[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