36:21] homemestead a reasonable

[2:36:22] forecaster could put us in a

[2:36:23] better spot or in a lower spot

[2:36:25] we do believe risks are weighted

[2:36:27] to the downside on that and a

[2:36:29] reasonable forecaster could kind

[2:36:30] of change the picture require

[2:36:31] more general fund obligation for

[2:36:33] homestead or kind of get rid

[2:36:35] of the taper refund surplus

[2:36:36] entirely

[2:36:38] specifically to some of those

[2:36:40] risks we see as we talked about

[2:36:41] in the sales tax section

[2:36:43] consumers could shift more

[2:36:44] towards the mandatory goods and

[2:36:44] we could see a decline in

[2:36:47] taxable sales threatening the

[2:36:48] the sales tax growth that we

[2:36:49] currently forecast the labor

[2:36:51] market remains a source of

[2:36:52] uncertainty and wage and salary

[2:36:53] growth could underpace our

[2:36:55] expectations causing individual

[2:36:56] income tax collections to

[2:36:56] decline

[2:36:59] something that we are mindful of

[2:37:01] HR one remains a big source

[2:37:02] of uncertainty you know we

[2:37:03] started to see some tax data

[2:37:04] come in for tax to 25 but

[2:37:05] certain provisions don't even

[2:37:07] take effect until tax year 26 so

[2:37:09] we won't see all of that

[2:37:11] until you know next October when

[2:37:13] tax are 26 filing kind of

[2:37:15] largely wraps up so we are

[2:37:16] are certainly keeping an eye on

[2:37:17] that and we will owe you an

[2:37:19] estimate on the underhB1419 in

[2:37:20] November which we will bring to

[2:37:21] you during the December forecast

[2:37:23] as well but we are still kind of

[2:37:25] identifying what's going on

[2:37:26] there entirely corporate

[2:37:26] profits are always a source of

[2:37:27] uncer

[2:37:29] tain ty they've been strong over

[2:37:31] the last couple of quarters I

[2:37:32] think largely tied to the the AI

[2:37:33] risk upside down side we're

[2:37:35] kind of keeping an eye on on

[2:37:36] that trajectory and then as

[2:37:38] alluded to with gas and diesel

[2:37:39] consumer changes in either

[2:37:41] purchasing of of battery

[2:37:43] electric hybrid vehicles or just

[2:37:44] driving less because gas is very

[2:37:46] expensive could cause a

[2:37:46] change in the transportation

[2:37:49] revenue forecast. Most of the

[2:37:50] upside risks are just kind of

[2:37:51] the flip side of those

[2:37:51] coins.hings could be better than

[2:37:52] we thought instead of worse than

[2:37:53] we thought

[2:37:55] the one I'll highlight is of

[2:37:56] course oil prices being higher

[2:37:57] for longer would support

[2:37:59] severance tax revenue and and

[2:38:00] all those oil and gas revenue

[2:38:02] streams that we collect so with

[2:38:03] that I will take any questions

[2:38:04] or pass it over torector

[2:38:04] Fiorranino.

[2:38:09] Director Firandio, thank you

[2:38:10] madam Chair.

[2:38:10] so

[2:38:25] ok, so moving on to where we

[2:38:27] are from the budget picture

[2:38:29] right now our forecast shows

[2:38:31] that we would end the current

[2:38:33] year with a 13.1 reserve that is

[2:38:36] before we factor in the updated

[2:38:41] forecast for Medicaid so that

[2:38:43] is worth what is on the paper

[2:38:46] but that's about it as we go

[2:38:49] into last year as you saw we

[2:38:51] are ending about 140 million

[2:38:52] below the

[2:38:55] 13% reserve as of last year. few

[2:38:58] things is one over refund that

[2:39:01] as Chiefibetsky's mentioned it's

[2:39:03] a negative in the current year

[2:39:04] over the last year it's a

[2:39:05] positive and the next year or so

[2:39:07] net in the budget is zero we

[2:39:09] also have the overexpenditure

[2:39:11] which you're seeing here is 213

[2:39:13] which as we talked yesterday is

[2:39:15] 158 when you deal with the

[2:39:17] reversions that also happened

[2:39:19] within Medicaid but just

[2:39:21] likelud council we only look at

[2:39:22] the over expenditure

[2:39:24] and not the reversions within

[2:39:25] the forecast because all the

[2:39:27] versions aren't there and then

[2:39:31] the diversions to prop 1123

[2:39:33] and SEF have been increased

[2:39:35] based on itled councils that

[2:39:38] does help with the SEF and helps

[2:39:39] with my goingfoable housing but

[2:39:41] does hurt in the balancing

[2:39:43] picture when we go to next year

[2:39:46] you can see that you know

[2:39:50] we end up right now at a $65.2

[2:39:51] million reserve above the 13%

[2:39:52] reserve but

[2:39:55] I would say a significant

[2:39:56] issue with the medicaid forecast

[2:39:57] which we'll talk about in a

[2:40:00] second. so as we look at the

[2:40:02] budget and the pressures on the

[2:40:04] budget there are caseload

[2:40:07] really is driving a huge issues

[2:40:09] on the budget. first I do want

[2:40:11] to highlight because we did say

[2:40:12] during last session we would

[2:40:14] come back depending on where the

[2:40:19] June forecast was for DOC

[2:40:21] caseload if we could delay the

[2:40:22] implementation

[2:40:25] of the contract with Wefane to

[2:40:27] open up a new facility that

[2:40:29] forecast did not change enough

[2:40:31] to change that trajectory so we

[2:40:33] are under in the process of

[2:40:35] working to contract to open up

[2:40:37] beds sometime at the end of this

[2:40:39] year and likely we'll see a

[2:40:40] supplemental I know we're

[2:40:42] holding some money for that

[2:40:44] with JBc did that and appreciate

[2:40:46] that and so likely by the end

[2:40:48] of this year we'll have to open

[2:40:48] up that facility

[2:40:54] next this is a slide we

[2:40:56] talked about yesterday basically

[2:40:57] we're looking at Medicaid and

[2:40:59] the growth in Medicaid where

[2:41:01] it's really not the caseload

[2:41:03] it's utilization that is

[2:41:05] driving the significant increase

[2:41:09] in cost in Medicaid and if we

[2:41:11] just continue to allow this to

[2:41:14] happen at this rate we will

[2:41:16] be reducing all of the other

[2:41:18] departments by the end of the

[2:41:18] next decade in

[2:41:21] that area. I do want to

[2:41:23] highlight also cause it's not

[2:41:25] factored into medicaid it's not

[2:41:26] factored into our what we'll see

[2:41:29] as our s scenario of the budget

[2:41:33] HR one challenges as you know

[2:41:37] we are starting to implement

[2:41:39] in October we'll start and

[2:41:40] you'll see how you actually did

[2:41:43] some of the 1331s around some of

[2:41:44] the impacts of HR one within

[2:41:47] Medicaid but then you also

[2:41:48] have the work requirements fully

[2:41:48] on

[2:41:51] december 31st so the start of

[2:41:53] next calendar year basically

[2:41:55] that will have an impact on that

[2:41:57] as well as the start in the

[2:41:58] budget year of the reduction of

[2:42:00] the hospital provider fee

[2:42:02] which will lose about $105

[2:42:04] million of fee revenue to the

[2:42:05] state which have an impact on

[2:42:07] both the expansion population as

[2:42:10] well as payments to hospitals

[2:42:12] and then we have the snapcos

[2:42:14] that snapco as you know we

[2:42:16] last year increased the

[2:42:18] expenditures from the fed's

[2:42:23] picking up50% to70 25% of the

[2:42:25] administrative expense that

[2:42:27] increase has been paid by HsMA

[2:42:29] so it has not had an impact on

[2:42:30] the general fund and then we

[2:42:33] start the payment error rate in

[2:42:35] the out year for the budget year

[2:42:37] for about 130 to150 million

[2:42:38] depending on where the purr is

[2:42:41] by your bridges the madam chair

[2:42:43] can you just talk a little

[2:42:45] bit more about the increase in

[2:42:46] cost to the states here

[2:42:49] 50 % to 25% seems that's a

[2:42:52] every everyone in America is

[2:42:53] gonna feel this like what are

[2:42:55] you seeing what are you doing

[2:42:56] what are your thoughts? Yeah so

[2:42:59] madam chairir we are you know

[2:43:01] we're looking at other states a

[2:43:03] lot of states as they look at

[2:43:05] implementation of this we

[2:43:07] were lucky and I think thanks to

[2:43:08] this legislature and thanks to

[2:43:12] the voters for allowing HsMA to

[2:43:14] cover some of the costs of this

[2:43:15] we were able to cover all of the

[2:43:18] administrative costs with HSMA

[2:43:21] costs many states are

[2:43:23] splitting it evenly between or

[2:43:25] some portion between the the

[2:43:26] state and the counties

[2:43:26] especially those who are county

[2:43:29] administered there's about 10

[2:43:30] states who are county

[2:43:33] administered for the purr which

[2:43:35] is not starting until next year.

[2:43:37] Many states including us are

[2:43:39] advocating for a delay in that

[2:43:40] implementation but barring that

[2:43:42] states are starting to put out

[2:43:45] guidance on what they expect

[2:43:48] we know for example that New

[2:43:51] York and North Carolina for the

[2:43:52] the the share of the meals

[2:43:54] they're asking the counties to

[2:43:56] pay 100% of those costs jeez

[2:44:01] we we have been talking and we

[2:44:03] had asked by the the counties a

[2:44:04] while ago what we would think is

[2:44:05] they're doing their budget

[2:44:07] planning what would be the worst

[2:44:09] case scenario we were very clear

[2:44:10] our budget would factor in a

[2:44:12] 6040 so state picking up 60%,

[2:44:14] locals picking up40% we thought

[2:44:17] the 100% did not make sense like

[2:44:18] some of the other states New

[2:44:19] York and North Carolina are

[2:44:23] doing and we are trying to

[2:44:25] factor in how HSMA plays into

[2:44:26] that as well there's not enough

[2:44:27] money right now

[2:44:30] to cover the cost of that with

[2:44:31] just HSMA so there is going to

[2:44:33] need to be in either general

[2:44:35] fund or what we think is some

[2:44:36] split between the counties and

[2:44:39] we think 6040 is that fair split

[2:44:40] as we move forward Senatormobley

[2:44:45] so on the8 to10% error rate that

[2:44:48] you're assuming I mean my

[2:44:49] understanding is that if you go

[2:44:50] over 10

[2:44:53] then it's much worse so is this

[2:44:56] assuming that we are at 10 or

[2:44:57] over or is this are all of your

[2:44:59] assumptions around us being

[2:45:00] under the 10

[2:45:05] madam chair senator Molay so our

[2:45:06] budget is assuming that we are

[2:45:09] in between8 and10%. The last

[2:45:11] year per was just barely above

[2:45:14] the 10%. it is whatever the

[2:45:16] lowest is of last year and this

[2:45:17] year for the federal fiscal year

[2:45:21] we are right now on track with

[2:45:23] what we have to be below that

[2:45:25] 10% but a few bad months could

[2:45:27] get us back above that 10% but

[2:45:29] we're hopeful and work with the

[2:45:30] counties and with the department

[2:45:33] to bring that below 10% and

[2:45:35] there's a lot of effort in

[2:45:36] collaboration with the counties

[2:45:39] to bring it down below that8% so

[2:45:40] it's as you remember it's5% if

[2:45:43] you're below8% it's between

[2:45:45] between8 and10 it's 10% and

[2:45:49] above 10% it's 1f% and just

[2:45:51] remember most states are above

[2:45:53] that temp. the average is at

[2:45:56] 10.5 so the average state is

[2:45:58] going to pay the full 15%. We

[2:45:59] are below the average in the

[2:46:00] country so I'm just ask

[2:46:04] ing is this 130 to160 million

[2:46:07] depending on us not being above

[2:46:08] the 10.

[2:46:11] madamir Senator Mala yes that's

[2:46:12] assuming the full and that's the

[2:46:15] full year cost of if we are

[2:46:17] believ between the eight and 10

[2:46:21] multiplied by top 1.5 to get to

[2:46:22] if we are above the 10 what that

[2:46:23] cost would be so it's

[2:46:24] significantly more it's about a

[2:46:30] an additional $6280 million of

[2:46:32] costs that would occur if we are

[2:46:32] above the 10%.

[2:46:35] vice chairirriges thank you

[2:46:36] madam Chair. I just want to

[2:46:37] confirm that that compared to

[2:46:39] other states that are county

[2:46:40] administered like Colorado

[2:46:41] there's only about 10 of them

[2:46:43] and you're saying that a lot of

[2:46:44] those states I mean majority

[2:46:47] some have decided that

[2:46:48] counties will bear the entire

[2:46:49] increased cost and what you're

[2:46:51] doing here is 6040 cause I'm

[2:46:52] hearing from counties that

[2:46:52] they're

[2:46:55] very upset and don't know how

[2:46:57] they're gonna bear these costs

[2:46:59] and I just it it is it's costs

[2:47:01] that are being forced on us

[2:47:02] but in other states

[2:47:05] they're the counties are being

[2:47:07] forced to bear even more of the

[2:47:09] burden on this madam Chair

[2:47:12] senator ridges so for there's

[2:47:14] ennant County administered

[2:47:15] states for those states the only

[2:47:17] two that we know for sure that

[2:47:19] have been clear of where they're

[2:47:20] going now the state administered

[2:47:22] most of those are state covering

[2:47:23] the costs of the county North

[2:47:25] Carolina and and New York have

[2:47:26] come out and clearly said the

[2:47:27] counties are bearing the full

[2:47:29] cost. Other states are still

[2:47:31] working and I think most of the

[2:47:32] other states will come into some

[2:47:33] balance between like

[2:47:35] us some share between what the

[2:47:38] state will cover and what the

[2:47:38] locals will cover.

[2:47:41] Senator weissman thank you.

[2:47:43] Could we go to the last bullet

[2:47:47] under medicaid uhapp expected to

[2:47:49] result in a loss of 105 million

[2:47:51] in state revenue for fiscal 28 I

[2:47:53] think that is just the loss of

[2:47:55] the provider fee without also

[2:47:56] considering the loss in match

[2:47:56] correct?

[2:48:01] madam chairir senator weissman

[2:48:03] yes that is correct. so if

[2:48:05] depending on which portion of

[2:48:08] the payments are impacted given

[2:48:10] the current hierarchy that would

[2:48:13] be on the on the expansion

[2:48:15] population so that would be

[2:48:17] closer to $1 billion of total

[2:48:19] funds out of the system for the

[2:48:21] 9 to1 match. I will say also and

[2:48:22] not

[2:48:25] good news but we've been clear

[2:48:27] and I think we expect somewhere

[2:48:31] between around 100,000 people

[2:48:34] from work requirements to be

[2:48:35] removed from the rolls so

[2:48:37] that will have an impact of

[2:48:39] believe somewhere in the order50

[2:48:41] dollars to $100 million of loss

[2:48:45] expenses for the for the

[2:48:47] possible provider fee as well so

[2:48:51] that may unfortunately the

[2:48:52] way it resolves for the first

[2:48:52] year is that the

[2:48:55] the loss and the expansion

[2:48:57] population due to work

[2:48:59] requirements will make the

[2:49:00] hospital provider fee the Chase

[2:49:02] enternterprise close to whole

[2:49:03] but that then will not happen

[2:49:06] the next year because you will

[2:49:09] lose another $15,110 million of

[2:49:12] revenue able to be claimed but

[2:49:13] you won't have that offset in

[2:49:15] the expansion population Senator

[2:49:17] weissman thank you. maybe we

[2:49:19] could follow up offline

[2:49:20] because I assume that OSPb is

[2:49:22] done the full five year project

[2:49:24] ions for the whole five year

[2:49:27] ramp of the cramdown in one I'm

[2:49:29] looking at some vintage December

[2:49:33] 25 numbers from JBc staff their

[2:49:34] fee calculation is a little bit

[2:49:35] higher

[2:49:39] than the 105 you know landing

[2:49:41] at about 13.3 billion total loss

[2:49:42] by the end of it all in fiscal

[2:49:47] 32 assuming a blended match

[2:49:48] rate of about82%

[2:49:49] those are

[2:49:52] point was made to me yesterday

[2:49:54] of course it's correct I mean

[2:49:54] you could have a little bit of

[2:49:57] error one way or the other but

[2:49:59] it's pretty apocalyptic

[2:50:01] however you slice that I'm

[2:50:03] just spending a lot of time

[2:50:04] thinking about those numbers

[2:50:05] over the intermediate term and

[2:50:07] I'd love to see what OSPB's

[2:50:08] numbers are toward the same end

[2:50:08] we can go offline.

[2:50:12] Directorerrandio thank you madam

[2:50:14] Chair and so noarrah White's

[2:50:15] been happy to have some

[2:50:16] conversations we have some

[2:50:18] modeling on that that we've been

[2:50:20] working on. I know the hospitals

[2:50:21] also have done some modeling and

[2:50:22] we're gonna sit down with them

[2:50:24] to you know align our models

[2:50:26] with theirs to make sure that

[2:50:27] we're looking at this because

[2:50:29] there are lots of policy options

[2:50:32] that you as policymakers need to

[2:50:35] figure out where and how we

[2:50:36] handle this because it will

[2:50:38] have dire consequences on the

[2:50:39] broader healthcare system is

[2:50:40] more and more

[2:50:43] people become uninsured and that

[2:50:45] shifts uncompensated care to

[2:50:47] providers just want to say thank

[2:50:49] you appreciate the collaboration

[2:50:51] and everyone's commitment to sit

[2:50:54] down and come to agreement on

[2:50:55] what the numbers actually

[2:50:57] are for our state so that

[2:50:59] decisions can be made and we

[2:51:01] don't have to resort to just

[2:51:02] pointing at no you're wrong no

[2:51:02] you're wrong.

[2:51:06] remo I just going back to the

[2:51:11] snap thing so the h30 to160 if

[2:51:12] we are able to get our error

[2:51:12] rate below 10.

[2:51:16] is it says state share

[2:51:18] contributions does that is that

[2:51:20] the state county dynamic or

[2:51:22] that's just the total amount to

[2:51:23] the state that will then be

[2:51:24] split between the county and the

[2:51:25] state

[2:51:27] Doctor Ferrandio thank you madam

[2:51:29] Chair Senatoralla that is the

[2:51:30] total cost to the state of

[2:51:33] Colorado of which our assumption

[2:51:35] would be 60% is state general

[2:51:39] fund or HSA and40% is out of the

[2:51:41] counties and we are looking at

[2:51:43] how HSMA is calculated and how

[2:51:44] that comes is that come off the

[2:51:46] top and then you do the 6040

[2:51:48] split so those conversations are

[2:51:51] ongoing I will say in the first

[2:51:52] year while it says 13 and160

[2:51:54] that's the full year as it

[2:51:54] starts the federal

[2:51:57] fi s cal year it's a little

[2:51:58] lower that first year just

[2:52:00] because that we start October

[2:52:03] 1st versus starting our

[2:52:05] fiscal year because of the

[2:52:06] disalignment between the two

[2:52:06] governments

[2:52:11] which happened in 1977 that they

[2:52:13] did a it was the year I was born

[2:52:15] so it's right when I was my my

[2:52:18] birth is in that federal TQ

[2:52:20] transition quarter and know

[2:52:21] random stupid fact I know.

[2:52:29] wasn't born she's moving on to

[2:52:34] our balancing picture

[2:52:37] and you will see a very similar

[2:52:43] picture to what Chiefzebetsky

[2:52:45] shared with you our estimate

[2:52:47] if we sit with where the revenue

[2:52:49] is and the impact of the new

[2:52:53] medicaid forecast we end at a

[2:52:54] ne1.

[2:52:59] $6 billion roughly shortfall

[2:53:03] from the 1f% reserve if we

[2:53:05] were to keep Medicaid to grow at

[2:53:11] the taor formula so44% next

[2:53:15] year4.3% during the budget year

[2:53:18] and restrict the growth in

[2:53:20] the current year that would save

[2:53:23] us $915 million and if you were

[2:53:24] then to keep the

[2:53:27] re s er ve at 13% instead of

[2:53:29] 15%. the difference at that

[2:53:32] point of between 15 and13 is

[2:53:35] $311 million that is needed to

[2:53:37] move that from 13 to15% so you'd

[2:53:42] end up right about a $330

[2:53:44] million hole in the budget if

[2:53:47] you stay at 13% and you kept

[2:53:51] Medicaid at tabergrowth so I

[2:53:52] would characterize that as a

[2:53:54] typical constrain Colorado

[2:53:54] budget

[2:53:57] that is manageable not fun but

[2:53:59] manageable compared to where we

[2:54:02] sit today with the growth in

[2:54:04] medicaid of about you know as

[2:54:08] you see 1.36 billion is the

[2:54:09] impact on the fiscal if we don't

[2:54:11] change anything and that doesn't

[2:54:13] account for both the reserve

[2:54:15] requirement for that and the

[2:54:17] $158 million that is the

[2:54:19] overexpenditure that is baked

[2:54:22] into that original start of that

[2:54:24] so Medicaid alone is is causing

[2:54:24] the vast

[2:54:27] majority of this issue and

[2:54:29] something that as we talked

[2:54:31] yesterday in our the

[2:54:32] administration's opinion needs

[2:54:34] to be tackled within Medicaid

[2:54:36] and not impacted on the the

[2:54:37] remainder of the budget

[2:54:39] bybridges thank you madam

[2:54:41] chairir. to your point about

[2:54:42] if Medicaid were just restricted

[2:54:44] to grow at what it is that

[2:54:46] revenue is allowed to grow at my

[2:54:47] understanding is that there's

[2:54:48] some states think maybe it's

[2:54:50] either Oregon or Washington that

[2:54:52] just allocated dollar amount and

[2:54:54] they say Medicaid figured out

[2:54:54] and

[2:54:56] that's and then you don't have

[2:54:58] this draw on the budget you

[2:54:59] don't have this over expenditure

[2:55:02] the way that we do here you

[2:55:04] just have medicaid as a

[2:55:05] department choosing what it is

[2:55:07] that they do and don't provide

[2:55:08] and how they manage that

[2:55:11] and well I don't like the the

[2:55:13] the legislature is removed from

[2:55:14] that it does seem like that is

[2:55:18] that is a potential path forward

[2:55:19] on this as we just say

[2:55:21] full stop we're medicaid's gonna

[2:55:24] grow at what the the revenue is

[2:55:26] allowed to grow at and so now we

[2:55:27] have to figure it out from here

[2:55:30] re ctor er ran di o madam chair

[2:55:32] Mr vice chair, yes several

[2:55:34] states have different mechanisms

[2:55:35] and more and more states are

[2:55:36] looking at mechanisms because

[2:55:39] Medicaid is growing at a higher

[2:55:41] than revenue or their spending

[2:55:43] caps other states do have

[2:55:44] spending caps just not in the

[2:55:46] constitution like we do so they

[2:55:47] can be waived by the legislature

[2:55:51] so Oregon for example has a

[2:55:52] growth target I believe is what

[2:55:54] they call it and they try to get

[2:55:56] to that it does there's some

[2:55:56] flexibility with how far they

[2:55:57] can go over

[2:55:59] or under that and they try and

[2:56:01] do it for their entire medicaid

[2:56:03] sorry their entire healthcare

[2:56:05] spending as a state including

[2:56:06] their state health plan for

[2:56:08] their state employees and others

[2:56:09] that they're trying to do and

[2:56:12] how they manage that is by

[2:56:14] changing benefit structures and

[2:56:15] do not believe they have the

[2:56:17] ability to change eligibility

[2:56:19] but its payment rates and

[2:56:21] benefit structures they changed

[2:56:22] to try to keep it within that

[2:56:23] growth rate so there are lots of

[2:56:25] different models we can look at.

[2:56:26] there's also you know some

[2:56:27] states have managed care

[2:56:29] some states don't have managed

[2:56:31] care that's you know there are

[2:56:33] conversations on does that make

[2:56:36] sense or not but as I think

[2:56:38] executive jerker hammer said two

[2:56:39] commissions ago medicaid or

[2:56:42] managed care is a worthwhile

[2:56:43] conversation. it's not the

[2:56:45] panacea to the underlying

[2:56:46] problems especially where the

[2:56:48] underlying problems are you know

[2:56:49] as we talked about yesterday

[2:56:51] those long term care services

[2:56:53] behavioral health and pharmacy

[2:56:56] and those are those are not

[2:56:57] necessarily easy to manage

[2:57:00] in a managed care system

[2:57:01] without trying to figure out

[2:57:03] what the benefit structure is

[2:57:04] and what the growth trajectories

[2:57:04] are

[2:57:08] So with that

[2:57:11] that concludes our presentation

[2:57:15] any further questions for

[2:57:16] Directorerrandio?

[2:57:19] Senator Weissman maybe for the

[2:57:20] director or or anybody and

[2:57:23] this is probably back a few

[2:57:26] slides so a lot of the we we've

[2:57:27] spoken here about sort of the

[2:57:29] expenditure side impact of Hr

[2:57:31] one in terms of what is pushed

[2:57:33] on to us and other states as a

[2:57:35] dynamic conformity state we're

[2:57:36] also hit on the other side of

[2:57:37] the ledger a lot of that was

[2:57:38] front loaded

[2:57:41] to you know our first

[2:57:43] fiscal year or two but I've been

[2:57:47] thinking about andreor you

[2:57:48] and I have talked offline about

[2:57:49] some of this stuff put policy

[2:57:51] questions aside from a purely

[2:57:53] forecasting standpoint is it

[2:57:56] possible to pull out of revenue

[2:57:57] projections

[2:58:03] maybe just take the top 3 or5

[2:58:05] largest scoring federal tax

[2:58:10] expenditures 168 a168K169174 I

[2:58:10] think

[2:58:13] that we inherit

[2:58:17] due to dynamic conformity and

[2:58:18] and what is the revenue loss to

[2:58:20] the state by simply inheriting

[2:58:21] those federal policy choices

[2:58:23] made through HR1 are we able to

[2:58:25] score that out just separately

[2:58:27] from sort of the blended net of

[2:58:28] all of tax policy

[2:58:30] projections that we use

[2:58:35] thank you madam Chair Senator

[2:58:37] Weissman you know thanks to

[2:58:41] House Bill1419 Annia gets

[2:58:43] the privilege to actually give

[2:58:47] you a report in November that

[2:58:49] does a lot of that work of

[2:58:50] trying to look at what the

[2:58:52] impact of HR one was on the

[2:58:53] state budget

[2:58:57] I think she was hoping we were

[2:58:58] above the taber capp so we

[2:58:59] didn't have to do that report

[2:59:01] but that's not the case so

[2:59:03] I'll turn it over to Miss

[2:59:05] Shropshire to add to your cause

[2:59:09] she is the expert is dug in so

[2:59:10] much into HR one and the

[2:59:12] impactstrapsha thank you madam

[2:59:13] Chair thank you for the question

[2:59:15] Senator Weissman I think we

[2:59:16] can put together a certain

[2:59:17] estimates about how much those

[2:59:19] provisions would have cost we

[2:59:21] won't truly know until we get

[2:59:22] IRS data that shows how much was

[2:59:23] actually taken under each of

[2:59:24] those provisions and deduct

[2:59:26] ed and then of course the

[2:59:27] apportionment factor to the

[2:59:28] state of Colorado versus the

[2:59:29] federal government and we don't

[2:59:31] get that data from the IRS very

[2:59:33] quickly. it takes multiple years

[2:59:35] to do so conceptually could

[2:59:37] something be done potentially

[2:59:38] but that'd be a policy question

[2:59:39] as to how that would be done it

[2:59:40] would certainly take some time

[2:59:40] for it to be you know right on

[2:59:41] the money

[2:59:48] right well thank you very

[2:59:50] very much I guess same goes

[2:59:51] for our

[2:59:56] friends at OsPB it's been a

[2:59:59] pleasure with this committee

[3:00:01] and this iteration of folks to

[3:00:03] work with you over these

[3:00:06] tumultuous ear and months and

[3:00:09] maybe it wasn't exactly joyous

[3:00:11] but you have been good to work

[3:00:12] with so thank you.

[3:00:15] it's always been a pleasure

[3:00:19] maybe some yelling, maybe some

[3:00:21] crying but always a pleasure

[3:00:23] working with you and I I I in in

[3:00:26] the unique position of being on

[3:00:28] your side before and especially

[3:00:29] during difficult times I think

[3:00:31] I'd rather be where I was and

[3:00:33] you were with the the challenges

[3:00:36] that we face as a state it's a

[3:00:37] lot easier when we have a great

[3:00:39] recession and you're making deep

[3:00:40] cuts and everyone accepts it

[3:00:43] versus where you guys have very

[3:00:45] difficult choices given the

[3:00:46] impacts of lots of different

[3:00:46] things and

[3:00:49] you have all done it in

[3:00:51] remarkable ways with remarkable

[3:00:53] compassion and thoughtfulness

[3:00:54] and it's been a pleasure working

[3:00:54] with the six of you

[3:00:58] sure we thank you madam chairir.

[3:01:00] I will just add that I think the

[3:01:05] the relationship the the

[3:01:06] partnership in addressing the

[3:01:08] challenges of the last few years

[3:01:10] that your team has built with

[3:01:13] our team has is really the only

[3:01:15] way this has been possible

[3:01:17] and I think it is a a new

[3:01:19] approach it is a new day and

[3:01:21] that relationship my deep

[3:01:23] hope is that it continues as

[3:01:25] uninterrupted as possible

[3:01:26] through the transition to both a

[3:01:29] new JBc and a new administration

[3:01:31] you all do incredible work and

[3:01:32] the people of Col

[3:01:34] or ad o are greatly benefited

[3:01:35] because of it and that

[3:01:37] partnership with our team is a

[3:01:39] big piece of that and I don't

[3:01:40] want to see that interrupted so

[3:01:40] thank you so much for what you

[3:01:41] do.

[3:01:43] Rep Tagert

[3:01:48] thank you madam chairir. I was

[3:01:49] just hoping today was going to

[3:01:50] be joyous

[3:01:56] it's a great way to

[3:01:56] go

[3:01:59] thank you everyone for the

[3:02:03] presentation it is now 11:31 so

[3:02:07] let us 11:32 let us come back at

[3:02:11] 11:40 and we will start on our

[3:02:13] 1331 requests we'll stand in a

[3:02:14] brief recess.

[3:16:51] right

[3:16:52] the joint that's so

[3:16:55] there the joint budget committee

[3:16:58] will come back to order.

[3:17:00] Directorharper, we're going to

[3:17:00] start on our

[3:17:03] interim supplemental requests I

[3:17:05] assume will go in order a binder

[3:17:07] here so starting with jil branch

[3:17:08] courts and probation

[3:17:09] OK M Bickle

[3:17:13] amandaickle here for the

[3:17:15] exoneration compensation

[3:17:16] orderder for the judicial branch

[3:17:19] the department courts and

[3:17:22] probation has requested 122,120

[3:17:24] general fund for the initial

[3:17:26] payment of monetary compensation

[3:17:27] and attorneys fees for James

[3:17:30] Garner who is exonerated after

[3:17:32] more than 13en years in prison.

[3:17:35] I think the statute is very

[3:17:36] clear about this. there was a

[3:17:39] court order the state has to pay

[3:17:40] the initial amount

[3:17:42] within two weeks so I

[3:17:44] recommend that you provide this

[3:17:46] funding and I would just note I

[3:17:48] did ask a little bit about like

[3:17:49] should we have an ongoing line

[3:17:51] item and there there've been

[3:17:53] four of these sort of

[3:17:54] compensations since this bill

[3:17:55] was originally passed in like

[3:17:57] 2013 so it's not that common an

[3:18:00] event but there will be a larger

[3:18:02] amount likely that you'll be

[3:18:02] paying in 2627 closer to a

[3:18:03] million.

[3:18:06] bridges thank you madam Chair I

[3:18:07] move staff rec ES01 exoneration

[3:18:09] compensation order. Are there

[3:18:10] any objections

[3:18:13] that passes on a vote of5 to0

[3:18:14] with Kkirkmeyer excused.

[3:18:21] have too Mr Thompson

[3:18:24] thank you madam Chair. Scott

[3:18:26] Thompson joinintudgetittee staff

[3:18:27] this is an interim supplemental

[3:18:29] for the officeice of alternate

[3:18:30] defense counsel

[3:18:33] they're requesting800,000

[3:18:35] dollars general fund in 2526 to

[3:18:37] make the final payments to its

[3:18:39] contractors that provide legal

[3:18:40] defense to indigent clients

[3:18:43] they are about one point they

[3:18:46] were about $1.8 million behind

[3:18:48] in the payments to these

[3:18:49] contractors mostly for June

[3:18:53] payments but worked with the

[3:18:54] sister agencies orrpc in

[3:18:58] the OCr to

[3:19:01] transfer about a million

[3:19:03] dollars500,000 dollars from each

[3:19:04] that we're going to be reverted

[3:19:07] and so that cut down their

[3:19:09] need by $1 million and so

[3:19:11] they're just requesting800,000

[3:19:15] general fund for this purpose

[3:19:16] I'm recommending that the

[3:19:17] committee approve the request.

[3:19:19] these are essentially payments

[3:19:21] that are that need to go out

[3:19:22] for work that's already been

[3:19:22] completed

[3:19:26] there are a couple concerns

[3:19:27] that I raised in my right up

[3:19:29] mostly around the statute that

[3:19:31] allows this transfer authority

[3:19:33] I think Msickle and I are

[3:19:35] going to be working on some sort

[3:19:37] of proposal to come to the

[3:19:39] committee to clean that up maybe

[3:19:40] to exclude the chief justice

[3:19:42] from the decision because

[3:19:44] ultimately the chief justice had

[3:19:46] to approve the transfer it

[3:19:47] seemed weird with the

[3:19:49] independent agencies so I think

[3:19:50] there's some ongoing

[3:19:51] conversations that will come

[3:19:52] from this request but for now

[3:19:52] I'm recommending approving it.

[3:19:57] apologies if this is embedded in

[3:19:59] there are the500,000 dollars

[3:20:00] transferred from each

[3:20:03] agency

[3:20:04] was from what

[3:20:07] what did they not need it for

[3:20:11] Yeah, it was their regular

[3:20:15] like operating budget so it

[3:20:17] was s money that was going to be

[3:20:19] reverted but they weren't going

[3:20:21] to spend this year they did

[3:20:24] both raise flags that they don't

[3:20:25] want this to be something

[3:20:27] that gets cut out of their base

[3:20:29] next year I think that they

[3:20:31] were just trying to do their

[3:20:34] best to keep costs down and

[3:20:34] we don't want to punish that

[3:20:35] success.

[3:20:38] thank you madam chairir. I do

[3:20:39] just want to commend OAdC's

[3:20:41] leadership for trying to find

[3:20:44] ways to cut and and also just

[3:20:45] make sure that everyone there

[3:20:47] knows that we are I think on

[3:20:49] this committee always stunned by

[3:20:50] the dollar increase year over

[3:20:51] year and

[3:20:56] it is it is difficult for us to

[3:20:57] vote yes on these things and I

[3:20:59] and I just ask every time'm like

[3:21:00] what happens if we vote no on

[3:21:01] this and then people's

[3:21:02] constitutional rights get denied

[3:21:03] so we're not going to do that

[3:21:05] but I do just want to say

[3:21:07] that this is a line item that is

[3:21:09] eye popping every year and so I

[3:21:10] appreciate the efforts of

[3:21:12] leadership to make it less high

[3:21:13] popping where possible and with

[3:21:16] that I movetafrec OAdC conflicts

[3:21:18] of interest contracts emergency

[3:21:18] supplemental

[3:21:22] are there any objections? That

[3:21:24] passes on a vote of5 to0 with

[3:21:24] Kirkmeyer excused.

[3:21:25] you

[3:21:29] right tab 3

[3:21:43] Mr Kurtz

[3:21:45] you want to go in a different

[3:21:46] order

[3:21:47] No.

[3:21:55] OK just wasn't there

[3:21:57] Mr Kurtz please

[3:22:01] thank you madam chairir. this

[3:22:02] one's a little bit

[3:22:03] complicated and I suspect a

[3:22:04] difficult decision so I'm

[3:22:08] planning to go slowly through

[3:22:09] the packet but I also know you

[3:22:11] have some time pressures so if

[3:22:12] you want me to move along if

[3:22:14] you've read ahead, let me know.

[3:22:15] give me that feed one seems

[3:22:17] consequential and difficult so

[3:22:18] let's just make sure we do the

[3:22:20] right thing here. OK. Um, so

[3:22:25] it's one request for 15.8

[3:22:27] million but I think it's really

[3:22:29] two separate issues and so I've

[3:22:30] dealt with those two separate

[3:22:31] issues

[3:22:35] separately on page two is a

[3:22:36] discussion of the first

[3:22:37] component of it and this

[3:22:41] component is4.7 million general

[3:22:43] fund for this population of

[3:22:47] noncitizens where because of

[3:22:50] changes in HR one in what

[3:22:52] categories of noncitizens are

[3:22:54] eligible, the department is not

[3:22:56] able to determine with the

[3:22:58] information that they have right

[3:23:00] now whether these this

[3:23:00] population is elig

[3:23:05] ible or not and the reason that

[3:23:06] that is happening is because

[3:23:11] the there's a a population

[3:23:13] that receives supplemental

[3:23:16] security income or SsI it's a

[3:23:19] needbased federal cash

[3:23:21] assistance for people 65 and

[3:23:23] over or people who have a

[3:23:26] disability. That population

[3:23:26] under the

[3:23:31] previous model was

[3:23:33] automatically eligible for

[3:23:35] medicaid so the department got a

[3:23:37] file it it comes in

[3:23:40] apparently daily from the

[3:23:41] federal government that says

[3:23:43] here are all the people who are

[3:23:46] eligible for SsI and their

[3:23:48] computer systems are set up to

[3:23:49] just automatically enroll those

[3:23:50] people into medicaid.

[3:23:54] with the changes in HR one to

[3:23:57] noncitizen eligibility for

[3:23:59] Medicaid. The Medicaid

[3:24:03] eligibility criteria and the

[3:24:04] SsI criteria no longer align.

[3:24:06] so there are these

[3:24:08] noncitizen

[3:24:12] categories that will remain

[3:24:15] eligible for SSI but will not be

[3:24:18] eligible for federal

[3:24:20] financial participation in

[3:24:21] Medicaid. Senator Moley's got a

[3:24:22] question.

[3:24:22] so

[3:24:26] are these the same7,000 people

[3:24:28] that have that are

[3:24:29] noncitizens but have

[3:24:33] legal status that it is part of

[3:24:36] HR one that we have known about

[3:24:36] for a

[3:24:38] year or so

[3:24:39] Mr. Kurtz

[3:24:43] that is correct. it is a subset

[3:24:47] of that population that

[3:24:51] are being automatically enrolled

[3:24:53] into Medicaid because they are

[3:24:55] in the SsI data. I see someone

[3:24:56] from the department nodding her

[3:24:58] or shaking her head like a lot

[3:25:01] these are not those7,000 people.

[3:25:04] these are these7,000 people no

[3:25:07] they're

[3:25:11] the people who don't qualif or

[3:25:13] who continue to qualify are in

[3:25:14] the7,000

[3:25:17] I I don't know I mean I guess

[3:25:18] what I'm

[3:25:21] trying to get at is how did we

[3:25:23] not know like how are we still

[3:25:24] trying to figure out who

[3:25:26] qualifies and who doesn't when I

[3:25:27] think there was some rule that

[3:25:30] happened recently rules and if

[3:25:31] they changed then that'd be good

[3:25:32] to know.

[3:25:35] Mslor director of Flores

[3:25:36] Brennan

[3:25:39] thank you madam chairir members

[3:25:40] of the committee Adela

[3:25:41] Floresrennan from the department

[3:25:45] um, so there is the7,000 that

[3:25:47] we've been estimating for the

[3:25:49] past year or so you are correct.

[3:25:53] this is an additional4900 is the

[3:25:55] total universe of individuals

[3:25:59] that come to us through the SsI

[3:26:02] file and we just recently, um,

[3:26:04] within the last couple of weeks

[3:26:05] got the CMS technical

[3:26:09] specifications on how they were

[3:26:13] going to implement the data

[3:26:17] push or not from the SsA

[3:26:19] system for those SsI

[3:26:21] individuals in the meantime we

[3:26:25] were trying to get them to

[3:26:27] give us an exemption for that

[3:26:29] because they're like Colorado

[3:26:31] along with a number of other

[3:26:34] states automatically take the

[3:26:35] information from the socialcial

[3:26:36] Security Administration

[3:26:39] and it automatically populates

[3:26:40] CBmS so

[3:26:43] what they gave us a couple of

[3:26:45] weeks ago was not something that

[3:26:46] we could implement for October 1

[3:26:48] mple

[3:26:55] OK, so the I see it now the4,885

[3:26:56] people are

[3:27:00] also part of the se000 or

[3:27:00] they're in a they're

[3:27:04] they're in addition because they

[3:27:05] qualify for SsI

[3:27:09] Director Florence rennan thank

[3:27:11] you madam Chair Senator

[3:27:12] Armadley there in addition to so

[3:27:15] the total universe is 12,000

[3:27:17] although once we start being

[3:27:19] able to work through that

[3:27:21] almost4900. Um, some of those

[3:27:23] folks will remain eligible we

[3:27:25] just can't tell yet. OK and for

[3:27:26] the

[3:27:29] 25% who will remain eligible the

[3:27:33] cost of the 25% of the4900

[3:27:36] people is4.7 million dollars

[3:27:44] if you look at the table on page

[3:27:46] 3 at the top of that table

[3:27:50] that breaks out the cost so

[3:27:52] I'll just walk you through this

[3:27:57] table quickly so there's4,885

[3:27:59] people that are impacted by this

[3:28:01] request where we don't know

[3:28:02] their eligibility status

[3:28:05] the expenditures for that

[3:28:06] population in 2526 were 29

[3:28:10] 4 million total

[3:28:13] this request is to provide

[3:28:15] funding for that population just

[3:28:17] from October through February

[3:28:19] bye by March the department

[3:28:21] hopes to have some system

[3:28:23] changes in place where they will

[3:28:27] be able to positively identify

[3:28:28] one way or the other

[3:28:29] somebodybody's eligibility so

[3:28:33] that's41.67% of the year that

[3:28:35] brings the total to 2.2 million

[3:28:36] then the

[3:28:38] department

[3:28:42] we doesn't know how many of

[3:28:43] these people will remain

[3:28:46] eligible but the request is

[3:28:47] based on the assumption that at

[3:28:50] least 25% of the population will

[3:28:51] remain eligible

[3:28:56] so that's $3 million for that

[3:28:57] population 1.5 million general

[3:28:58] fund

[3:29:00] the remaining

[3:29:04] population that would be

[3:29:04] ineligible

[3:29:07] is about 9.2 million

[3:29:11] currently we have built into the

[3:29:13] budget that that population

[3:29:15] would be split between general

[3:29:16] fund and federal funds because

[3:29:17] the forecast didn't

[3:29:20] take into account that this

[3:29:21] population would be losing

[3:29:22] eligibility

[3:29:25] but this request is asking to

[3:29:27] move all of that to a general

[3:29:30] fund expense so that incremental

[3:29:32] increase in general funded costs

[3:29:33] is4.7 million.

[3:29:38] Senator Kirk meyer

[3:29:41] that is just through February so

[3:29:42] essentially a half year.

[3:29:43] correct

[3:29:48] and the 9 million was for a half

[3:29:49] year or a full year, Mr. Kurtz

[3:29:52] that's for the same half year

[3:29:59] it would be4.7 million moving

[3:30:01] from a federal fund cost to a

[3:30:02] general fund cost.

[3:30:03] p re s ent ative Brown

[3:30:10] thank you madam chair. so the

[3:30:13] is this money the the4 million

[3:30:17] the 4 million that you that the

[3:30:19] department is asking for and

[3:30:20] that I believe that you

[3:30:21] recommend

[3:30:24] if I understand correctly this

[3:30:25] is for

[3:30:28] this is to cover the costs of

[3:30:29] these folks' benefits or this is

[3:30:31] to cover the cost of the systems

[3:30:32] change or both?

[3:30:33] this

[3:30:36] madam the

[3:30:41] request is only for the service

[3:30:43] costs the department is

[3:30:45] attempting to make the system

[3:30:48] and process changes within

[3:30:48] existing resources

[3:30:50] the department is in

[3:30:53] between a rock and a hard place

[3:30:55] on the one hand, they can't

[3:30:58] blanket deny eligibility for

[3:30:59] this population because some of

[3:31:01] the population would be eligible

[3:31:04] for Medicaid and so if they just

[3:31:06] disenrolled that population

[3:31:07] they'd be in violation of

[3:31:08] federal law.

[3:31:11] on the other hand, they can't

[3:31:13] claim a federal match for the

[3:31:15] population if some of them are

[3:31:17] ineligible so if they claimed

[3:31:20] the federal match then

[3:31:21] the

[3:31:24] subsequently discovered that

[3:31:25] some of the population was

[3:31:27] ineligible the federal

[3:31:29] government would claw back that

[3:31:31] money but could also implement

[3:31:32] penalties against Colorado for

[3:31:35] not complying with that

[3:31:36] portion of federal law

[3:31:37] and so

[3:31:37] that's

[3:31:42] the they're really not in a

[3:31:43] position where they can win on

[3:31:45] this and the request

[3:31:47] has

[3:31:51] a sort of a two stage proposed

[3:31:53] solution one stage of it is that

[3:31:55] in the short term the

[3:31:56] department is going to make

[3:31:59] efforts to implement a manual

[3:32:01] procedure to try to identify

[3:32:03] which of these people are

[3:32:04] eligible or not

[3:32:07] they're going to use general

[3:32:08] funds or they're proposing that

[3:32:09] they would use general fund for

[3:32:10] the expenses for the population

[3:32:13] until the point in time when

[3:32:15] they have determined whether

[3:32:17] they're the person is eligible

[3:32:19] or ineligible once they've

[3:32:20] determined that

[3:32:22] if they are eligible they can go

[3:32:25] back and claim the federal funds

[3:32:26] retroactively from the federal

[3:32:28] government back to the date

[3:32:29] whenever their documentation

[3:32:30] says that they were eligible

[3:32:34] if they are determined

[3:32:36] ineligible we would have spent

[3:32:37] general fund and we're not going

[3:32:39] to claw that back from anyone

[3:32:41] it's just that's water under the

[3:32:42] bridge

[3:32:42] and

[3:32:47] at the same time that they're

[3:32:49] working on this manual process

[3:32:50] which is a complicated process

[3:32:51] because as they said their

[3:32:53] system automatically is

[3:32:54] enrolling these people into

[3:32:56] Medicaid and it's overriding any

[3:32:58] kind of manual adjustments that

[3:32:59] we might be doing so they

[3:33:01] they've got some work cut out

[3:33:02] for them to figure out how to do

[3:33:02] that

[3:33:07] their long term plan is that

[3:33:08] they're going to change their

[3:33:11] systems so that these people are

[3:33:13] getting flagged and not

[3:33:14] automatically getting enrolled

[3:33:17] in medicaid and they're going

[3:33:20] to try to use other sources of

[3:33:23] federal information to verify

[3:33:25] the eligibility of as many of

[3:33:28] the noncitizens as they can

[3:33:31] but there are limits to that

[3:33:33] data and for some of the

[3:33:34] population they're going to have

[3:33:34] to just reach

[3:33:35] out to them

[3:33:38] and get those people to provide

[3:33:40] the information to confirm their

[3:33:40] eligibility or not

[3:33:43] so thank you thank you very much

[3:33:45] Mr Kurtz that's very

[3:33:47] helpful so I think the way I

[3:33:49] understand it is we have a

[3:33:50] population of people that we've

[3:33:53] identified and we don't know

[3:33:54] whether these folks based on the

[3:33:57] new rules and the way that we do

[3:33:58] things we don't know whether

[3:33:58] these folks are

[3:34:01] eligible or not we know that

[3:34:03] some of them are eligible and

[3:34:04] some of them are not and so if

[3:34:05] we take if we sort of blanket

[3:34:08] accept them or deny them we have

[3:34:11] some ri some legal and financial

[3:34:13] risks and so what this part of

[3:34:14] the

[3:34:17] of the supplemental does is sort

[3:34:20] of gives us the ability to work

[3:34:20] through the process

[3:34:23] figure out whether these people

[3:34:25] are eligible or not and when

[3:34:27] they are elig if they're

[3:34:28] eligible we go get the federal

[3:34:29] money if they're not eligible we

[3:34:30] basically

[3:34:33] it shuts off and and that's the

[3:34:34] end of it kind of thing. OK.

[3:34:37] thank you for that that's very

[3:34:38] confusing and also very

[3:34:38] helpful

[3:34:45] Thank you madam Chair. I'm'm

[3:34:48] confused but the first part of

[3:34:49] what Representative Brown

[3:34:51] talked about made a great deal

[3:34:54] of sense to me. The second part

[3:34:56] I'm puzzled by

[3:34:59] does this4.7 million

[3:35:03] take into account

[3:35:07] that that we as a state would be

[3:35:09] making up for what the federal

[3:35:13] share would have been or are

[3:35:14] these folks literally shut off

[3:35:15] I think there's a big

[3:35:18] difference in my mind

[3:35:25] up until the point where we

[3:35:26] determined their

[3:35:30] eligibility

[3:35:40] Up until the point where we

[3:35:43] determined their eligibility

[3:35:46] we would be paying general

[3:35:48] funds where otherwise we would

[3:35:49] be getting federal funds

[3:35:52] at the point in time where we

[3:35:53] determine that they're

[3:35:59] ineligible if that's the

[3:36:00] determination then

[3:36:04] we would not continue to pay for

[3:36:06] any new services at that point

[3:36:08] they would lose eligibility for

[3:36:08] Medicaid.

[3:36:21] thank you madamh

[3:36:25] what concerns me there is

[3:36:30] and I need to to rationalize it

[3:36:32] but what concerns me there is

[3:36:35] now we've got a population of

[3:36:38] legal immigrants

[3:36:44] with no absolutely no benefits

[3:36:45] and then we have cover all

[3:36:48] Colorado and there's something

[3:36:49] there that just

[3:36:50] doesn't seem rational to me

[3:36:51] but

[3:36:53] I'll deal with it

[3:36:59] assume we're talking about two

[3:37:01] different populations. I don't

[3:37:02] know but these are adults we're

[3:37:03] talking about yes versus

[3:37:05] children and pregnant

[3:37:09] So

[3:37:15] there is that distinction

[3:37:17] of children and pregnant

[3:37:18] women versus adults

[3:37:21] but I think the

[3:37:24] the point you're

[3:37:25] makingpresentative Taggart is

[3:37:28] that it does seem to be a

[3:37:30] different standard that we're

[3:37:30] looking at

[3:37:34] yeah

[3:37:35] I'll just stop there

[3:37:43] rap brown

[3:37:46] thank you madam chairir

[3:37:51] Mr Kurtz, this seems like so

[3:37:53] this is the4.7 million dollars

[3:37:55] is is the is essentially what we

[3:37:59] assumed the federal share of

[3:38:00] benefits for these folks would

[3:38:00] be over that

[3:38:05] period of time and so it stri is

[3:38:07] it correct me if I'm wrong but

[3:38:09] it strikes me that this is sort

[3:38:11] of the upper bound on the amount

[3:38:12] of money that we would need to

[3:38:13] spend and that the actual

[3:38:15] expenditures would be somewhere

[3:38:16] less than that because there'd

[3:38:18] be people that would one be

[3:38:20] determined before the end of the

[3:38:22] period to be ineligible and to

[3:38:24] would be determined to be

[3:38:26] eligible for federal funding in

[3:38:27] which case we wouldn't need to

[3:38:28] spend money on them is that

[3:38:30] or this extra money is that a

[3:38:30] good way of thinking about it

[3:38:31] too or no?

[3:38:37] there's some it's an estimate

[3:38:43] the4885 is an absolute number

[3:38:45] based on a point in time but

[3:38:46] we're getting new SsI data all

[3:38:46] the time

[3:38:53] the to the extent sorry so to

[3:38:55] the extent to which we get new

[3:38:59] people the roles increase or

[3:39:01] decrease this this estimate

[3:39:03] could be inaccurate but if you

[3:39:04] take this if you think the

[3:39:07] universe is48885 people

[3:39:09] then this would be sort of the

[3:39:10] upper bound of what

[3:39:14] I'm a little hesitant to say

[3:39:16] it's the upper bound I do think

[3:39:16] it's a

[3:39:20] likely that it's a conservative

[3:39:20] estimate of

[3:39:23] how much you might have to spend

[3:39:27] but there are risks in both

[3:39:28] directions so I'm

[3:39:31] hesitant to say it's the upper

[3:39:32] bound of what you

[3:39:34] this population would cost fair

[3:39:34] enough thank you no

[3:39:37] no I mean I guess one of the

[3:39:39] questions is how do we come up

[3:39:40] with this 25%

[3:39:43] who we think will be eligible

[3:39:45] after we do this work like it is

[3:39:47] that something we've been doing

[3:39:49] right along and we know 25% is

[3:39:50] what's happening or is that

[3:39:52] a brand new estimate that we

[3:39:52] came up with

[3:39:57] educated guest by the economists

[3:39:59] at the department it is

[3:40:04] informed by crosschecking these

[3:40:07] populations with some of those

[3:40:09] secondary sources of information

[3:40:11] for immigration status and the

[3:40:13] department was able to

[3:40:15] crosscheck some of these clients

[3:40:17] and based on the number that

[3:40:19] we're coming back as still

[3:40:21] eligible the department

[3:40:23] estimated a range and

[3:40:23] having trouble

[3:40:26] remembering the range off the

[3:40:27] top of my head that was in the

[3:40:29] request but it was something

[3:40:34] like 20 to40% and so this 25%

[3:40:34] is in that range of

[3:40:38] how many they think will

[3:40:41] continue to be eligible but it

[3:40:42] is

[3:40:47] you know just like any

[3:40:48] projection it's throwing a dart

[3:40:49] at a dartboard

[3:40:52] ator mo ble y I guess I mean if

[3:40:53] the range was 20 to40, why

[3:40:55] wouldn't they have landed on 30?

[3:40:56] I I don't know like

[3:41:01] I guess I just I don't want us

[3:41:03] to have to come back and say

[3:41:05] oh oops we need more because

[3:41:07] that that does seem painful

[3:41:09] and is making people doubt

[3:41:14] the numbers that we're getting

[3:41:14] if

[3:41:19] I I don't know I I mean I I see

[3:41:21] that's what's before us I just

[3:41:22] that seems

[3:41:23] a little flawed

[3:41:33] well

[3:41:38] do we want to take this a piece

[3:41:39] at a time or

[3:41:41] shall we get the whole

[3:41:45] the whole enchilada and then we

[3:41:46] can

[3:41:49] look at how Mr Kurtz segmented

[3:41:50] this.

[3:41:57] just to hear it all and then we

[3:41:58] can make our decisions

[3:41:59] in whatever order

[3:42:13] people want to hear more or do

[3:42:14] you feel like you have enough

[3:42:27] ce br id ge s thank you madam

[3:42:28] chairir. I move staff

[3:42:29] recommendation for the first

[3:42:31] part of interim supplemental

[3:42:32] requests qualified noncitizens.

[3:42:33] are there any

[3:42:36] senator Moy

[3:42:43] it's it's staff recommendation

[3:42:46] which is4.7

[3:42:50] 17601

[3:42:52] general fund

[3:42:57] in the in the current fiscal

[3:42:58] year

[3:43:00] as suggested by

[3:43:04] staff member Eric Kurtz iss this

[3:43:05] specific we you have a middle

[3:43:07] initial Mr Kurtz we can have in

[3:43:08] middle initial is Eric full

[3:43:13] it's Erikssonric Jurtz

[3:43:19] initial Juliusliuserric Julius

[3:43:20] Kurtz that

[3:43:25] the of ourlord 2. Any objections

[3:43:28] to Eric Julius Kurtz's

[3:43:30] recommendation. Part one.art one

[3:43:32] ing un that passes on a vote of

[3:43:33] 600.

[3:43:35] Mr. Kurtz

[3:43:39] so the second part of this

[3:43:40] request is

[3:43:44] the same

[3:43:48] changes in federal law are going

[3:43:51] to cause some people who are

[3:43:52] currently using long term

[3:43:57] services and supports to no

[3:43:58] longer be eligible for Medicaid.

[3:44:02] and this is a population of 275

[3:44:02] people

[3:44:06] they are noncitizens legally

[3:44:06] residing

[3:44:09] in the US but they don't meet

[3:44:10] the new HR one

[3:44:11] criteria

[3:44:12] there

[3:44:17] eligibility status is not

[3:44:19] ambiguous it's not they're not

[3:44:21] coming in through the SSI data

[3:44:22] or if they did come in through

[3:44:24] SsI data we have more

[3:44:25] information about them we know

[3:44:29] for sure that this population is

[3:44:31] no longer available or eligible

[3:44:32] for medicaid

[3:44:33] the

[3:44:37] staff recommendation here is

[3:44:39] not to approve this portion of

[3:44:43] the request and it's based on

[3:44:44] the statutory framework

[3:44:49] for hick puff and whether

[3:44:51] they have authority to do this

[3:44:53] but also the statutory framework

[3:44:55] around interim supplemental

[3:44:57] requests and whether the budget

[3:44:59] committee has authority to

[3:45:00] approve an over expenditure for

[3:45:00] this

[3:45:04] so with regard to Hickpuff's

[3:45:05] statutory authority

[3:45:08] they have very broad authority

[3:45:09] to do

[3:45:12] really just about anything

[3:45:14] necessary to comply with federal

[3:45:14] regulations around Medicaid.

[3:45:17] if there are matching federal

[3:45:21] funds they can do things even

[3:45:23] sometimes that conflict with

[3:45:25] state statute in order to comply

[3:45:26] with the federal Medicaid

[3:45:26] requirements

[3:45:27] but

[3:45:28] they have

[3:45:33] when when it's not related to

[3:45:34] medicaid

[3:45:37] there's statutory authority is

[3:45:39] not so broad and we expect

[3:45:42] as a general assembly

[3:45:44] historically an affirmative

[3:45:45] statute that says they can do

[3:45:46] this thing

[3:45:49] it's not enough that the statute

[3:45:53] says you can't do this thing. it

[3:45:55] has to say you can do this thing

[3:45:56] and there is no statute that

[3:45:59] says that the department can

[3:46:00] provide these services

[3:46:02] to this population

[3:46:07] the department cited several

[3:46:09] different statutes on the

[3:46:11] bottom of page ive I kind of

[3:46:13] walk through each of those

[3:46:14] individually and why they don't

[3:46:16] apply before you walk through

[3:46:17] them Senatorma's got a

[3:46:18] question.

[3:46:20] just can you refresh my memory

[3:46:22] about what we did with Cover all

[3:46:24] Coloradans for people on long

[3:46:24] term services and supports.

[3:46:30] You grandfather them you kept

[3:46:31] I'm sorry

[3:46:35] the grandfather

[3:46:43] Maybe Mister Kurtz knows the

[3:46:44] answer

[3:46:47] Mr. Kurtz. you you did put a cap

[3:46:49] on long term services and

[3:46:49] supports but you grandfathered

[3:46:50] the people who were already

[3:46:52] receiving the services so you

[3:46:55] could argue that this request is

[3:46:56] similar to that policy

[3:47:00] vice chairir Bridges thank you

[3:47:02] madam Chair. Those were for kids

[3:47:04] people under eight and then when

[3:47:06] they turn 18 or when they turn

[3:47:07] 19 they lose those services so

[3:47:11] I think it's 19 I think

[3:47:15] hm I don't think we did

[3:47:16] so

[3:47:16] when

[3:47:21] is is anyone in this population

[3:47:23] in these 200 some folks are

[3:47:28] underder eight or under 19 or

[3:47:28] they all adults?

[3:47:33] these are all adults and they're

[3:47:34] all nonpregnant

[3:47:35] so

[3:47:38] there

[3:47:41] every time I get into this the

[3:47:44] the terminology around

[3:47:47] noncitizens is incredibly

[3:47:49] confusing and frustrating and

[3:47:51] complex probably intentionally

[3:47:52] so or maybe reflecting

[3:47:55] the lack of consensus of opinion

[3:48:00] but there's a category of

[3:48:02] people that

[3:48:04] are called

[3:48:09] lawful permanent residents

[3:48:10] those are people that have a

[3:48:11] green card and then there's a

[3:48:13] category of people called

[3:48:14] lawfully residing

[3:48:17] which is a broader term that

[3:48:19] includes lawfully permanent

[3:48:21] residents but also people here

[3:48:23] who may be on a different status

[3:48:26] that is a temporary status such

[3:48:29] as that may or may not lead to

[3:48:31] the possibility of getting a

[3:48:33] green card or becoming a

[3:48:34] permanent citizen

[3:48:39] if you are lawfully residing and

[3:48:40] you are a pregnant person or a

[3:48:40] child

[3:48:45] you were previously eligible for

[3:48:47] medicaid and HR1 did not change

[3:48:48] that you will continue to be

[3:48:48] eligible

[3:48:53] if you are not awfully residing

[3:48:54] and you are a child

[3:48:57] then underco all Coloradans you

[3:48:58] can get

[3:48:59] benefits

[3:49:05] as well but again if you're

[3:49:07] lawfully ri residing your your

[3:49:09] status and you're pregnant and a

[3:49:11] child you're not your status is

[3:49:13] not changing underhr one but if

[3:49:15] you are lawfully residing and

[3:49:16] you are an adult

[3:49:19] then your status may change and

[3:49:21] the people who are losing

[3:49:24] eligibility are refugees and

[3:49:24] asylees

[3:49:27] they're basically the same thing

[3:49:29] but one applies before they get

[3:49:30] to the US the other applies

[3:49:31] after they get to the US

[3:49:34] people with temporary protected

[3:49:34] status

[3:49:36] humanitarian parole

[3:49:40] survivors of human trafficking

[3:49:40] and domestic violence

[3:49:45] or people where they've got a

[3:49:47] withholding of removal because

[3:49:48] there are circumstances if they

[3:49:50] were deported to the country

[3:49:52] that they came from that their

[3:49:56] life or freedom would be in

[3:49:56] jeopardy

[3:49:59] so those are the categories that

[3:50:00] are gonna be losing eligibility

[3:50:05] and they don't include any

[3:50:06] children or pregnant women

[3:50:09] Senator Molay

[3:50:11] thanks so

[3:50:13] just to

[3:50:16] all of the people all of these

[3:50:20] 275 people are currently here

[3:50:22] legally and they are on long

[3:50:25] term services and supports and

[3:50:27] they are receiving services. So

[3:50:28] I just wonder

[3:50:32] if we don't pay for that then

[3:50:34] what what happens to them I mean

[3:50:37] if these people who are

[3:50:40] depending on receiving

[3:50:42] services to preserve their life

[3:50:45] are they like the people we

[3:50:48] heard about yesterday, and so

[3:50:49] I just wonder like do they all

[3:50:51] end up going to an ER now or

[3:50:52] what happens

[3:50:54] hurts

[3:50:55] the

[3:51:01] department in their forecast

[3:51:04] expected that the changes in

[3:51:05] eligibility for noncitizens

[3:51:09] would have some knock on

[3:51:11] effect to emergency services

[3:51:14] under Medicaid because Medicaid

[3:51:16] does cover emergency services

[3:51:17] for noncitizens regardless of

[3:51:20] immigration status it's not

[3:51:22] granular enough that we can tie

[3:51:25] a specific number to these 275

[3:51:26] people but

[3:51:30] that is one possible outcome is

[3:51:31] that they may end up using more

[3:51:34] emergency services. Another

[3:51:36] possible outcome is that

[3:51:38] they're going to have to become

[3:51:41] more reliant on family friends

[3:51:42] charitable organizations

[3:51:44] they may

[3:51:49] end up having lower life spans

[3:51:50] and there are people with

[3:51:51] disabilities who need these

[3:51:52] services

[3:51:56] so they're highrisk populations

[3:51:57] like that's not an unreasonable

[3:51:58] assumption that

[3:52:02] for some of them this may be

[3:52:03] life and death either short term

[3:52:04] or long term

[3:52:09] without these services they

[3:52:11] may move to someplace else where

[3:52:12] they can get services

[3:52:14] so

[3:52:18] yes lots of potentially very

[3:52:18] challenging outcomes

[3:52:20] for this population

[3:52:27] on the bottom of page five as I

[3:52:28] said, I walked through the

[3:52:29] statutory authorities. I really

[3:52:31] only want to highlight the

[3:52:33] second bullet because I think

[3:52:34] this one is the most

[3:52:34] interesting, the most relevant

[3:52:40] so back in 1997 the general

[3:52:43] assembly had a similar kind of

[3:52:45] challenge it the federal

[3:52:49] government changed the rules

[3:52:52] around this lawfully residing

[3:52:55] population of noncitizens and

[3:52:57] said for some of these

[3:52:58] noncitizens that

[3:53:04] they could not gain access to

[3:53:06] Medicaid until they had lived in

[3:53:08] the US for five years it's

[3:53:08] called the five year bar

[3:53:11] the department

[3:53:14] cited the statute and said this

[3:53:16] is an example of us

[3:53:17] grandfathering these services

[3:53:19] for this type of population

[3:53:24] and the statutes specifically

[3:53:24] allowed for a general fund

[3:53:29] however that statute was limited

[3:53:30] and only applied to people who

[3:53:32] were receiving services on

[3:53:35] July11997. so it doesn't apply

[3:53:36] to this population

[3:53:40] we don't know if any of them

[3:53:41] were receiving services on

[3:53:42] July11997 or not

[3:53:47] but it is also and I think a

[3:53:48] better example

[3:53:48] of

[3:53:51] the point that I'm trying to

[3:53:54] make which is when the general

[3:53:57] assembly tries to approve

[3:53:59] services for a population like

[3:54:02] this the way that it does it is

[3:54:03] through an affirmative statute

[3:54:05] rather than through the budget

[3:54:06] process.

[3:54:09] and I think that if you were to

[3:54:11] say they can just do this

[3:54:13] through the budget process they

[3:54:14] don't need an authorizing bill

[3:54:15] that that could have some

[3:54:20] problematic ramifications

[3:54:22] down the road and it is

[3:54:24] particularly important because

[3:54:27] this department has unlimited

[3:54:28] over expenditure authority for

[3:54:29] medicaid.

[3:54:32] so if the department can just

[3:54:34] create a new program for a

[3:54:34] that's general fund

[3:54:38] and use some of the money that

[3:54:39] is appropriated to the

[3:54:42] department to just create this

[3:54:42] general fund only program

[3:54:45] then the rest of the budget they

[3:54:47] can just say well we

[3:54:48] overexpended it was Medicaid

[3:54:51] that caused us to overexpend.

[3:54:53] never mind that we created this

[3:54:55] new program with some of the

[3:54:56] general fund it was Medicaid

[3:54:56] that caused it

[3:54:58] that to me would be

[3:55:02] circumventing the general

[3:55:04] assembly's authority over the

[3:55:06] budget and so that's why I think

[3:55:09] this standard of we need to have

[3:55:11] something in statute that says

[3:55:13] you can do this is so important

[3:55:15] and that it's not an

[3:55:16] appropriate in my mind

[3:55:19] process for the general

[3:55:23] assembly to approve funding for

[3:55:24] this through

[3:55:26] the the budget process alone

[3:55:31] there's a second concern that I

[3:55:33] have with the statutory

[3:55:34] authority for this and that is

[3:55:34] that

[3:55:39] what's the budget can maybe can

[3:55:41] do during the interim is a

[3:55:43] proven over expenditure for

[3:55:44] program that is already existing

[3:55:47] when there's

[3:55:50] unforeseen circumstances

[3:55:53] that have arisen since the

[3:55:54] legislature was in session.

[3:55:58] this to my mind does not meet

[3:55:58] that standard.

[3:56:03] first of all we've known since

[3:56:05] Hr one passed that this

[3:56:07] population was going to lose

[3:56:08] Medicaid coverage

[3:56:11] it was part of the department's

[3:56:13] forecast last year it was part

[3:56:16] of the assumptions in the budget

[3:56:17] that the budget committee put

[3:56:18] together

[3:56:21] it

[3:56:25] it's hard for me to say that

[3:56:26] this was an unforeseen decision

[3:56:30] and then in addition to that

[3:56:34] there has to be an appropriation

[3:56:36] for this purpose that the

[3:56:38] general assembly can allow to or

[3:56:38] the JBc could allow to

[3:56:39] overexpend

[3:56:43] the appropriation that we have

[3:56:45] is specifically for Medicaid

[3:56:47] eligible individuals. This

[3:56:48] population is not medicaid

[3:56:51] eligible and so there isn't

[3:56:52] really an appropriation that you

[3:56:53] can say yes you can overexpend

[3:56:54] that

[3:56:57] and this fits under the

[3:56:59] rubric of what that

[3:57:00] appropriation is for

[3:57:04] on page six is a quote from the

[3:57:06] department where they basically

[3:57:09] admit that there is no new

[3:57:10] information behind this request

[3:57:14] they say no new information

[3:57:14] became available

[3:57:17] however it became clear during

[3:57:19] discussions that the medicaid

[3:57:20] mission that members of the

[3:57:21] joint budget committeetee were

[3:57:23] concerned that we have available

[3:57:24] options for this population

[3:57:27] the only option for not losing

[3:57:28] coverage is to backfill with

[3:57:30] generalundd. therefore we are

[3:57:31] presenting the supplemental to

[3:57:33] provide the JBC an opportunity

[3:57:35] to act to continue coverage for

[3:57:37] a discrete highly vulnerable

[3:57:38] population at their discretion

[3:57:42] this is a lastish effort to help

[3:57:42] these individuals

[3:57:47] unfortunately the 1331

[3:57:49] authorization that has been

[3:57:51] delegated to the budget

[3:57:55] committee is not it is intended

[3:57:57] for unforeseen events it is not

[3:57:59] for last efforts on behalf of

[3:58:01] vulnerable people in my mind

[3:58:02] this is

[3:58:05] the department taking a second

[3:58:06] bite at the apple

[3:58:09] rather than something that's in

[3:58:10] response to any kind of new

[3:58:10] information

[3:58:15] that's really the basis for the

[3:58:16] recommendation

[3:58:17] it

[3:58:19] on the

[3:58:23] page five of the the second

[3:58:25] paragraph there. I kind of

[3:58:26] walked through some of the

[3:58:30] pros and cons of the policy if

[3:58:33] you were to set aside the legal

[3:58:35] concerns but ultimately I was

[3:58:36] not able to set aside the legal

[3:58:37] concerns

[3:58:40] so I didn't even really try to

[3:58:43] sort through those pros and cons

[3:58:47] I understand it's a difficult

[3:58:48] decision

[3:58:50] but I just don't think that it

[3:58:51] fits within

[3:58:55] what hickpuff is allowed to do

[3:58:57] or what the JBc is allowed to do

[3:58:58] with an interim supplemental.

[3:59:07] Thank you madam chairir

[3:59:11] I find myself a bit

[3:59:15] resenting this statement that

[3:59:16] they put in that

[3:59:19] Mr Kurtz you've had to put in

[3:59:21] here it became clear during

[3:59:22] discussions

[3:59:27] at the medicaid commission that

[3:59:28] members of the JBc were

[3:59:30] concerned that we have available

[3:59:31] options for this population

[3:59:34] I'm one of those people that has

[3:59:36] expressed that concern

[3:59:42] for the forICA to now say

[3:59:45] that that's a rationale for

[3:59:51] requestst it's not remotely fair

[3:59:54] I will still beer very concerned

[3:59:54] about

[3:59:59] these 275 but that should not be

[4:00:00] the rationale

[4:00:00] because

[4:00:01] i and

[4:00:05] I don't remember who else

[4:00:08] expressed our concern is a

[4:00:09] reason that they're bringing

[4:00:11] this to us they should have

[4:00:12] brought it to us

[4:00:15] during the budgeting process

[4:00:17] because they knew it was going

[4:00:19] to be a problem along with

[4:00:20] the7,000

[4:00:23] legal immigrants that were

[4:00:24] gonna lose Medicaid. I I just

[4:00:31] it puts the blame on us for

[4:00:34] being human beings and being

[4:00:34] concerned

[4:00:36] that's not remotely fair

[4:00:41] respectfully I think they were

[4:00:42] doing what

[4:00:46] what they thought the committee

[4:00:46] a committee member was asking

[4:00:48] of them my

[4:00:51] but this is

[4:00:55] the I mean to Mr. Kurtz's point

[4:00:59] this is the point of HR1. I mean

[4:01:01] this is what it was supposed to

[4:01:03] happen and we we did know that

[4:01:04] and

[4:01:06] it's not unforeseen

[4:01:08] it was very foreseen

[4:01:13] that people have been saying for

[4:01:14] a very long time that people's

[4:01:16] lives are going to be

[4:01:19] irreparably harmed and probably

[4:01:22] people will die from HR one

[4:01:22] and

[4:01:26] so this

[4:01:30] it's a really sticky situation

[4:01:31] that we are put in because

[4:01:36] Now we are faced with it having

[4:01:37] to make a choice about something

[4:01:42] but I

[4:01:45] I do not take lightly the the

[4:01:46] legal

[4:01:49] rationale that has been laid out

[4:01:50] here for what our authority is.

[4:01:53] by sherbridges thank you

[4:01:56] madamir. I I also would just

[4:01:57] like to know sort of what's the

[4:01:58] implication if we say yes to

[4:01:59] these folks

[4:02:00] with the

[4:02:03] three quarters of folks that

[4:02:05] are going to be examined that

[4:02:07] will turn out not to have

[4:02:08] coverage if we say we're going

[4:02:11] to cover these folks we also

[4:02:13] essentially committing ourselves

[4:02:14] to covering all the rest of the

[4:02:16] folks that get unenrolled

[4:02:17] down the line in other words

[4:02:19] it's a similar population we've

[4:02:21] identified these 200 some people

[4:02:25] early but they roughly have

[4:02:27] the same look the same as the

[4:02:28] people that are going to lose

[4:02:28] coverage

[4:02:31] that are currently getting SsI

[4:02:33] ur t z

[4:02:39] I think that the department

[4:02:41] would argue that the thing that

[4:02:43] makes this population unique is

[4:02:45] their utilization of long term

[4:02:47] services and supports and that

[4:02:48] makes them more vulnerable

[4:02:52] to a loss of coverage than

[4:02:56] able bodied that just has

[4:02:56] health insurance

[4:03:03] thank you madam Sher if you're

[4:03:04] getting SsI

[4:03:05] presumably you you're not

[4:03:10] super able bodied so my

[4:03:11] assumption is that like that's

[4:03:14] why you get SsI so like my

[4:03:16] assumption is that the

[4:03:16] population that will lose

[4:03:18] coverage through the examination

[4:03:19] that will occur between now and

[4:03:22] March will look very similar to

[4:03:24] this population in other words

[4:03:26] if we say yes now it would be

[4:03:28] hypocritical at best to say no

[4:03:28] later

[4:03:33] and maybe we say yes to this

[4:03:35] population throughmarch and then

[4:03:37] we decide when we have the rest

[4:03:38] of the legislature here whether

[4:03:39] or not we want to say yes to all

[4:03:41] the rest of those folks as well

[4:03:43] I don't know in either way I

[4:03:46] just want to know are these I

[4:03:47] think that the case is probably

[4:03:48] pretty strong that these these 2

[4:03:51] 75 individuals

[4:03:55] look very similar to the 2/3 of

[4:03:57] folk the three quarter of folks

[4:03:58] who will lose coverage through

[4:03:59] the examination that we just

[4:04:00] approved.

[4:04:00] Mr Kurtz

[4:04:04] I think there's a a difference

[4:04:04] in degree that

[4:04:10] yes one of the criteria for SsI

[4:04:12] is disabilitynother criteria is

[4:04:17] age so it's not only people with

[4:04:18] disabilities that we're talking

[4:04:21] about it's also people who do

[4:04:22] not have a disability but

[4:04:24] they're over 65 but

[4:04:27] for those that do have a

[4:04:29] disability there are degrees of

[4:04:31] need and people

[4:04:35] there are people who have

[4:04:36] disabilities who are not using

[4:04:38] long term services and supports

[4:04:40] and there are people who are

[4:04:41] using them and this is the

[4:04:42] population that is using them.

[4:04:43] rapra

[4:04:48] thank you madam chairir.

[4:04:53] this is a terrible situation

[4:04:56] that we are put in and I very

[4:04:58] much would like to be able to

[4:04:59] provide the care for these folks

[4:05:03] but I find your legal arguments

[4:05:05] very convincing and I don't see

[4:05:06] how we can

[4:05:08] do this through the supplemental

[4:05:08] process

[4:05:13] you know I would love to be

[4:05:14] proven wrong but it seems like

[4:05:15] that's that's sort of where

[4:05:16] we're at right now

[4:05:19] and I would be happy to have

[4:05:20] a conversation with the

[4:05:21] department or others about how

[4:05:22] we

[4:05:24] take care of these folks in the

[4:05:24] future but it's

[4:05:27] doesn't seem like this is the

[4:05:29] this is the right venue for that

[4:05:30] unfortunately legally.

[4:05:42] Well

[4:05:45] any other questions for Mister

[4:05:59] Would you like someone else to

[4:06:00] make a motion?

[4:06:00] No it's fine

[4:06:04] I moved staff rec for part two

[4:06:04] of

[4:06:07] interim supplemental requests

[4:06:08] qualified noncitizens.

[4:06:11] are there any objections to

[4:06:12] staff recommend

[4:06:18] that passes on a vote of5 to1

[4:06:19] with Bridges objecting.

[4:06:28] I don't like it either but

[4:06:51] right Miss Yule microgrids

[4:06:55] thank you madam Chair Andrea

[4:06:56] Eule, JBc staff. I'm here with

[4:06:56] one

[4:06:59] request for the department of

[4:07:00] Local affairs

[4:07:02] so essentially what they're

[4:07:05] asking for is $1.2 million

[4:07:09] for the microgrids for community

[4:07:11] resilience grant program that

[4:07:13] they accidentally let revert at

[4:07:17] the close of fiscal year 2526

[4:07:18] what they should have done was

[4:07:19] last session asked for an

[4:07:21] extension of spending authority

[4:07:23] from the bill that created the

[4:07:26] program which washB22 1013.

[4:07:29] but they failed to do that there

[4:07:32] was a bill last session, that

[4:07:35] repealed the repeal date for the

[4:07:36] program. House Bill261051

[4:07:39] and as that bill was going

[4:07:40] through the legislature the way

[4:07:42] it was explained to fiscal notes

[4:07:43] and to me was that they needed

[4:07:45] to repeal the repeal date so

[4:07:47] that they could continue

[4:07:49] administering federal grants

[4:07:50] that had been received and so

[4:07:53] the fiscal note showed that

[4:07:54] ongoing costs were all related

[4:07:55] to federal grants

[4:07:57] so it wasn't until August

[4:07:59] that the department realized

[4:08:01] that the spending authority for

[4:08:02] their state funded grants had

[4:08:03] run out

[4:08:05] there's about one

[4:08:10] $1.1 million that they had

[4:08:11] awarded for five state funded

[4:08:13] grants that they can no

[4:08:14] longer

[4:08:17] pay for absent any action from

[4:08:19] the JBc because he has spent the

[4:08:20] spending authority

[4:08:22] expired of the total request

[4:08:22] of

[4:08:28] $1,219,700 that amount

[4:08:32] exactly matches what reverted so

[4:08:33] it is fair I think to think of

[4:08:36] it as a net zero request.

[4:08:37] that amount does include

[4:08:39] $108,000 for administrative

[4:08:41] costs those administrative costs

[4:08:43] were set aside out of the

[4:08:45] initial appropriation from the

[4:08:47] original bill to pay for admin

[4:08:50] the program also received

[4:08:52] administrative costs for three

[4:08:52] years in the long bill and the

[4:08:53] department

[4:08:56] did underspend those

[4:08:58] appropriations by $160,000 over

[4:09:00] the course of those three years.

[4:09:02] so they have spent less on

[4:09:03] administrative costs than they

[4:09:08] received appropriations for

[4:09:08] from Senator Kirkmeyer

[4:09:10] thank you thank you madam chair.

[4:09:11] So was the 1.2 million

[4:09:16] considered part of our ba

[4:09:16] balancing the budget budget

[4:09:17] balancing

[4:09:21] M Y thank you madam Chair

[4:09:23] Senator Kirkmeyer no because

[4:09:24] I was

[4:09:27] like under the impression and I

[4:09:28] think as was everyone else that

[4:09:29] the money would be fully spent

[4:09:32] so we were never planning on

[4:09:33] getting any reversions from this

[4:09:34] program when we bounce the

[4:09:34] budget

[4:09:39] Anything else in particular we

[4:09:41] should know? no I do recommend

[4:09:42] the request the the grants that

[4:09:44] would be negatively impacted or

[4:09:46] listed on the bottom of page two

[4:09:47] there's they also used part of

[4:09:49] this money as a federal match so

[4:09:50] there are

[4:09:53] there's let's see I think

[4:09:55] like $17 million worth of

[4:09:56] federal grants that could also

[4:09:58] be negatively impacted if we

[4:09:58] don't

[4:10:01] pay for the state funded grants

[4:10:03] that were used as a match so I

[4:10:05] do recommend the request the

[4:10:06] department

[4:10:08] the spending authority will have

[4:10:10] to be granted in the fieldd

[4:10:12] services programme cost line but

[4:10:13] because the department does

[4:10:15] still have statutory authority

[4:10:17] to operate the grant program

[4:10:18] legal services in the state

[4:10:18] controller said that was ok to

[4:10:19] do.

[4:10:20] vice chair bridges

[4:10:24] madam chair I moved staff rec on

[4:10:25] microgrids for community

[4:10:27] resilience grant programme over

[4:10:28] expenditure and spending

[4:10:28] authority extension.

[4:10:29] are there any objections

[4:10:32] seeing none that passes on a

[4:10:32] vote of 6 to0.

[4:10:44] right you're not Mister Catlett

[4:10:44] Mr. Rickman.

[4:10:48] thank you madam Chair Samickman

[4:10:49] presenting on behalf of Mr

[4:10:50] Calett's document for the

[4:10:51] department of revenue

[4:10:54] supplemental request they're

[4:10:56] requesting over expenditure

[4:10:59] authority of 10 about 133 1000

[4:11:02] from the commercial commercial

[4:11:03] vehicle enterprise tax fund

[4:11:06] because distributions from for

[4:11:09] this sales tax refund exceeded

[4:11:11] appropriations in 2526 and

[4:11:14] somalli's recommending approval

[4:11:14] of the request. I can

[4:11:18] talk in more detail as well but

[4:11:18] that's an overview.

[4:11:26] what do you think of Mister

[4:11:27] Calett's recommendation?

[4:11:31] thank you madamir. I think Mr

[4:11:32] Catlett did an immaculate job

[4:11:33] with the whoa well in

[4:11:37] in that case allow me to move

[4:11:38] staff rec for interim

[4:11:39] supplemental requests funding

[4:11:41] for commercial vehicle

[4:11:43] enterprise sales tax refund not

[4:11:44] drafted by Mr Rickman but

[4:11:45] instead drafted by Mister

[4:11:45] Calertt.

[4:11:46] presented by Mister Ri

[4:11:47] are there any objections

[4:11:52] seeing none that passes on a

[4:11:52] vote of 6 to0.

[4:11:58] Directorharper, anything else

[4:11:59] by way of interim supplementals

[4:12:03] or for you? No I'm sure I think

[4:12:04] we're done today and I think we

[4:12:07] got in under the wire for folks

[4:12:09] with the hard stop hopefully OK

[4:12:10] I would this is a this is a

[4:12:10] rough day to drive togJ

[4:12:12] the440 for tax

[4:12:16] for gas is real expensive

[4:12:17] hopefully it's not a diesel car

[4:12:19] rebhaart

[4:12:23] charging infrastructure is

[4:12:24] inadequate thank you madam Chair

[4:12:27] I just want to bring it to

[4:12:29] everybody's attention that we

[4:12:30] all got

[4:12:32] notice from

[4:12:37] the department from HICA from

[4:12:38] the director

[4:12:41] having to do with anymt again

[4:12:43] that

[4:12:48] recommendation was either not

[4:12:50] to do something or to do some

[4:12:50] budget neutral

[4:12:54] I have to put it on the record

[4:12:54] that

[4:12:58] the input that we're getting in

[4:12:58] writing

[4:13:02] from providers across the state

[4:13:08] does not at all concur with what

[4:13:10] the department is recommending

[4:13:13] and I don't want to take

[4:13:15] people's time I know

[4:13:17] Representative Stewart and I'd

[4:13:18] appreciate if she said something

[4:13:18] as well

[4:13:24] will review that detailed

[4:13:26] information with the department

[4:13:28] on my next visit when I come

[4:13:31] back here that first week of

[4:13:34] October because there we are

[4:13:36] losing services across the state

[4:13:39] the department doesn't seem to

[4:13:40] realize that

[4:13:43] and maybe it's because

[4:13:45] decisions were made in august

[4:13:48] and here in early September as

[4:13:50] compared to the data they were

[4:13:51] pulling from was through the end

[4:13:52] of July

[4:13:55] but I'm really concerned and

[4:13:57] I'm as concerned as I was before

[4:13:59] that folks are gonna go

[4:14:01] without service and or they're

[4:14:05] going to end up going to the

[4:14:07] hospital or to their clinics by

[4:14:11] way of ambulances as compared to

[4:14:13] NEmt and that's very

[4:14:15] worrisome to me so but I

[4:14:19] if you if it's ok with you

[4:14:21] folks I know umpresentative

[4:14:22] Stewart is not a part of the

[4:14:27] JBc but she is in fact in an

[4:14:28] area where this is impacting her

[4:14:32] umpresentative Brown and I had

[4:14:33] the opportunity to

[4:14:37] meet a couple of providers and

[4:14:39] repstewart's district and talk

[4:14:41] through some of the

[4:14:43] challenges that they were seeing

[4:14:44] that were perhaps not reflective

[4:14:46] of what is happening in other

[4:14:49] parts of the state so I

[4:14:51] think we all yes received the

[4:14:53] letter from Hickpuff for a

[4:14:54] couple different

[4:14:59] proposals which I briefly

[4:15:01] reviewed and certainly think it

[4:15:02] behooves us to take some more

[4:15:03] time with the department because

[4:15:04] I'm not sure that that's

[4:15:04] well

[4:15:07] there's a lot more to discuss

[4:15:11] and unpack I think but uh,

[4:15:13] but appreciate Repstewart

[4:15:15] your focus on the issue if there

[4:15:16] was something else you wanted

[4:15:17] the committee to know.

[4:15:21] thank you madam Chair. I I do

[4:15:22] appreciate this time. I know

[4:15:25] it's a little unconventional

[4:15:26] really I just

[4:15:29] this was kind of my my final

[4:15:32] plug just to to let you know the

[4:15:33] impact that it has had on my

[4:15:36] district which has been quite

[4:15:37] disproportionate to the rest of

[4:15:39] the state. I know that hickpuff

[4:15:41] had provided some data

[4:15:43] that they got out of Mesa County

[4:15:45] and I just wanted to make folks

[4:15:47] aware that my district

[4:15:49] district is 170 miles away from

[4:15:51] Mesa County and three mountain

[4:15:53] passes so I including Red

[4:15:55] Mountain if anybody's ever

[4:15:56] enjoyed that drive. and

[4:15:59] and so what we're seeing has

[4:16:01] been quite the unique challenge

[4:16:03] and it is impacting people quite

[4:16:05] a lot and it's something I've

[4:16:06] heard about

[4:16:07] you know

[4:16:11] a lot more so than other issues

[4:16:13] during the interim of how this

[4:16:16] is impacting my district so I

[4:16:19] appreciate your consideration

[4:16:20] as we move forward and please

[4:16:23] let me know how I can best be of

[4:16:24] help to problem solve this.

[4:16:26] thank you

[4:16:29] all right so more to come on the

[4:16:30] NEmt front.

[4:16:31] Directorharper

[4:16:33] No.

[4:16:33] yes

[4:16:40] OK. well, I very much

[4:16:41] appreciate,

[4:16:45] that this perhaps is the last

[4:16:47] iteration of all of us meeting

[4:16:48] together like this and

[4:16:52] it truly has been an incredible

[4:16:54] privilege to work with all of

[4:16:54] you

[4:16:56] on

[4:17:01] I don't know some really trying

[4:17:03] times and trying years

[4:17:07] for those of us who have served

[4:17:10] together for like four years at

[4:17:12] this point sitting next to each

[4:17:13] other each day every day

[4:17:15] we

[4:17:20] we've gone through a lot and

[4:17:21] we've seen different budgets

[4:17:24] and we've had to overcome a lot

[4:17:25] of challenges together

[4:17:29] but overcome we have and I will

[4:17:31] be forever grateful for

[4:17:32] having had the opportunity to

[4:17:33] work together with all of you

[4:17:38] by sherbridges thank you madam

[4:17:40] Cha.est staff and best group of

[4:17:40] people I've ever worked with.

[4:17:41] thank you.

[4:17:46] all right well joint budget

[4:17:47] committee will stand in recess

[4:17:48] for a while

Joint Budget Committee [Sep 18, 2026]

Agenda

Transcript