State Republicans talk business and budget

Republican Study Committee, CACI host pre-legislative forums
The Colorado Statesman

Statehouse Republicans preparing for the opening of next week’s legislative session met this week with business groups on regulatory reform and reviewed the Independence Institute’s proposals on how to solve the state’s budget woes. But the forums excluded Democrats, sometimes deliberately, and conservative solutions presented by some of the groups are unlikely to get Democratic buy-in. And in one of those sessions, it was hinted at that some of the priorities of the Hickenlooper administration might not match those of the Republicans in the House and Senate.

On Thursday, Henry Sobanet, Hickenlooper’s pick for the Office of State Planning and Budgeting, talked to the Republican Study Committee, a group of conservative legislators who were reviewing ideas on how to cut the state budget and deal with future budget issues.

Earlier in the meeting, RSCC members heard from Christie Herrera of the conservative American Legislative Exchange Council, who talked about federal health care reform and how her group believes it will impact Colorado’s budget.

Herrera said Colorado has already taken one important step: joining in one of the multi-state lawsuits filed against the federal government seeking to block implementation of all or parts of the Affordable Care Act. ALEC and Heritage Foundation data project that Medicaid rolls in Colorado will increase by 42 percent once the ACA goes into effect in 2014. The cost, over a six-year period, is estimated at more than $600 million, with the state responsible for half of that, and Herrera said nationwide, 1.6 million jobs will be lost.

That data appeared to alarm Sen. Ted Harvey, R-Highlands Ranch, who later told Sobanet that the state needs “to take a serious look at how to get out of Obamacare.” But Sobanet responded that there are a lot of other things that have to be dealt with first, and that the Hickenlooper administration would be paying attention to the issue. Harvey shook his head as Sobanet spoke.

Sobanet was at the meeting to present his perspective on the state’s economy and budget. He told legislators that any ideas they might have to close the $1 billion general fund gap would be welcome. “We have a unique opportunity, given the makeup of both houses, to achieve stalemate or statesmanship. But when push comes to shove, elected officials pursue the latter,” he said.

Colorado has experienced a “lost decade” of employment and revenue, Sobanet said, explaining that the state has the same amount of general fund available in its 2010 budget as it did in 2001. And the economy has shifted, from one that sells product, to one that sells time, he said. “When you sell time, there are only so many billable hours in the day. Our future growth trajectory is limited by the amount of time we can sell,” and that makes the case for slow growth in this transitional period.

The meeting also featured ideas on PERA reform, as well as spending reforms for higher education, K-12 education and corrections, from the Independence Institute. No Democratic legislator attended Thursday’s forum, and Sobanet was the only member of the Hickenlooper administration in attendance, albeit as a presenter.

Harvey told The Colorado Statesman the meeting was announced in advance and open to anyone. “The key to the next two years is how Governor-elect Hickenlooper leads his party in the Legislature to accomplish cost savings required to balance the budget. Come sine die, that’s what we’ll be judged on — how the governor and Legislature balanced the budget.”

Second forum looks at regulatory reform

The Thursday forum was the second one held by Republicans this week in preparation for the 2011 session. Wednesday, the Colorado Association of Commerce and Industry sponsored a gathering in conjunction with House and Senate Republicans, to hear ideas from business organizations on regulatory reforms.

Senate Minority Leader Mike Kopp, R-Littleton, told The Statesman that Democrats were not invited to the Wednesday event because the issue of regulatory reform was one that Republicans ran on in the fall campaign. However, Kopp said, the issue of regulatory reform is “not strictly a Republican agenda” and it is one that Republicans and Democrats can work on together. “I think the governor-elect is amenable” to changes, Kopp said, and “we want to make sure we don’t politicize the issue of regulatory reform.” He also said he has been talking to Senate President Brandon Shaffer, D-Longmont, on the issue and hopes the two can put together a reform package in the 2011 session.

The audience included representatives of the Colorado Oil and Gas Association (COGA), mining and energy companies, contractors, the Colorado Hospital Association, the Colorado Competitiveness Council and several chambers of commerce, and their lobbyists.

Kopp told the audience that regulatory reform is not a one-year project. “It will take some time to achieve,” which he said could be at least several years. But businesses are concerned about job growth and dissatisfied with the state’s regulatory structure and management, he said, and he asked the audience to share “actionable” ideas — and “what government is doing that stands in the way of you being productive.”

One of the first suggestions was for more state spending, not less, and it came from Peter O’Connor of AngloGold, which operates gold mines in Cripple Creek. O’Connor said understaffing in one division at the Colorado Department of Public Health and Environmental has caused delays in getting permits to expand his company’s mining. He explained the department he deals with has just one person to handle modeling for the entire state and the understaffing, coupled with repeated requests for modeling (complex computer programs that provide 3D views of drilling) has cost his company hundreds of thousands of dollars, more than two years of delays and may result in layoffs at a time when his company is expanding due to the rising price of gold.

The contractors, represented by Mike Gifford of the Association of General Contractors, asked for changes in four areas: retention of payments for public projects, which affects cash flow; storm water regulations; sales and use tax expansion, much of it by local governments; and contractor licensing and registration, a problem that requires contractors to be licensed by multiple local governments and the state. “We need a common system of license and registration,” Gifford pleaded.

Loren Furman of CACI said the state’s rulemaking process needs to be more transparent, explaining that the way regulations and rules are reviewed by the Legislature’s Legal Services committee (through its annual rules review bill) is a “rubberstamp process.” She also asked legislators to address sales and use tax issues, such as a system of double penalties that are assessed for late payments.

It’s been more than 20 years since the state’s telecommunications laws have been revised, and changes in technology make those laws outdated, according to Janice Sinden of Colorado Concern, an alliance of business executives.

The state’s initiative process also needs work, according to Tamra Ward of the Denver Metro Chamber of Commerce. She pointed out that Colorado businesses spent $6 million to defeat Amendments 60, 61 and Proposition 101, and how those measures got onto the ballot shows more accountability is needed in the process. (A non-profit run by TABOR author Doug Bruce was slapped with a $11,300 fine this week for failing to file required campaign finance reports.)

One audience member said the state’s regulatory environment relies on fines to keep the system going, and that’s “the wrong incentive.” Virginia Morrison Love, lobbyist for the Colorado Competitive Council, said that as the Republicans look at regulations, “don’t give agencies incentives to fine and penalize just to keep their structure going.” Tony Gagliardi of the National Federation of Business said state agencies are no longer about education and only about enforcement, and “that’s bad for business.”

And the idea of an ombudsman, who can help new businesses navigate through state rules and regulations, appealed to several audience members. But Rep. Carole Murray, R-Castle Rock, told the audience that this is something that should come from economic development groups rather than relying on the state to do it.

These ideas are “the starting point,” said Kopp. “It may take some years to get this through.”

Some in the audience also suggested changing PERA from a defined benefit to a defined contribution plan, an idea echoed by the Independence Institute on Thursday, or to repeal some of the 2010 so-called “dirty dozen” tax exemptions, such as the one imposed on energy use. Neither idea is likely to get much play from the Democratic-controlled Senate. Shaffer told The Statesman earlier this week that with regard to repealing the tax exemptions, “it’s time to move forward. The politics of the past don’t serve Colorado.”

Marianne@coloradostatesman.com