Colorado Democrats on Monday unveiled the broad strokes of how they plan to spend $3.8 billion in federal coronavirus stimulus money being sent to state government, prioritizing affordable housing, workforce development and infrastructure projects.
The majority of the money – $2 billion – will be allocated before the 2021 legislative session ends by June 12.
The bulk of that first allocation, $1.3 billion, is the amount in tax revenue state officials have determined was lost because of the economic disruptions caused by the coronavirus pandemic. While the rest of the money has more restrictions, the $1.3 billion is mostly unrestricted and can go toward transportation projects that would otherwise be prohibited under the American Rescue Plan, the federal bill that sent the money to Colorado.
Of the $1.3 billion, Democrats plan to direct about $400 million to transportation, infrastructure, and parks and agriculture initiatives.
Another $150 million will go in the coming weeks toward housing initiatives, while $100 million each will go to behavioral health and workforce development. The first chunk of spending will also include $80 million to “invest in existing programs to promote business development and create jobs,” according to the governor’s office.
The details of the spending plan, which weren’t released on Monday during a news conference at the Capitol, will be critical. Gov. Jared Polis teamed up with lawmakers and Treasurer Dave Young on a statewide listening tour to determine where the money should go.
Bills to distribute the money, which should provide specific information about where it is going, are imminent. The legislation comes as the Legislature is already racing to finalize more than 250 other bills.
Republicans didn’t join the news conference Monday, which also included the four Democrats in the state’s U.S. House delegation. That’s a big change from the bipartisan work that led to the still-pending $800 million state coronavirus stimulus package funded by better-than-expected tax revenues in the current fiscal year, which runs through June.
“The Republicans – we talked to about the plan,” said House Speaker Alec Garnett, D-Denver. “Discussions are ongoing.”
Polis was adamant that the GOP will eventually be involved. “I expect that many pieces of this will likely be bipartisan,” he said.
House Minority Leader Hugh McKean, R-Loveland, said GOP lawmakers are concerned about how the money is being spent. They feel not enough is being directed toward transportation.
“It’s a pittance,” he said.
The second round of spending – $1.8 billion – will be developed during the Legislature’s interim period before next year’s lawmaking term, when it will be finalized. The plan is for the second chunk of spending to supplement programs receiving money as part of the first tranche.
Polis said there is still an openness to direct some of the money toward the $1 billion deficit in the state’s unemployment insurance trust fund. Right now, businesses will be forced to make up the hole by paying additional fees.
“There’s nothing looming on that. That’s a 2023 issue,” Polis said. “So, I think that us and the Legislature are happy to look at considering that next session.”
The governor said the money could come from a $700 million to $800 million pool being set aside for future budget years, indicating Democrats don’t want to eliminate the deficit in one fell swoop.
Garnett said lawmakers don’t want to spend all the money at once because they believe they’ll have more information later this year about where the money is needed.
“The most important thing is that we allow economists and others to help give us the lay of the land,” he said. “There’s a lot of money moving around the system now. Moving that aside until later I think is the prudent, responsible way of going about it.”
State Sen. Dominick Moreno, D-Commerce City, said lawmakers will set aside some of the money to prepay future state budget obligations. That will allow the Legislature to drive down the Taxpayer’s Bill of Rights cap on government spending in future years and spend more on other priorities.
“Maybe we prepay state employee compensation, maybe we prepay controlled maintenance or other investments the state needs to make on an annual basis,” Moreno said. “Every little bit that we do to prepay, when we eventually do reach that TABOR cap – which we will in the coming fiscal years – creates more room in the state budget to still protect things that we care about.”
The American Rescue Plan has five limitations on how the money can be spent. The money must be distributed:
- To backfill revenue loss.
- To support public health expenditures, by funding COVID-19 mitigation efforts and medical costs. The money can also be used to cover mental health and addiction treatment.
- To address negative economic impacts caused by the pandemic, including by rehiring public-sector workers, providing aid to households and offering small business assistance.
- To support an equitable recovery by addressing not only the immediate harms of the pandemic, but its exacerbation of long-standing public health, economic and educational disparities.
- To invest in water, sewer and broadband infrastructure.
Colorado is also receiving $1.9 billion that will be sent directly to city and county governments across the state. They have the same spending restrictions.
