In the first General Assembly under Democratic Gov. Jared Polis, Colorado lawmakers made little progress in reducing a $9 billion backlog in transportation projects, but the new governor pronounced the 2019 session a success on several fronts.
“Due to the hard work, dedication, and collaborative effort by lawmakers, we are delivering real results — most of them bipartisan — for our state and enacting the agenda that Coloradans overwhelmingly voted for six months ago,” Polis said at the end of the 72ndGeneral Assembly Friday. “This fall, Colorado families will have access to free, full-day kindergarten, we are lowering the cost of health care, and making significant progress on many other issues that will improve our Colorado way of life.”
Polis signed a $31 billion budget for the fiscal year beginning July 1 that includes $11.8 billion in state funding.
With Democrats in control of both houses of the legislature for the first time in several years, lawmakers took a cautious approach with a view toward an overdue recession.
The legislature approved $256 million in new spending toward construction and building projects on state property. The biggest project is another $31.3 million for the construction of the Center of Personalized Medicine and Behavioral Health at the University of Colorado Anschutz Medical Campus in Aurora. Another $22.5 million is earmarked for a building on the Colorado State University campus in Fort Collins.
Lawmakers avoided a tuition increase for higher education by adding $121 million to the college and university budgets.
After several thwarted efforts to authorize bonds for transportation projects, lawmakers stuck to a modest pay-as-you-go plan.
More than $300 million will be added to transportation funding in the next fiscal year, with no provisions beyond that. Declining gas tax revenues cause the state to keep losing ground as the Colorado Department of Transportation estimates the project needs at $9 billion.
But Polis called the $300 million a “commitment of Democrats and Republicans to do everything we can with the resources we have to reduce traffic and promote safety.”
Lawmakers “did everything they could with what they have, which I think was the message from voters,” Polis added. “They didn’t bond with new revenue, they didn’t want a sales tax, They said do more, and this legislature has really stepped up, and we’re very supportive of that.”
The state’s gas tax of 22 cents per gallon has not changed since 1992 and is not indexed to pump prices. Colorado’s gas tax falls below 34 other states, including the neighboring states of Nebraska, Utah and Wyoming, which have raised their gas taxes over the last few years. Through inflation, a 1992 dollar is worth about 40 cents today.
Colorado, which issues no general obligation bonds, carries issuer credit ratings of Aa1 from Moody’s Investors Service, and AA from S&P Global Ratings. Outlooks are stable.
“The Aa1 rating reflects the state's strong economic performance, higher-than-average income levels, and relatively low debt levels,” Moody’s noted in an April update. “Balanced against these strengths are narrow, but improved reserves; above average pension liabilities; and constitutional restrictions and voter initiatives which constrain budgeting flexibility.”
Pension reforms enacted in 2018 “will improve funding of the state's pension plans and are a credit positive incorporated in the ratings,” analysts said.
Among the bills Polis has signed into law is Senate Bill 19-181 outlining certain state restrictions on the oil and gas industry, including local government regulation of oil and gas locations in their jurisdictions.
S&P Global Ratings issued a report after the April 16 bill signing, promising to monitor the effect of the legislation on local tax bases.
“As of now, the fiscal impact to local governments statewide is undeterminable, as we cannot anticipate which cities and counties will adopt local governing rules as a result of SB-181, and whether those local governments will have significant oil and gas activity,” S&P analysts said.
“We don't expect local governments with high levels of oil and gas production will heavily regulate production,” they added. “Assuming the city or county receives a sizable percentage of revenue from a combination of severance taxes or oil and gas ad valorem taxes, or both, the impact of regulation would likely be detrimental to the entity's budget.
