Tired of waiting for Congress to aid struggling businesses amid the COVID-19 pandemic and the contentious federal election, Colorado lawmakers will try to provide their own stimulus in a special session next week.
Gov. Jared Polis' $1.3 billion relief package includes is $220 million of funding to help small businesses and individuals impacted by the coronavirus shutdown. Polis indicated on Friday the amount could go as high as $300 million.
“We are living in a moment of unprecedented urgency,” Polis said in a written statement announcing the Nov. 30 special session. “We will act to support our small businesses who face challenging months ahead, provide relief to hardworking people, support child care and improve broadband access for students and educators.”
The special session is designed to address the growing spread of the COVID-19 virus, ahead of the regular session that begins Jan. 13.
Among the key elements are small business relief, housing and rental assistance, support for childcare providers, and expanding broadband access for students and teachers.
“With COVID-19 cases reaching daily new records and winter just around the corner, Coloradans can’t wait any longer for Congress to provide relief — they need us to act now to help small businesses, families and students get through the challenging months ahead,” said Speaker KC Becker, D-Boulder, who hands over the gavel to Rep. Alec Garnett, D-Denver, next year.
Enhanced federal benefits for people receiving unemployment stopped on Sept. 5. The state will help fill the gap by sending one-time payments of $375 to 435,000 individuals by December, after the governor signed an executive order authorizing the payments.
“After passing a robust COVID relief package this spring and working with the governor to provide $375 in one-time support to hundreds of thousands of Coloradans, we’re ready to get back to work to support small businesses and the Coloradans who have been hit hardest by this pandemic,” said Speaker-designate Garnett. “We need to act now to bridge the gap where Washington has failed, or our economy will falter.”
Polis, a Democrat in a state that voted heavily Democratic in the Nov. 3 election, will work with a General Assembly whose House and Senate are increasingly controlled by his party. Democrats gained a seat in the Senate and maintained a majority in the House.
Senate President Leroy Garcia, D-Pueblo, said the pandemic “has torn through our country with unmatched aggression and unrelenting persistence,” adding, “the loss of life is only one piece of the devastation.”
“People have lost their jobs, their life savings, their family businesses, and not least of all their hope,” Garcia said in a prepared statement. “These Coloradans cannot wait another moment, and neither should we. We need to act urgently to bring relief to the people of our state. So, we have decided to pull every lever, find every dime, and use every tool in our toolbox to make it happen.”
Polis’ FY 2021-22 budget request totals $35.4 billion, an increase of $3 billion or 9% from last year's. That includes a general fund request of $13.6 billion, an increase of $2.25 billion or 20%.
Included in the COVID-19 relief, the budget provides $105 million in winter support and tax relief for small businesses, such as restaurants impacted by capacity restrictions, $50 million for housing eviction prevention and direct benefits, and $50 million in support to early childhood providers across Colorado to help enable the workforce to return to work.
On Nov. 3, Colorado voters approved measures that will have some effect on budgeting.
Amendment B ends the Gallagher Amendment that provided more than $35 billion in property tax cuts to homeowners over the last 40 years.
Lawmakers, business leaders and fiscal reform advocates have tried for years to get voters to relax some of Colorado’s unique constitutional restraints on taxes and public spending, particularly the Taxpayer Bill of Rights that caps tax rates and requires an election for a government to exceed the cap.
Repeal of the Gallagher Amendment circumvents about $491 million in cuts to school districts and $204 million in cuts to county governments next year.
Voters will surrender an estimated 18% residential property tax cut that was expected to take effect in 2021. In the upcoming session, Colorado lawmakers must create a new formula for property tax levies.
Another measure that passed on Nov. 3, Proposition EE, raises taxes on nicotine and tobacco in January, with additional increases scheduled through July 2027. The law is designed to replace some of the funding for education, housing and rural schools lost in a $3 billion cut to the state budget earlier this year.
Proposition 116, another measure that passed Nov. 3, reduces the state income tax rate to 4.55% from 4.63%, providing minor savings of about of about $37 annually for the average taxpayer.
Voters more narrowly approved Proposition 117, which places limits on how much the state can raise fees. Affected fees include those from government enterprises such as water utilities, parks or toll roads that are funded primarily by user fees rather than taxes. Proponents said lawmakers have increasingly turned to fees to fund government services since the passage of the Taxpayer Bill of Rights in 1992. Before this measure passed, fees were not restricted by TABOR-like voter-consent requirements.
TABOR allows the state to retain and spend an amount based on the prior fiscal year's actual revenue or limit, whichever was lower, adjusted for Colorado inflation and population growth and any "voter-approved revenue changes."
A September forecast from the State Economist's Office said the impacts of the COVID-19 pandemic will weigh heavily on FY 2020-21 general fund revenue collections, which are projected to decline 11.6% from year-ago levels.
“Significant budget balancing actions made during the 2020 legislative session are expected to more than offset revenue declines,” the report said. “However, the revenue outlook remains uncertain.”
Revenue subject to TABOR is expected to fall below the Referendum C cap by $2.17 billion.
“While economic and revenue collections have exceeded expectations in recent months, the near- and longer-term impacts of the pandemic on Colorado’s economy and state revenue remain uncertain,” the report said.
“Longer or repeated periods of reduced economic activity to control the spread of COVID-19 will cause more severe and longer-lasting revenue impacts. Conversely, near-term development and distribution of a COVID-19 therapy, a stronger than expected resumption of economic activity, and additional federal fiscal and/or monetary policy support pose near-term upside risks to the forecast.”
