Colorado’s GOP AG clears key Democratic budget plan as legal

By saying a plan to reclassify a billion-dollar hospital program is constitutional, Colorado’s Republican attorney general today bolstered a key strategy by the Democratic governor to free up money in the state’s budget.

In a formal opinion issued by her office in response to a question from Gov. John Hickenlooper about whether his plan is legal, Attorney General Cynthia Coffman wrote in short: Yes.

The news might sound arcane, but it’s a big win for Hickenlooper and Democrats in the legislature, and a legal blow to Republican Senate president Bill Cadman and other conservatives.

At issue is whether it would be constitutional to reclassify Colorado’s hospital provider fee into a government-owned business called an enterprise so money generated from it will not push general fund revenue over mandated limits under a 1992 Constitutional amendment called the Taxpayer’s Bill of Rights or TABOR. The hospital provider fee is a state program requiring hospitals to pay money each year depending on how many patients stayed in hospital beds overnight and how much outpatient services they provided. That money is then used, among other things, to help Coloradans who can’t afford insurance plans get care, and to help the state pay for people who are on Medicaid, which is a government healthcare program for low-income Coloradans and their families.

But money generated from that fee— more than $700 million last year alone— counts as money that pushes Colorado’s state coffers up and over the revenue limits set by TABOR. If the state brings in too much money and hits the revenue caps, then the excess money must be refunded back to taxpayers. Taking money generated from the hospital provider fee out of that equation means there would be more revenue left in the budget to pay for programs like road funding or education.

Related: What you need to know about Colorado’s biggest political battle

The debate to reclassify this program has become the biggest political fight at the Capitol since the legislature gaveled into session in January. The battle pits Hickenlooper and Democrats against Cadman and TABOR-supporting conservatives like the state chapter of Americans for Prosperity.

But in recent weeks, public clashes over the proposal have been on hold as questions linger about whether redesignating the program is constitutional. Hickenlooper’s administration says it is, and they had a verbal opinion from the attorney general about it. Cadman has used a nonbinding legal memo from lawyers who work for the legislature who say reclassifying the program isn’t constitutional. In the meantime, the general counsels for two former Democratic and Republican governors say the plan is doable.

Hickenlooper asked Attorney General Cynthia Coffman for an official opinion on the matter on Jan. 7. All eyes have been on her office since to see how she would respond. Without a legal determination from Coffman, any action and substantial debate on the hospital provider fee had remained on hold as the clock ticks on the 2016 legislative session, which ends in May.

Related: Colorado’s biggest political battle hangs in legal limbo

Today, a break in the anticipation.

In response to this question from Hickenlooper:

Under current case law interpreting the requirement that enterprises be “government-owned businesses,” may the General Assembly establish a TABORexempt enterprise to collect and administer the Hospital Provider Fee?

Coffman’s office released an opinion that reads, in part:

Yes. Considering both judicial interpretations of TABOR and the General Assembly’s prior decision to classify the HPF as a fee rather than a tax, organizing the HPF as an enterprise would not contravene the three considerations that determine an entity’s status as a government-owned business: an HPF enterprise would (1) lack the power to tax, (2) provide government services in exchange for involuntary fees levied on service recipients, and (3) be financially distinct from its parent agency.

The attorney general’s office released the opinion, which it has been working on for about two months, a day before Super Tuesday, when Colorado and nearly a dozen other states hold their early nomination elections for president.

“While some may attempt to politicize this legal conclusion, my opinion is based solely on the law and its application to the facts,” Coffman said. “The debate over whether to create a Hospital Provider Fee enterprise can now shift back to the General Assembly.”

Whether to reclassify the program isn’t a novel idea this year. Last year, the state’s Democratic House Speaker brought forward a bill, late in the session, and Republicans killed it.

The fight last year and this time around has oddly pitted Republicans against a near monolithic voice of the state’s business community that includes the Denver Chamber of Commerce, the Colorado Association of Commerce and Industry, Associated General Contractors, the state Wheat Growers Association and chambers from Aurora to Grand Junction, and others.

Last year, when the hospital provider fee issue was being debated late in the legislative session, 307 lobbyists had signed up to work in support of reclassifying it. Only one group was opposed: Americans for Prosperity, the prime political arm of the billionaire industrialist Koch brothers. This year in Colorado’s legislature, AFP has made its top priority defending TABOR and keeping revenue generated by the hospital provider fee inside the economic structure that can trigger TABOR refunds. The group has asked lawmakers to sign a pledge saying they won’t vote to reclassify the program.

One Republican who won’t sign the pledge, and has positioned himself as a key player in the debate, is Alamosa GOP Sen. Larry Crowder. He’d been speaking publicly about how the hospital program helps his constituents, and how lawmakers should look at reclassifying it into an enterprise.

Related: Hospital provider fee becoming a campaign issue

Crowder, who is up for re-election, has also publicly taken on AFP, calling the group out on Twitter as a puppet of out-of-state billionaires.

You hoonyocks at AFP want to pick a fight with me? Then get after it

— Larry Crowder (@SenatorCrowder) February 19, 2016

Related: GOP Sen. Larry Crowder vs. AFP on Twitter

Already, Colorado’s former Republican attorney general, John Suthers, has said he believes there’s a way to reclassify the hospital provider fee without betraying the state Constitution.

Included in Coffman’s opinion about the constitutionality of reclassifying the hospital provider fee, was this:

“In light of the presumption of constitutionality and this office’s duty to defend enacted legislation, this opinion concludes that an HPF enterprise would not contravene the three considerations in current law that determine an entity’s status as a ‘government-owned business.'”

Coffman said the term “government-owned business” has, for purposes of TABOR, “been broadly interpreted by the courts, and the General Assembly has repeatedly relied on the enterprise exception to enact fiscal policy at the state level without seeking voter approval.”

She said the purpose of her formal opinion is “not to comment upon the wisdom or desirability of the General Assembly’s past or prospective legislation or the courts’ decisions,” but to “apply independent judgment to a question of law, in light of current legal authority. Based on these considerations, this formal opinion concludes that organizing the HPF as a TABOR-exempt enterprise would not contravene current law.”

Democratic Senate Minority Leader Lucia Guzman responded by saying Coloradans have heard from two attorneys general “who have stated that administering the hospital provider fee as an enterprise fund is indeed constitutional,” and now is the time to “come together and take legislative action on our budgetary crisis to ensure we can provide great schools for our kids and safe roads and bridges across the state.”

Americans for Prosperity in Colorado tweeted that while the AG might have said the reclassification plan is legal, “That doesn’t make it advisable.”

This is a developing story. We will update it as more news comes in.

[Photo credit: Images Money via Creative Commons on Flickr]