State Budget Director Says Enterprise Effort Is Stalled

What has it been like working for both Republican and Democratic governors?
“It’s been a really unique honor.  As people, I feel like they (Governor Owens and Governor Hickenlooper) have some things in common. But in other ways they handle problems, or decision making, or political strategy, differently. I think the different coalitions that represent both the parties affect the leader who is in office. It’s a combination of the coalitions they are coming from, constituents they are most affiliated with, in combination with their different styles. On the big important issues, I think the two governors I served have been really committed, hardworking, thoughtful people. They both put their soul into their job.”

How would you compare today’s budget issues with those of your former terms of service?
“We have challenging budgeting right now.  This is far preferable to the 2010 to the 2011 period, or the 2001 to the 2002 period, where we had 15 per cent negative drops in the General Fund.  I think right now is a more run of the mill challenge where you see the tradeoff being: should we do rebates or should we do transportation or education spending?  That’s where the policy and political debate is.  In the scheme of things, we have certainly been through significantly worse periods. But at the same time, we’re not keeping up with the growth of the state. We’re giving money back out before we would have under the TABOR law because of the creation of the Hospital Fee program.  We’re not able to catch up right now.  But I would say we’re in way better shape than in the last two recession periods.”

What do you find most challenging with the state budget at this time?
“The greatest challenge is we have constitutional rules that, in many cases, don’t work well together.  We have limits on revenue and we have mandates to increase our spending.  In some years, they are easy to manage together; other years they are very difficult to manage together. Over the long run, the rules are going to really constrict on themselves.  We have a temporary issue with rebates now being generated in the General Fund by a funding stream that’s not in the General Fund called the Hospital Provider Fee.  We have rebates being caused by something outside of the General Fund so we can’t keep all the money that we have right now.”

What are the issues around the state’s inability to keep that money?
“The bigger picture issues are the fundamental conflicts in the constitution. While it’s certainly manageable, the structure we have now will prevent us from keeping up with the needs in education or transportation because of the formulas that are in either our Constitution or our statutes. We are proposing lowering (slightly) the support for Higher Education and K through 12 Education. Right now, we’re not sure we can keep up with enrollment and inflation.  We have proposed paying some providers less in Medicaid, or in Corrections, or other provider services, to help balance the budget. Our capital construction budget is way down. The Hickenlooper administration has proposed recategorizing the Hospital Provider Fee into an enterprise fund. We believe that the freed up resources should pay for transportation and education.”

What is the status of the Enterprise Fund proposal?
“We are working to get the legal work we did last year documented around the legality of that proposal.  I feel like for the moment, the initiative is stalled.  I think people are still working on the legalities.  What I can’t divine is, if there really is a door open if the constitutionality question gets a little clearer. Obviously these are volatile topics: TABOR, Medicaid. It’s an even number year, which means election looms large so I feel like for the moment the progress on creating an enterprise this session is stalled.  I think there’s some optimism with respect to opening the conversation.  I think the constitutionality issue will become a little clearer. I don’t know if there are votes to get it to the Governor’s desk right now.”

What is the future of state funding for behavioral health?
“I think everything that isn’t protected in the constitution or is a federal mandate is at risk with the structure we have and with the performance of the economy. We have most recently prioritized increases to mental health funding over the last two cycles.  It’s gotten significantly more attention than maybe four or five years ago. It’s important to remember that Medicaid and K thru 12 Education are 65 per cent or so of the entire General Fund program.  Every other program, regardless of merit, is going to be subject to the vagaries of trying to meet the requirements of those two items.”