2022 – 2023 State Budget – Long Bill
The Colorado House and Senate have both reviewed and voted on the 2022-2023 budget, which will now go back to the Joint Budget Committee who will act as the conference committee to finalize the budget. It is expected to arrive on the Governor’s desk next week for final approval well in advance of the new fiscal year starting July 1.
At $36.4B, planned appropriations represent a 12.3% increase over the current year ($4B) and the largest inflation-adjusted budget in state history. The budget does not include the approximately $4B in federal stimulus funds the legislature is in process of allocating among a long list of favored projects and programs.
Unfortunately, assisting business recovery curried limited favor. Most notably, the budget allocates $600M to the Unemployment Insurance Trust Fund to which employers contribute based upon salary and headcount. In February of 2020, the trust fund held $1.2B. With the massive disruption caused by the onset of Covid and public policy response, the fund went into the red and now sits at just over $1B in arrears. At that level, every employer would see exponential increases to their UI premiums over the next five years to not only cover recurring claims, but to repay funds borrowed from the federal government to keep the fund solvent.
The half-measure approved within the budget will lessen the premium increase, though employers will still see increases due to circumstances well outside their control. Federal stimulus funds were not appropriated for this purpose even though it closely aligns with the intent of the American Rescue Plan Act of 2021.
The budget working through the final stages further emphasizes growth in department personnel. Projections show an additional 820 positions across the system. Though this represents a little more than 1% of the current headcount, it is not yet clear whether these positions can be sustained beyond the current economic cycle. This will be further tested in future years as support for the Medicaid program commands an increasing allocation from the general fund.
On the plus side, both parties are in support of increased educational spending. Under Amendment 23, passed in 2000, per-pupil spending is to increase at a rate at least equal to the rate of inflation. To catch up on prior levels of support, the K-12 education system was to receive an additional 1% each year through 2011. However, in the midst of The Great Recession, the legislature created an IOU account known the budget stabilization factor, or negative factor, to keep track of the funding deficiency. That account now shows a balance in excess of $570M. The proposed budget will chip away at that amount with an additional $250M next year with hope of knocking it down further in future cycles.
Though it hasn’t directly impacted most businesses, air quality appears to be the big winner this year. From the current appropriation of $661,739, the Air Pollution Control Division within the Colorado Department of Public Health & Environment is slated to receive $45M spread out over several years. This presents a significant concern from the standpoint of making future commitments based upon current conditions.
Based upon legislation enacted since 2019 and regulatory actions pursued by the APCD since, virtually every business must now expect air quality to factor heavily into daily operations, business development and strategic planning processes.