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Dan Pilcher CACI Senior Vice President & Chief Operating Officer
E-Mail: dpilcher@COchamber.com
Thursday, September 1, 2011
DU Study Sees No Choice But to Raise Taxes to Solve Long-Term State Budget Problem
Yesterday, the University of Denver’s Center for Colorado’s Economic Future released the second part of its comprehensive study of the state’s tax system.
The first part, released in March, found a “persistent structural imbalance” and projected that revenues would lag spending for the next dozen years.
Part two, however, concluded that the picture is darker than first forecast because of the stumbling economy. By fiscal year 2023-2024, according to the study, Colorado will need an additional $3.45 billion to just maintain current services.
Without that money, the legislature will only have enough funds for the Big Three: K-12 education, prisons and health care. There will be no funds for state courts, higher education, youth corrections, state crime labs and “other core services of state government,” the report said. K-12 education funding accounts for 40 percent of the state budget now.
And in the following fiscal year, the gap will grow to $3.5 billion, and then there will not be enough money to even fully fund the Big Three.
“The enormity of this gap suggests that Coloradans consider both tax increases and spending cuts to fill it,” the study said. Cutting programs “without changing the structure of the current tax system is unrealistic,” the authors wrote, because of such risks as the loss of federal funds, risking litigation to restore funding or “jeopardizing the welfare of some of the neediest Coloradans.” For example, cuts to K-12 education could eventually violate Amendment 23, which mandated funding increases.
Among the options for increasing tax revenues that the report presents are (1) adopting a graduate income tax; (2) expanding the sales tax on services, and (3) increase property taxes.
For more on the study, read “Study says Colorado Budget Outlook worse than thought and cutting alone won’t fix it” by statehouse reporter Tim Hoover of The Denver Post.
Last year, the legislature asked DU to conduct the study. The last time that a comprehensive study of the state tax system was undertaken was 1958.
CACI Energy & Environment Council Submits Comments to CDPHE on Its Strategic Planning Effort
On August 23rd, CACI hosted a strategic planning session with the Colorado Department of Public Health and Environment (CDPHE). The goal of the meeting was for CACI’s Energy and Environment Council to provide feedback to the Department on its strengths, weaknesses, goals and priorities for inclusion in the CDPHE’s new strategic plan. Below is the body of the communication from CACI to the CDPHE:
1. What are the strengths of CDPHE?
CACI responses: There is a good dialogue back and forth on permitting, the Department is always willing to engage. CDPHE is very accessible. The Department has a commitment to good science and doing things correctly. The candor of CDPHE lobbyists and their communication is appreciated. CDPHE has pushed back on EPA when they need to be pushed back on, and pushes back on standards that are not attainable. There is confidence in the agency’s delegated authority. Good work on performance based standards – good job attaining National Ambient Air Quality Standards.
2. What are the weaknesses/areas of needed improvement for CDPHE?
CACI responses: The mining industry sees a huge backlog on all permits (air, water, etc.) on issuing and renewing. Need to see accountability in fee increases: show why they are need, how much, where, etc. Because it can be unclear what standards apply, the Department sometimes struggles with exercising judgment and using discretion – need to make a decision. There needs to be cost benefit analysis of increases in health standards vs. the total benefit/impact, comparing health benefits to economic impact. There are concerns about guidance being viewed as law. Issues have arisen from the Department being short-staffed and losing senior level leadership. The organizational process has flaws – it’s streamlined but gets passed off to different and disconnected staff. There are problems with two groups in the Air Division: enforcement and technical. As far as the Technical Group, working through modeling issues with air staff modelers is much more difficult than in other states. Other states’ modelers try to solve problems, ours seems to try to find problems. In the Enforcement group, the Water Division tries to problem solve and are advisory oriented. The Air Division approach is more “Gotcha!” and they could learn from the Water Division on best practices to work on compliance vs. using the stick all the time. Permits are very complex, and it would be better for all if the Division worked with permit applicants to navigate the process rather than working to “catch” them. One CACI member specifically noted that they have built in six states, and the modeling group in Colorado is by far the worst they have worked with, and that factor does come into play when looking at new project sites. CDPHE needs to look at the best way to help state economics. The fee structure is a black hole: the Air Quality modeling does not give any guidelines on the range for what it will cost, there is no way to budget for it, at the end they give a permit applicant a bill and the applicant must pay whatever the cost is in order to get the permit. Needs to be accountability, a record of how the Department reached a decision. Draft guidances need to be finalized, they stay in draft form seemingly indefinitely. There are big concerns with the use (particularly in the Water Quality Division) of policy and guidance documents that have not been through rulemaking processes and which the Commission is allowed to adopt in informal hearing without APA notice and procedures.
3. What are the critical issues the Department needs to face over the next three to five years (organizational, environmental or public health issues)?
CACI Comments: CDPHE will need to deal with the unprecedented number of EPA initiatives across the board. The Department needs to work on keeping up with industry development. Efficiencies that industry gains should make things easier for the Department, but they don’t seem to. The issue of electronic waste continues to come up and CDPHE has not been engaged. Issues around fees and resources across all programs. Acquiring and maintaining competent staff is important. CACI recognizes the need to pay enough fees to have decent permitting staff. CDPHE is always about two years behind in staffing up or down based on need. Having conversation early with industry in budgeting would be helpful.
· On issue of permitting staff, CDPHE noted personnel rules that required them to try three times to hire instate before they are allowed to advertise for a position out of state. This is a big piece of why it takes so long to fill positions. Changes to rules or statutes possible bill for 2012 session?
CDPHE should have a broader scope of where fees are coming from, if they are working. The Department should work with industry to ensure we can achieve SIP requirements, especially for ozone. Need to plan ahead with stakeholders. Modeling requirements for NOx and SO2 will be an issue. CDPHE technology/data/infrastructure is way behind, and very expensive.
4. What should be the key strategic priorities for the Department over the next five years?
CACI Comments: Focus on reasonable national EPA standards, use state influences to do so, utilize Governor Hickenlooper’s relationship with the president. Ozone regulations may result in industry moving elsewhere. Even the federal government is moving computer centers to more affordable energy states. Organizational structure and management need to be a focus. There should be an emphasis on development of general permits across divisions and industries, and an effort to develop thoughtful general permits. Flexible permitting should be considered as well. Greenhouse gas regulations, if they should come to pass, will be a whole new regulatory area. Need to focus on hiring, training and promoting good staff. CDPHE needs to evaluate its enforcement philosophy, they have lost a market-based approach. In a non-attainment world, there is a need for credits, offsets, banks, etc. Modeling is a tool, it is important to look at the actual data.
In Summary: Director of Environmental Programs Martha Rudolph stated that CDPHE will start working on the issues outlined with staff. She also requested to work with CACI members on modeling that is working better in other states, and to get together smaller groups to explore this and other issues, such as cost benefit analysis, technology and enforcement.
CACI Presents to Aurora Chamber of Commerce
This morning, Loren Furman, CACI Vice President of Governmental Affairs, and Bonnie Finley, CACI Member Development Manager, made a presentation to the Board of Directors of the Aurora Chamber of Commerce concerning current policy issues facing the Colorado business community as well as the results of the legislative session from CACI’s perspective.
Colorado Health Exchange Board Update
NOTE: The following was written by Dan Anglin, CACI Governmental Affairs Representative.
On Monday, August 22nd, the Colorado Health Benefits Exchange (COHBE) Board convened its’ fourth meeting. The Board began the meeting by opening the floor to Representative Bob Gardner (R-Colorado Springs) who is the Vice-Chair of the Legislative Health Benefit Exchange Implementation Review Committee (Committee).
Rep. Gardner thanked the board for their service, telling them that “it speaks well for your commitment to the state and the people of Colorado to spend so much of your time on this important issue.” Rep. Gardner explained that he voted against the bill that authorized the creation of a health insurance exchange, but stated:
“Nevertheless, I am the vice chair of the oversight committee, and will become the chair during the legislative session. My concerns were not about health exchanges but rather concerns that because exchanges had been scarfed up into the federal act, that there would be rules and requirements that would prevent us from having a Colorado solution. In fact, my worst fears have been realized in the 240 pages of rules from the U.S. Dept. of Health and Human Services. It is upon us that their restrictions are placed and does not appear to be the appropriate way to provide us with flexibility. I was a little concerned when it was reported to me that discussion during one of your meetings appeared to state that the legislative oversight committee did not have a role in responding to the rules.’
“We ask that you provide us with a timeline for your task. When I say that, what I mean is that we really need a timeline in order to effectively schedule our review of your recommendations.”
Representative Gardner’s statement prompted several questions from the Board, including whether the Board and the Committee could coordinate efforts with Legislative Council, and if the Board has a different role than the Legislative and Executive Branch on the subject. Rep. Gardner was unsure if the Board would be able to work with the Legislative Council, and thinks that the Board should focus on operational issues before considering policy creation, and offered that the road ahead may be difficult to separate the distinction between the two. The Board then moved on to the agenda.
Ms. Claudia Brett Golden from the Colorado Attorney General’s office provided the board with confidential documents pertaining to her recommendations for compliance with Colorado’s open meetings laws (sunshine). As the counsel for the Board, any legal advise that she or other members of the Attorney General’s office can be considered confidential and not subject to sunshine laws. Ms. Brett-Golden clarified that her presence in a meeting of two or more board members does not constitute executive privilege, only if her presence constituted legal advice. Additionally, she clarified that meetings with the staff are not subject to sunshine laws, nor is a chance meeting of two board members. She also outlined meeting notification requirements, and recommended that although e-mails are an unsettled area of law, the board should consider such communication an open meeting.
The Board discussed that the subject of a search for an Executive Director will be taken up during the next meeting, scheduled for September 16. Joan Henneberry, current Planning Director, announced that she will not be applying for the position and would be available to assist with the process established by the Board.
A document was presented to the Board that outlined Ms. Henneberry’s recommendation for strategic decisions. The discussion of the timelines involved in the many areas of policy to be developed was a concern for many Board members including the role of the Legislative Oversight Committee.
A presentation of recommendations to streamline the eligibility and enrollment process and whether to integrate additional services into the Exchange prompted discussions of concern about costs and delivery of the technology within an 18 month period.
Board Chair Gretchen Hammer formed a Rules and Regulation Review Subcommittee to discuss whether the Board would like to submit formal comments to HHS regarding the numerous sets of rules that have recently been published. The subcommittee consists of Board members: Steve ErkenBrack, Beth Soberg, and Albert Salazar.
The next scheduled Board meeting will be held on Friday, September 16th, at 8:30 am in the Mile High Room at COPIC, 7351 E. Lowry Blvd, Denver, CO, 80230.
If you have any questions about the COBHE or the CACI HealthCare Council, please contact Dan Anglin.
Legislators to Tour Medtronic Navigation in Louisville
On September 6th, legislators from across the state will participate in a CACI-sponsored tour of the Medtronic Navigation manufacturing and educational facility, located in Louisville.
Medtronic Navigation, a Silver Partner member of CACI, is a global leader in operating room surgical technology and an innovator in disease management. The facility in Louisville includes an educational center with an operating room surgical center to train surgeons in the newest developments in surgical technology.
The tour will be part of CACI’s outreach initiative this summer and fall to introduce legislators to CACI members through visits to the companies to learn about the challenges facing businesses and how state laws and regulations affect their operations.
Click on a company's name to visit their website. Thank you for being CACI members!
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