Senate Bill 16 would have allowed municipal governments to reduce their contributions for their employees to the Colorado Public Employees’ Retirement Association by up to 2.5 percent, increasing employees’ contributions by the same amount. Two years ago, the legislature allowed the state to implement that provision for its own employees to help balance the strapped state budget.

Still pinched by tight tax revenue following a crippling recession, city governments across Colorado have been grappling for ways to balance their budgets, too, and have looked at curbing payroll costs, including contributions to the state public employees’ retirement program. Cities like Colorado Springs and Boulder have sought statutory permission to tinker with the retirement-funding mandate.

Colorado Springs Mayor Steve Bach addressed the Senate State Affairs Committee today in support of the bill.

“Without any flexibility, Colorado Springs will have few options of how we can address the growing financial burden PERA is placing on our budget,” Bach told the committee.

Kevin Bommer, the legislative advocacy manager for the Colorado Municipal League, in a prepared statement after the bill was defeated, said municipalities should be afforded the same latitude over their budgets that was granted the state, and he said without such flexibility, layoffs have taken place and will become more common in local governments.

“This decision could very well cost jobs for local government employees,” Bommer said.

The bill’s sponsor, Sen. Kent Lambert, R-Colorado Springs, said the issue has been looming ever larger for government at every level in the state.

“Government retirement funds are a huge problem—if not a crisis,” said Lambert. “This is a major part of government spending and has no equivalent in the private sector.”

However, majority Democrats who defeated the bill in committee said the measure would amount to a 2.5 percent cut in pay for employees at city hall.

Sen. Rollie Heath, D-Boulder, said the burden on employees just wasn’t acceptable.

“That’s a gift-horse to local governments,” Heath said. “It’s taking it out of the pockets of employees.”

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Senate Bill 15, nearly identical to last year’s unsuccessful proposal,  which failed in the Republican-led House, is again sponsored by Sens. Angela Giron, D-Pueblo and Michael Johnston, D-Denver.

The measure would create a tuition category for undocumented students that costs less than out-of-state tuition but is effectively higher than the rate for Colorado students who receive a stipend toward the in-state rate through the Colorado Opportunity Fund.

The committee’s chair, Sen. Bob Bacon, D-Fort Collins, said extending in-state tuition to undocumented students is a matter of recognizing reality.

“These people are Americans without the paperwork,” said Bacon.

Yet, Sen. Nancy Spence, R-Centennial, said the tuition proposal merely masks a larger issue.

“As long as it is not legal to hire a person who is not documented,  these kids will still be in the same predicament,” said Spence. They won’t be able to work, even if they are college grads.”

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The announcement, delivered by Republican House Speaker Frank McNulty, of Highlands Ranch, was accompanied by a package of proposals that would do away with what McNulty calls unnecessary and burdensome regulations on businesses and add more accountability for state agencies regulating businesses.

McNulty said he and his colleagues traveled the state talking to businesses, shaping the nine-point jobs agenda.

“These are the things that we are going to target from the beginning,” said McNulty.  “We asked the job creators what they needed, and they consistently told us that creating a more stable regulatory environment would create jobs.”

Democratic House Minority Leader Mark Ferrandino, of Denver, said the Republican agenda has elements worth considering, particularly with regulatory reform.

“I see places for bipartisan support and ways we can work together,” said Ferrandino. “No one wants regulation just for the sake of regulation. As long as consumer protections are in place and consumers aren’t harmed, there are ways we can streamline regulations.”

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In order to receive the preferences, which amount to a 5-percent competitive advantage in bidding, companies must demonstrate that at least 90 percent of those employed under the contract are Colorado residents or at least live in Colorado. The contractors employing those workers also must provide them health and retirement benefits under the legislation. If it is a construction project, an opportunity to participate in a U.S. Department of Labor-approved apprentice program must be included.

The pending Senate Bill 1, to be sponsored by Sen. Evie Hudak, D-Arvada, and touted at Wednesday’s news conference by Senate President Brandon Shaffer, D- Longmont, should resonate with Coloradans, says Hudak.

“When I knock on doors and speak with my constituents, they tell me they want us to work together to create jobs and improve the economy,” said Hudak in a prepared statement. ”HIRE Colorado will do just that, leveraging public funds to create jobs right here in our own state.”

Shaffer, in his remarks, said he knows Republican lawmakers want the same outcome—job creation—and that he is confident the two parties can come to agreement on the bill.

However, Rep. B.J. Nikkel, R-Loveland, said the bill may contain too many pitfalls.

“It’s easy to say this is a jobs bill, but the devil’s always in the details,” said Nikkel.

Republican House Speaker Frank McNulty, of Highlands Ranch, also said the legislation may prove to be a hard sell despite its honest intentions.

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In order to project payroll every year, the committee is given the results of an annual compensation survey comparing state jobs with their rough equivalents at other government entities as well as in the private sector. The report is designed to tease out prevailing wages—meaning average pay—for similar work.

By law, state government jobs may not exceed, or lag behind, comparable positions in the marketplace by more than 7.5 percent. While the state is currently within the allowable margin,  an additional $57.7 million would be needed to meet prevailing wages, and an additional $35.5 would be needed to meet prevailing benefits.

Rep. Mark_Ferrandino, D-Denver, supports the added expenditures despite current budget straits because of the large number of state employees who will be retiring soon and will need to be replaced.

“When we continue to fall behind prevailing market wages, it’s going to be hard to attract the talent to the state of Colorado,” said Ferrandino. “As we get toward higher and higher retirements, we need to make sure that we have compensation that’s competitive.  It’s something we need to keep on our radar.”

Yet, Sen. Kent Lambert, R-Colorado Springs said the salary survey  may be somewhat distorted.  Lambert pointed to the employers the survey uses as a basis for comparison—a dozen other states, local counties, and three private-sector companies: Newmont Mining Company, Northern Colorado Medical Center and the University of Denver–and said the survey is skewed.

“It seems these are high-end comparisons,” said Lambert. “We need to a take a look at that to see if the state is using an appropriate benchmark. Otherwise, I mean, why aren’t we pulling a company out of the phone book and asking what do you pay your employees?  It might be a more accurate description.”

Additionally, government jobs have stayed fairly constant in terms of total employment throughout the down economy, says Lambert, while private-sector jobs have dropped by about 100,000.

“We know that if they (state employees) leave, it’s going to be a lot worse on the outside, but we don’t account for that in our comparison with the whole private sector,”  said Lambert.

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In addition to the $9 million, questions also have arisen over the state- and federally funded office’s expenditures, such as a sharp rise in monthly rental costs that used to be in the hundreds of dollars and now are up to $13,000 per month.

Republican Rep. Cindy Acree, of Aurora, says it’s taken years of persistence, but she is hoping to finally get answers should the Legislative Audit Committee give the green light for an audit of the energy office’s finances. Acree said after repeated and unproductive requests for financial records from the energy office, she resorted to filing an open-records request a year ago and subsequently received reams of financial documents that took another year to wade through.

Acree says it’s not about targeting expenditures for energy policy but rather good stewardship of tax dollars, especially when the tax dollars are buried in what Acree said amounted to 1,500 pages of frustratingly complicated documents that lacked clarity.

“When we see red flags, we need to do something,” said Acree. “I’m standing up for our citizens who aren’t standing in the weeds.”

As the state faces another tight budget year, Acree says $9 million is a significant sum, especially in light of $10 million in property tax relief for senior-citizen homeowners that Democratic Gov. John Hickenlooper proposes should be suspended for another year.

“The governor wants to once again suspend the homestead tax credit, and this unaccounted-for money could cover that,” said Acree.

The documents that have sparked the interest of Acree and the governor show the office received almost $122 million during a period between January 2008 and November 2010, all under the previous administration of Gov. Bill Ritter. Current expenditures have not been called into question.

Hickenlooper is asking in his audit request for the auditor to identify ways to improve fiscal management and for more meaningful transparency, says GEO spokeswoman Denise Stepto. Transparency, says Stepto, should provide clear and usable data for anyone who wants to know how their tax dollars are being spent. Stepto said the need for an audit shows transparency principles may not always have been followed.

“If there’s an inability for people to get the information they want, and what’s there is inaccurate or too frustrating, it’s mind-numbing,” said Stepto. “We would love to have this information accessible to the public. When you have nothing to hide, there’s no reason to not have the information available.”

The requests will come under consideration at the next Legislative Audit Committee meeting in December. If the members approve the request, it will be forwarded to the state auditor, who will make a recommendation on whether the requests have merit to conduct a full audit.

Meanwhile, Acree and State Auditor Dianne Ray will meet with the news media and public Wednesday at 10:30 a.m. in the Legislative Services Building across from the Capitol to answer any questions about the pending audit requests.

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Pinnacol Assurance is both a business and a political subdivision of Colorado, by statute.  The company found itself at the center of state budget discussions in 2009, when a proposal by then- Gov. Bill Ritter sought to transfer $500 million of the company’s reserves to cover a hole in the state budget.

In the end the transfer was not made after encountering opposition from Republicans and the business community, but questions arose over the company’s business practices that led to hundreds of millions of surplus of dollars in its reserves–fed by premiums paid for by Colorado businesses and by the state for its workers.

Earlier this year Hickenlooper asked Pinnacol to examine its operations and explore options for the future, and the company delivered a restructuring plan outlining its goal of “separating from the state of Colorado while, at the same time, protecting the interests of policy holders and injured workers.”

The plan, which essentially would privatize the company, would give the state government a $340 million ownership stake. The state’s share would yield $13.6 million a year in dividends toward a business-development fund and a new state education fund. Pinnacol, meanwhile, would lose its tax-exempt status, be freed up to sell its injured-worker coverage on the open market in other states, and would pay $125 million to the Colorado Public Employees Retirement Association to take Pinnacol employees out of that state-employee pension system.

Hickenlooper said the proposed restructuring plan appears workable.

“We are pleased to see Pinnacol has delivered a long-term plan that appears to create ownership certainty for both policy holders and the public interest,” said Hickenlooper in a prepared statement. “One of our chief concerns is making sure injured workers are protected. It’s also important that policy holders and the state of Colorado benefit from any changes.”

The 19-member task force assembled by the governor includes members of the business community, labor groups and other key stakeholders. Among the members is former Senate Republican Minority Leader Mike Kopp, of Littleton. Kopp now is manager of corporate affairs for the Colorado Rural Electric Association, which is a client of Pinnacol. Kopp says his role will be ensuring Pinnacol will be allowed to continue with the business model that has kept its ledger out of the red.

“Notwithstanding all the issues at play, they kept rates low. What they were doing worked,” said Kopp. “I want to make sure that the interests of policy holders are protected and that injured workers are served.”

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Rep. Cheri Gerou, R-Evergreen, who is one of six lawmakers sitting on the Joint Budget Committee, said she will oppose Hickenlooper’s stance on the exemption, which was added to the state constitution by voters in 2000. The exemption was honored for just two years before lawmakers suspended the tax break, which Gerou says was the wrong thing to do.

“So far, this has been a broken promise and I’m tired of broken promises,” said Gerou. “Part of the role of government is to respect and take care of the vulnerable, particularly our elders.”

The exemption allows homeowners 65 and over who have lived in the same primary residence for at least 10 years to exempt 50 percent of a home’s market value, up to $200,000, from their property taxes.  A provision in the amendment allows it to be suspended by the legislature when necessary to balance the budget. The legislature has agreed to suspend the exemption in recent years as a last-resort budget-balancing move.

In July, Republican House Speaker Frank McNulty, of Highlands Ranch, declared that “the days of balancing Colorado’s budget on the backs of seniors are over,”  vowing House Republicans would oppose any attempt to suspend the program yet again.

At the time, the Joint Budget Committee’s Rep. Mark Ferandino, D-Denver said he agreed that bringing back the popular tax exemption should be on the table, but he said he would be taking a wait-and-see approach.

“We all want to help seniors, but at the end of the day, we have a responsibility to balance the budget,” said Ferrandino. “We’ll work with the majority (House Republicans), but it’s going to once again take a balanced approach. It’s always about weighing options and protecting the most vulnerable among us.”

Today, Ferrandino applauded Hickenlooper’s overall budget proposal, saying he is ready to roll up his sleeves.

“Gov. Hickenlooper has come forward with a responsible budget proposal that gives our committee a clear path forward,” said Ferrandino. “I’m ready to get to work with the governor’s office and my Democratic and Republican colleagues in the Joint Budget Committee to produce a balanced budget that makes the tough choices and respects the values we cherish as Coloradans.”

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The controversy swirls around Proposition 103, asking for an increase in both income and sales taxes over a five-year period. The estimated $3 billion raised through the increase will be applied toward education funding—pre-school programs through higher ed.  If passed, Proposition 103 would round up the state income tax’s flat rate from 4.63 percent to 5 percent and the  state sales tax from 2.9 percent to 3 percent.

The latest jab thrown in the dust-up comes from newly installed Republican Senate Minority Leader, Bill Cadman, of Colorado Springs, who derided a study by the pro-Proposition 103 Bell Policy Center for finding that private-sector job stagnation incurred by the tax increase would be offset by job growth in the public sector.

“Eliminating private sector jobs to create government jobs makes no sense,” said Cadman. “People across Colorado have already suffered massive job losses over the last year. How many private-sector jobs are the supporters of Proposition 103 willing to sacrifice in order to pass their $2.9 billion tax increase?”

The Bell Policy Center issued its report in response to a study by  Barry W. Poulson, a Senior Fellow in Fiscal Policy at the anti-Proposition 103 Independence Institute in Golden and John D. Merrifield, Professor of Economics at the University of Texas, finding that 11,000 jobs will be lost if the measure passes. (The Colorado News Agency is an independent media project of the Independence Institute.)

“Economic analyses of the effects of state taxes and spending on economic growth show that while tax increases are likely to slow job growth, increases in state spending tend to increase job growth. At a minimum, it is likely that they would cancel each other out, with the decline in job growth due to increased taxes being offset by the increase in job growth created through increased education spending,” says the Bell Policy report.

Meanwhile, the Colorado branch of the National Federation of Independent Businesses, with a membership of around 7,500 businesses, fired off a statement last week disavowing words attributed to Sen. Rollie Heath, D-Boulder, architect and voice of Proposition 103, saying businesses supported the measure. Tony Gagliardi, president of the small-business coalition, said he wanted to set the record straight.

“At a time when Colorado is still trying to recover from the most injurious financial recession in our history and with an unemployment rate that still is above the national average, why does Senator Heath think this a great time to raise taxes on hard-working people and those who are the true job creators?” said Gagliardi.  ”Has he taken one too many swigs of his own campaign Kool-Aid?  Let me be absolutely clear. NFIB-Colorado opposes this tax increase.”

Yet, Great Education Colorado, a statewide advocacy group for education, in a recent letter to state officials asking for their support said the path to economic recovery must include increased funding for education.

“If you want to support Colorado families during these tough economic times, then you must support public education.  If you want to rebuild our economy, then you must support public education,” reads the letter.

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Senate President Brandon Shaffer, D-Longmont, who requested the audit, says he wants reassurance that online schooling—utilized by students in rural school districts with limited course offerings as well as by students with unique circumstances—is functioning well.

In a letter distributed Monday to committee members, who must approve requests before they are given to the auditor,  Shaffer sought, “an emergency audit to be performed of full-time online K-12 education programs receiving General Fund support.” Shaffer’s letter cited a Department of Education report of “exceedingly high student failure rates,” lack of accountability and oversight of the program, and districts that accept the funding with “little or no plan for retention or educational successes.”

“In an economic climate where the state of Colorado is forced to cut hundreds of millions of dollars from its education budgets, we must ensure that every dollar of taxpayer money is spent efficiently and effectively,” said Shaffer.

Among the three panel members voting against the audit request were Rep. Cindy Acree, R-Aurora, and Rep. Jim Kerr, R-Littleton.

Kerr said the suddenness of the  request raised red flags he couldn’t ignore.

“Why this, why now?” asks Kerr. “An eleventh-hour emergency audit request—and there is no such thing as an emergency audit—by someone, who is running for Congress, and who already has access to the information he is seeking, amounts to political grandstanding.”

Acree said she, too, questions the urgency as well as the need for an audit.

“The same issues that present themselves in online K-12 education are there in the brick-and-mortar schools,” said Acree. “This seems like an effort to undermine educational choices and is using the resources of the auditor’s office to do so.”

Yet, the State Auditor’s Office said the request will receive the same treatment that every audit receives. There will be an eight-hour review looking into the merits of the request, the findings of which will be presented to the committee in November, with a vote at that time on whether to approve a full audit.

“This will be handled just like any other audit, like any other request,” said spokeswoman Jenny Atchley.

Shaffer, who was not present at today’s meeting, said in his letter the urgency of his request  is related to the task lawmakers will have as they begin to make budgeting decisions in January.

In a prepared statement after the meeting, Shaffer said his military experience and a desire for educational success helped shape his decision.

“When I was in the Navy, I was taught you get what you inspect, not what you expect. I’ve requested this audit to ensure we’re getting the best education for our children and the most effective use of taxpayer dollars.”

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