March 16, 2026 · Budget Committee · 13,881 words · 10 speakers · 347 segments
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Okay. Ready? All right. The Joint Budget Committee will come to order. We are now figure setting on capital construction IT projects. Mr. McClure.
Thank you, Madam Chair. Andrew McClure, JBC staff. So I have two figure setting presentations for you. The first of these is on IT capital projects. So turning to page one of the IT capital figure setting, I just want to give a summary of the JTC recommendation for IT capital projects. As you may recall, for IT capital projects, the processes that the JTC receives these project requests. They have a prioritized list of these projects that they then send over to you all for approval of funding. So the JTC is recommending 11 prioritized projects from General Fund, which includes six state agency and five higher ed projects. Additionally, the JTC is recommending approval of four cash-funded projects. The recommendation totals are $9.8 million in general fund and $17.1 million in cash funds. These figures are roughly $2 million more in general fund than the governor's request and about $0.3 million less than the governor's request for cash funds. On page two, this is kind of just an overview of what you all may elect to do. So in deference to the legislative process for IT projects, the JBC staff typically doesn't make recommendations on these projects and allows you to just kind of work with the JTC to figure out prioritization. So on page two, we have a summary of possible JBC action. The first three of these are...
Question from Senator Mobley. Before we get going, I just want to know, is it okay that Senator Bridges has elected to not be wearing his tie?
I never wear a tie here.
I agree.
There are no standards in this room.
Address.
Address.
Yes.
Are you sure? I thought you had to have a jacket on.
Well, maybe a jacket.
And a tie.
I'm pretty sure a past eight of mine got severely reprimanded. Anyway, Mr. McClure.
Thank you, Madam Chair, and thank you, Senator Mobile, for keeping us on target here. Maintaining the level of decorum for JBC. So on page two, we have a summary of possible action here. The first three of these will not trigger a meeting with the JTC. The latter three of these will. So you all have the option to approve the JTC list and fund all projects above the JTC line. So in their prioritization, you all would be able to draw the JBC line based on general fund impact. So you could set a limit of all projects up to X dollars in general fund get funded, working our way down the list, and transferring cash funds to the capital construction fund for cash-funded projects in lieu of general fund. So none of these three actions trigger a meeting with the JTC. The latter three, so prioritizing projects that have already received funding for prior phases, is adjusting the priority order by moving projects up and down the list, so reordering the list, or adding or removing specific projects from the list. All three of these would trigger the requirement to meet with the JTC to discuss prioritization of these IT capital projects. So at the bottom of page two, this is just a kind of narrative of the main differences from the request, which you can see the table on page three. The projects ranked nine through 11 for general fund prioritization were included from the non-prioritized, were not included in the governor's prioritized list. These projects total about $2 million general fund and $50,000 cash funds. Meanwhile, project rank eight, so the Fort Lewis College Door Access Control upgrade includes an increase of roughly $50,000 general fund as well as a decrease of $0.4 million in cash funds in relation to the request. So these are the deviations from the prioritized requests.
So the OSPB did have one higher ed project that was on their list. Is that right? What's listed as number seven? That was prioritized by?
The administration?
Okay.
I can double check. And I believe, yes, project number eight was as well.
So those were both prioritized.
The funding for eight is slightly different than what was in the prioritized request.
How different?
$50,000?
Yep.
and also an additional, an increase of 50,000 general fund and then a decrease of 0.4 million in cash funds.
Okay.
Any questions, folks?
Well, Mr. McClure, go ahead then.
Thank you, Madam Chair.
So page three has the prioritization of requests I do want to draw your attention to page four This is just I think important budgetary info for you all to have prior to making a decision on this So the first thing here is that this school finance modernization project is going to be substantially under budget. the total cost is going to be about $3.4 million general fund for two phases, as opposed to the estimated $9.3 million in the initial request. So, yeah, quite a savings there. I think this had to do with once they put out the RFP, the bids were substantially lower. the second of these is the thing that i think is budgetarily has the potential to have the greatest impact so the general fund priority six priority number six project this human resources information system the out year costs on this project are projected to be substantial the initial appropriation contained in the it capital request is one million for a study to evaluate implementation of a statewide human resources system. Initial estimates from the Department of Personnel indicate that full implementation is going to cost almost $64 million over four years from FY 2027-28 through FY 2030-31.
Question.
Senator Crickler.
Are the same people who activated 9.3 million
Mr. McClure. So the estimate for the school finance would have been Department of Education, and then it would be Department of Personnel and Administration for the statewide human resources project. I would say that they have both worked with OIT to get approval for these projects. And so OIT would have been aware of these cost estimates before recommending approval to the governor.
Senator Kirkmeyer.
So OIT doesn't work now to get recommendations on the out-year cost-to-week.
Thank you, Madam Chair.
Senator Kirkmeyer, they work collaboratively to kind of identify the costs of these projects.
Anything else you want to point out to us?
No.
Okay. Senator Kerkmeyer.
Thank you. So I'm curious as to the projects recommended in the cash funds versus projects recommended
for general funds. that human resource information system is coming out of general funds and the state procurement system is coming out of cash funds.
Are there specific cash funds that are still?
And what are they? Mr. McClure. Thank you, Madam Chair. I'll have to. I don't have that information right here in front of me, but I can circle back to those
specific cash funds and get that information for you I have Thank you I kind of have the same question about also about the one that coming from the what is the P&G?
Oh, we've got an environment.
I'll see you see if you get it.
But they have a project that's coming out of cash funds and one that's coming out of
general funds. Why isn't the stationary sources modernization coming out of cash funds as well?
There's a cash fund.
Mr. McClure.
Thank you, Madam Chair.
Senator Kirkmeyer.
So the stationary sources control fund does fund the stationary sources activities. So this is the final phase of the stationary sources modernization project. The initial funding for this was anticipated to be capital construction fund, general fund. At the outset, I presume this is due to the ongoing solvency issues with the stationary sources control fund and kind of the need identified by the department and presumably the JTC to fund this project. fund this project absent the existence of these cash funds.
Senator Kirkmeyer, feel free to dialogue.
Thanks. So originally it was funded out of the stationary source cash fund, and now we're going to fund it out of general funds.
Senator Kirkmeyer, this was always funded out of the capital construction fund. This wasn't funded out of the stationary sources control fund, this project at any point.
Why not? Because they're not solving it? Because they're not charging enough fees? My presumption is that, yes, it was funded out of the general fund
because the fee revenue wasn't sufficient to pay for the project.
So what exactly are we paying for?
So the project is to, essentially, the department is looking to build out a more efficient permitting system. My understanding is that we've had a substantial backlog in these air quality permits. The department has stated in conversations with them that the permitting process is becoming more efficient due to the adoption of this system. And that the expectation is that once it's fully implemented, they're going to be able to cut down backlog times. That's my understanding of why they are implementing this. One of the challenges that they're facing apparently is the increase of the front range, the EPA non-attainment, which has caused more pollutants to fall under this Title V permitting process. This is one of the challenges they're dealing with and something they say can be ameliorated through the adoption of this new system.
And what are they using the penalty payments for?
Oh, I think your mic's on.
And what are they using the penalty payments for and the fines that they get? Where does that many go? out in grants to somebody when they could be paying for things like this So a lot of the fine revenue goes to so the fee revenue for the permitting actions goes to the stationary sources control fund
while the fine revenue, as I understand it, goes to the community impact cash fund.
How much money is in the community impact cash fund? Do we know?
Apologies. I don't have, I do have.
I think it would be helpful if we knew what was in those funds. Because they could be used to pay for this instead of general fund.
The capital construction fund is general fund.
So it would be, we could be using those funds. And again, I want to know what cash funds we're using for the procurement system in DPA AND WHY WE CAN'T USE THE SAME CASH FUNDS FOR THE HUMAN RESOURCE SYSTEM IN DPA. IT SEEMS LIKE WE SHOULD BE ABLE TO. THANKS.
ALL RIGHT. ANY OTHER QUESTIONS FOR MR. MCLEAR ON THE LIST?
Okay. And do you happen to know what the JTC conversation was about giving us a list that was $2 million more than what was allocated in the budget? Not that we've done the allocating yet, but, you know, proposed.
I do not know what the, from a budgetary's perspective, what the rationale was for going beyond the...
Okay. All right. Next.
So I only have really one decision here for you. At some point, I'll be back in front of you with long bill head notes. I am going to get a final edit from LLS regarding those. So the only decision for you is this general fund transfer to the IT capital account of the capital construction fund. And so all I would be looking for today is approval to account for whatever you all decide to do with IT capital projects to incorporate that figure into the transfer to the IT capital sub-account of the Capital Construction Fund. And this would be basically whatever the value of the projects you will arrive at minus this $2,831,000 figure, $2,832,000 figure contained in the table as available for appropriation. This is what is already in the IT capital account and so can be used for future appropriations.
Okay. Senator Korkmeyer.
Well, thank you, Madam Chair. From my perspective, I'd like to know what, for some of these departments, what cash funds they could be using versus general funds. Because I'm not too thrilled that they're $2 million over. So they all need to come in with how can they start figuring how to use some other, either cash funds or federal funds. I'm all for that.
But do you have a, because I think what we would be approving for if we gave approval
FOR THIS LEGISLATION, WE COULD JUST
We have an approval for Mr. McClure to transfer what ultimately we landed on in terms of general fund,
but perhaps it's less than what we have seen in the pages before.
Senator Kirkmeyer.
Thank you, Madam Chair. I agree. I'm not necessarily interested in changing the priority list, so we'll decide where the line falls based on some of the other information we get. Is that essentially what you're saying?
Yeah.
I'm cool with that. And based on some of the other information about cash funds as well as... Well, I'll just say, you know, there are a couple things on here that are not continuation projects. They are new. Exactly. So I think we should look closely at that as well.
Okay, so if everybody's okay with the mechanism that Mr. McClure is proposing here,
Senator Ramabile, do you want to make a motion?
I move staff rec on IT capital general fund transfers.
Are there any objections? That passes on a vote of 4-0 with Bridges and Taggart excused.
Okay, I think that's all I have for you on IT capital. At the back, the appendix A includes the list of IT capital projects from the JTC. If you have any questions on any of that or would like me to gather more information.
I did have a question actually on page A5. AND IT'S NOT YOUR PART OF CDPHE, ACTUALLY. SO, BUT IT IS THE CDPHE ITEM WHERE IT SAYS THAT THE JTC IS RECOMMENDING FUNDING FOR PHASE TWO, BUT THERE IS A NOTE ABOUT THE JTC BEING CONCERNED ABOUT THE LONG-TERM STABILITY OF THE PROJECTED BALANCES OF THE HEALTH FACILITIES, GENERAL LICENSURE CASH FUND AND HOME CARE AGENCY CASH ONE, AND SO I JUST WONDERED IF YOU WERE TOO, OR NOT YOU, BUT THE JBC STAFF WAS TOO. SO NO NEED TO ANSWER THAT NOW, BUT I JUST WANTED TO KNOW.
OKAY, YEAH, I WILL PASS THAT ALONG TO MY COLLEAGUE, MS. SHEN, WHO IS THE RESPONSIBLE JBC ANALYST FOR THAT PARTICULAR PROGRAM. THANK YOU.
All right.
And Appendix B is those headnotes that do need to be edited further, and so I will bring those back in front of you in hopefully short order. So the next presentation I have here for you is on the Office of Information Technology, primarily IT common policies is what we're looking at. So the first thing I have, or the first thing I just want to highlight for you is that I dropped a memo in front of you. THIS IS JUST A COUPLE, ONE THING IS A CLARIFICATION ON A STEP INITIATED ITEM WITHIN THE FIGURE SETTING DOCUMENT AND THE SECOND ITEM IS JUST A TECHNICAL CORRECTION FOR THIS ANNUALIZATION THAT I HOPE TO GET A MOTION ON AT SOME POINT DURING PROBABLY TOWARDS The second item is just a technical correction for this annualization that I hope to get a motion on at some point during probably toward the end of this presentation but just wanted to flag that for you
All right.
So on page one, this is the summary of staff recommendations. So there's three items here in addition to this technical correction. The first of the, just to not bury the lead here, for the statewide AI compliance, staff is recommending denial of the department's request for $5.2 million for this item. For payments to OIT, the office is requesting an increase of $9.2 million in total funds on behalf of all state agencies. Staff is recommending a reduction of $32.1 million from that request number, including $17.4 million general fund. And then lastly is this staff-initiated transfer from the IT revolving fund of $10 million for FY2627. So on page three is the beginning of the conversation around the statewide AI compliance. The initial request included $5.2 million total funds, including $3.4 million general fund for implementation. This is the actual requests we received were a little bit different than this. And this is largely driven by differences between OIT's estimate for the costs in the judicial department and what the judicial department has actually requested. So you can see this on the top of page four. I just kind of highlight these differences between what OIT's estimates were for these costs and what we actually received from the independent agencies. Uh, staff is recommending denial of the request, uh, given the timeline for implementation of SB 24205 resources for the assessment phase of the legislation are, are assumed to have been included in the FY 2526 long bill. Uh, because the long bill is drafted to current law and that was expected to go into effect before the end of the fiscal year, staff assumes that these assessments and early implementation were absorbable within existing resources. given that additional resources were not requested by state agencies. So essentially OIT is, they in this request are proposing kind of a centralized program to manage this IT risk and meet the mandates of SB 24-205. the so staff has concern about the implementation of this so the first of these as I've highlighted is say it again we're good with staff rec okay so I'll just say I did get some outreach on this and I'm good with staff rec
also but what I wanted
to float was adding a footnote
that
that if the
departments actually do incur costs that they can come back and request funding.
Senator Kirkman They can already do that I guess they felt it would give more comfort if there was a footnote I got the same request and also said they can already do a supplemental if new costs that come to light were unknown before
and our challenge has been that this has all been very nebulous and unclear and unsubstantiated, these requests that have come forward on Senate Bill 205. And so until there are clear, concrete proposals and justification for staff needed, I agree with staff rec, and I don't think they need a footnote to come back if those demonstrated costs became clear.
Okay, Senator Mobley.
Thank you. I move staff rec OITR1 statewide 24205A I compliance.
Are there any objections? That passes on a vote of 3 to 1 with a Mobley objecting and Bridges and Taggart excused.
All right, Mr. McBear.
Thank you, Madam Chair.
So on page six, this is the payments to OIT common policy. So the request, initially the office requested $10.8 million increase. The actual value of the increases that we received through official department requests was $9.2 million across state agency, including $1 million in general fund for these IT services. This table on page six shows these payments to OIT. I do want to note, I did try to limit the tables in front of you all. I do have more data should you all feel like it is required. On page seven is the summary of the recommendations. So I'm recommending a reduction of $32.1 million in total funds, including $17.4 million general fund in relation to the request. This would be a decrease of $22.9 million in total funds from the FY2526 appropriation. Staff record for the general fund appropriation is 12.5% lower than the request. Staff is also requesting permission for analysts to work with their respective departments to make net neutral technical corrections to non-general fund. fund sources. So this reduction is, I arrived at this total of reductions through primarily analysis of reversions as well as kind of assessing proposed increases given the tight budgetary environment and kind of this overarching thing we have discussed before about overcollection to the IT revolving fund. So for reversions on page eight, this is just a table showing like at a high level what these reversions are looking like. The first thing I want to highlight is that statewide reversions have been substantial in the most recent completed fiscal years, totaling $37.5 and $46.8 million respectively. respectively. So the reversions are substantial, which to me indicates that the appropriation can be reduced. Additionally staff is noting that departments are reverting fewer general less general fund than they are total funds which indicates that they're disproportionately spending general fund appropriations. And so constraining those general fund appropriations is a way to have departments spend their cash funds down for these services. Uh, staff does note that departments often suggest reductions in these common policy, uh, lines should be proportional, but I, I am noting here that they do not, that the expenditure behavior doesn't seem to match this concern with proportional allocations, uh, at the front end in the appropriation. Uh, additionally, uh, staff is fully expecting that departments are going to contend that reverting cash funds are empty spending authority. to this to me does not suggest that that we should be just keeping these these and this empty spending authority of cash funds in these line items that these need to be trued up by departments because it is it is impossible for us to to budget against you know is this cash fund empty spending authority or not. Staff is also concerned because most departments are permitted to set fees at a rate that pays for indirect or indirect costs. We're concerned that departments are not raising their fees to pay for these indirect costs and backfilling this with general fund.
Senator Mobley. Are we ready?
I think so.
So I'll just, I did sort of have a question here. I understand that, you know, you are saying they're going to have to work to true these things up, that if they're utilizing cash funds more than general funds here and if there's going to, if you're going to force them, sorry, to rebalance the way they are spending on OIT, I just think everything will have a sort of a cascading effect. I mean, they're managing their money in a particular way that will cause consequences. So I just anticipate a comeback on this, but I very much appreciate your effort to sort of rein in what I think has been identified as some significant over-appropriation in the OIT line here.
Senator Kirkmeyer. Thank you, Madam Chair.
but I also want to know the $11 million in the overcollection, the IT revolving fund,
and it talks about an $11 million transfer that will be made in 2526.
Is your $17.4 million general fund reduction include that $11 million transfer? Mr. McClure. Thank you, Madam Chair. Senator Kirkmeyer, the $17.4 million general fund is just a reduction in appropriation. The transfers are separate general fund relief from that.
Senator Kirkmeyer. I think we also should take the transfer. So why should they build the 25 to 30? They're at 25 to 30 million in an IT revolving fund. And I understand they probably need dollars in case things happen mid-year or whatever, but that's also why we have emergency supplementals. But I think in this year, I don't know why we need to be transferring $11 million transfer that will be made in 25-26 to increase their pot of money from 30 million to, I don't know, 40 million. THE TRANSFER IS ANOTHER REQUEST OR ANOTHER ITEM. YES. IS IT?
SORRY. THANK YOU, MADAM CHAIR. SO THERE IS A, SO YOU ALL HAVE APPROVED A TRANSFER OF 11 million dollars from the IT revolving fund to the general fund. I'm additionally recommending a transfer of 10 million dollars for, so that first transfer is for FY 2526, and then I'm recommending another transfer for FY 2627 of 11 million dollars. Or 10 million dollars, excuse me. So are we just stopping this transfer in 2526?
Are we, I think, transferring and then transferring it back? or are we just stopping it? Mr. McClure.
Thank you, Madam Chair. Senator Kirkmeyer, the only transfers associated with this are a $10 million transfer that you, the $11 million transfer, excuse me, that you have approved from the IT revolving fund to the general fund, and then another $10 million from the IT revolving fund to the general fund. There's no transfer going from the general fund to the IT revolving fund.
So the, I'm sorry. What page are you looking at? I'm on page 8 underneath the analysis, and it's the third bullet, the overcollection. So when it says inclusive of an $11 million transfer that will be made in 25-26,
that's a transfer from the revolving fund to the general fund?
Yes.
Okay. I didn't read that in there.
All right. Thank you.
Okay.
Okay. Senator Mobley.
I move staff rec R7 payments to OIT. Are there any objections?
That passes on a vote of 4-0 with Bridges and Taggart excused.
Mr. McClure.
All right. Thank you, Madam Chair. And the last item I have for you is on page 13. This is the staff initiated transfer from the IT revolving fund to the general fund. Staff is recommending a transfer. Staff, and apologies, this is in the memo. You all have approved this first transfer. This is already in that omnibus transfer bill. I'm recommending a transfer of an additional $10 million in FY26-27 from the IT revolving fund to the general fund.
Senator Motley. I move staff initiated transfer from IT revolving fund to general fund.
Are there any objections? That passes on a vote of 4-0 with Bridges and Taggart excused.
Anything else? Thank you, Madam Chair. Thank you.
Okay, thank you. Next up, Mr. Thompson, tab three.
whenever you're ready.
Scott Thompson, Joint Budget Committee staff here with a recommendation for the legal services common policy rate and statewide allocations. This memo really details how the common policy rate is created and annually once the rate is decided upon we use that multiplied by a three-year average of the number of hours PROVIDED TO EACH AGENCY TO DETERMINE THE APPROPRIATIONS. SO MY RECOMMENDATIONS REALLY SUMMARIZED ON THE TOP OF PAGE TWO. IT IS AN ATTORNEY RATE OF 146 A LEGAL ASSISTANCE RATE OF 98 AND A BLENDED RATE OF 138 I happy to go into the details but it very mechanical on how I produce these numbers I'm really verifying Department of Law's calculations. The one thing I do want to flag for the committee this year is since a lot of the common policy compensation common policies haven't been finally decided, I'm requesting permission to make de minimis changes to the illegal rate, but I'd like to hear what the committee thinks de minimis is during this period of time, whether that be changes to the rates themselves or the total appropriations. So if we're going to talk about total appropriations, those are laid out on pages 3, 4, and 5. And the total funds being allocated through the common policy is about $85.2 million. AND BASED ON THE ESTIMATES OF HOW THAT BREAKS OUT BETWEEN GENERAL FUND AND OTHER FUNDS, IT'S ABOUT 31.9 MILLION GENERAL FUND. THIS IS A, THIS BLENDED RATE IS. And Mr. Harper, Director Harper just suggested that I also include what the current estimate or placeholders are for compensation in here. And I think it's based on what was requested in the initial budget governor's budget request. And so I haven't taken those out. BUT THESE ARE SEPARATE FROM THE COMMON POLICIES THAT WE ARE LOOKING AT.
NO? THIS LEGAL SERVICE, THIS BLENDED RATE, HOW WOULD THOSE DECISIONS IMPACT THIS?
SURE, MADAM CHAIR, SO REALLY THIS COMES UP EVERY YEAR AND ALL OF THE COMMON POLICIES THAT HAVE PEOPLE INVOLVED WITH IT DEPEND HEAVILY ON WHAT THE COMPENSATION COMMON POLICIES ARE DECIDED ON. And so at some point you just have to say stop and stop chasing your tail around these things that will continually influence each other. And so this is really when there's still big outstanding compensation common policies, it's hard to determine the legal services rate because those are still pending. So if we reduce the compensation common policies by a whole lot, then this rate would come down too. Because it's tied to, oh well, okay, Director Harper and Senator Kirkmeyer rightly pointed out, we do not have tails.
Director Harper.
Speak for yourself. Thank you, Madam Chair. Craig Harper, JBC staff. I think the easiest way to think about it is this rate is paying salaries. so if you enact a common policy and it's also paying benefits so if health life dental becomes more expensive then the rate needs to go up in order to cover the health life dental if their salaries go up the rate needs to go up to cover their salaries the request that you have in hand and what mr thompson is assuming here because we don't have a decision yet assumes and you may be able to speak to the attorney salary, recommend a portion of the request in there. Um, but for health life dental, for example, I imagine that it's a similar rate to what's in the winds agreement. And even though these are not classified employees, they're not covered by winds. The common policy would be that the state going to absorb in the request would have been the state would absorb the entire premium increase and backfill the portion that the employees picked up in 25 because that the request via the wins agreement. If that's the case, then that's what would be built into this rate now because we don't have decisions yet. And if you were to make a decision that made that more expensive, then the rate would go up. And if you were to make a decision that would make that cost less expensive, for example, keeping the premium ratio between employer and employee at 88.12 like you did for the current year, then the rate may actually drop under that scenario because what this rate is doing is covering all costs associated with these employees. So anything that increases the cost of those employees means the rate has to go up and the opposite for anything that decreases the cost of the employees relative to these assumptions. And no one tinkers with these rates outside of those common policy decisions. Is that correct?
Yes.
So the only place that a decision on the rates is being made is here at this committee. No, I mean, there's no, like, past history of saying, well, we did this with common policy, but your blended legal services rate is just going to be X. For as long as Mr. Thompson or I have been doing this, This has been a defensible calculation, and I think long predating me in terms of the, it's gotten in some ways more transparent and in some ways more complicated because of the way that we do the legal services now in terms of a three-year look back for the actual utilization. But the fact is that there's a number of attorneys at Department of Law. The common policies are driving changes in compensation and benefits for those attorneys, along with office space. I mean, every cost associated with this set of attorneys is built into this rate. So their rent for the car center would be built in here. This money is sort of sprinkled throughout the entire budget. But it's all driven by the costs of those specific attorneys. So, under the safe assumption that we are not going to make common policy decisions that cost more than what is in the request, this number would only go down pending decisions that we made if we appropriated less for common policies than what is in the request.
Yes. Okay. Senator Kerkmeyer?
Didn't we just not increase attorney rates in a bunch of other independent agencies and other places?
These are not classified. Those are contract. That was contract attorneys, the contract attorney rate, which is related to a statute that requires an increase every year. That we agreed to here. Yeah.
But we just said no.
I mean, these are not classified employees.
But these are.
No, these are all not classified employees. Non-classified. Correct.
But they're state employees, which is different than the contractors that work with those independent agencies.
They're outside of the bargaining agreement, but state employees.
So they'd be like the folks we look at for step-like, if you will.
Right.
But did we increase the attorney rates for public defenders?
I don't think we increased anybody's attorney rates. In public defender, those would be covered by the same type of wins agreement because those are state employees. I think they're also outside the classified system. They are. But they've been treated like classified employees for salary calculations.
Maybe we be thinking differently Senator did you have your hand up Well I mean I fine if folks aren okay with it but I am fine to approve the staff recommendation pending common policy decisions.
Sure, don't take it to the bank, though. Senator Amabile.
I move staff recommendation, legal services, common policy rate, and statewide allocations. And give you permission to address that based on what happens.
Yeah. If it's like anything more than like a dollar or two on the rate, I think that's probably when I would like to come back and show you new calculations.
All right. Are there any objections? That passes on a vote of 4-0 with Georges and Taggart excused.
Thank you. Thank you.
We've been going really fast without you.
We're on tap 4 now. Yeah, we went like this on IT. We got a lot of money out of IT. IT.
Okay. All right. We'll stand in a brief recess while we reset for staff comebacks. We're at 10-4 already. Yes. Are you sure you don't need to go make some more calls?
Not making a call.
He's not making a call. You sure you don't need to go talk to some more department people?
Yes.
I wasn't doing that either.
Oh.
Okay.
Well, whatever you're doing, you sure you don't need to go do it again? Think I'm set. We did discuss that we don't have any tails, just so you know. Thank you. Thank you.
All right. Oh, except there is, okay. The Joint Budget Committee will come back to order. Um, we are now on staff comeback memos. Mr. Kurtz, kick us off.
Thank you, Madam Chair. During, um, the federal public health emergency for COVID, we received an enhanced federal match and that reduced our general fund obligations, but it also reduced our cash fund obligations. The federal intent of that enhanced match was to provide budget relief to states. So the General Assembly passed a bill that was sponsored by the Budget Committee that tried to capture that benefit to these cash funds and essentially convert it to a benefit for the General Fund. SO WITH THE HAS FEE, WE CONTINUED COLLECTING THE SAME AMOUNT OF REVENUE FROM THE HOSPITALS, BUT BECAUSE THE COST OF MATCHING THE FEDERAL FUNDS WAS LESS, WE TOOK THAT EXTRA REVENUE, AND WE USED IT TO OFFSET GENERAL FUND. WE DID SOMETHING SIMILAR WITH CERTIFIED PUBLIC EXPENDITURES, BUT WITH THE CERTIFIED PUBLIC EXPENDITURES, it's a little more complicated because it's not, the money's not coming to the state. It's money that's being spent by local governments. And we're just saying, yes, we have certified that that was a local tax dollar expenditure. And therefore, we're going to get this federal match. But the federal match we were getting was higher because of the enhanced federal match. so we took 50% match on those certified public expenditures and gave that money back to the local governments that had earned it and the money in excess of 50% we kept that at the state level and used it to offset general fund expenditures that statute expired it was repealed but we are continuing to get some certified public expenditures from services that were delivered during this time frame when we got the enhanced match. So we have this extra federal funds that are coming in and if you decide not to do anything, that extra federal funds will go to the local governments and they will get this benefit not because that was the intent of the original legislation, but because their reconciliation of their expenses took longer than everybody else's reconciliation. And so their reconciliation went out past when the statute expired. The recommendation here is that you run a bill to extend the dates of that, and that will make it so that those extra federal funds are used to offset the general fund.
Senator Mobley's got a question. Well, I just wanted to make sure that that wasn't money anybody was counting on.
Like, they didn't delay reconciling in order to get to keep the money. I don't think that anyone was making a strategic decision to delay the reconciliation. I mean, they would have to be pretty darn smart to do that.
Well, okay. I'm convinced then.
Senator Bridges. Thank you, Madam Chair. I move staff recommendation on page two of HickPuff memo, which is extending legislation to the enhanced federal match from the Families First Coronavirus Relief Act continues to benefit the general fund.
Are there any objections That passes on a vote of 5 with Taggart excused The second one is on page 3 For the non emergency services we talked at the briefing about how and at the supplemental about how the department discovered that there were other states that were claiming an enhanced federal match for the non emergency services for non who became eligible because we expanded eligibility to the ACA populations
So we got that enhanced federal match and we get to keep claiming it until October of next year when H.R. 1 says we can no longer claim that enhanced federal match. At the same time, the department said instead of using general fund, we're going to use...
This one's not going to be passed. This one's not going to be passed. I have a question. Okay. Sorry, guys. All right. All right. We'll proceed with all the questions and then... We'll just make Brown vote yes on everything. Okay. Sorry. It's okay.
Do you want me to keep going or do you want to ask your question?
Okay. So the...
at the same time that we were getting to claim the enhanced federal match for this, the department looked a little more closely at it and said, you know, the state share of this should probably be coming from the hospital provider fee rather than the general fund. And the statutes for the hospital provider fee say that it's for some very specific purposes. It does not mention emergency services for non-citizens in those specific purposes. But it does talk about the adults without dependent children to 133% of the federal poverty guidelines and the parents and caretakers from 61% to 133% of the federal poverty guidelines. And that's these non-citizen populations that the department is using the hospital provider fee for those populations. So the supplemental that you all approved was based on the department's forecast that was assuming that they were going to continue using the hospital provider fee for this purpose. and the February forecast for 26-27 also makes that same assumption. If that's not what you want to do, if you would rather use general fund, then the table that's at the bottom of page 4 shows you how much would shift from hospital provider fee to a general fund expense. So it would be for 26, 27, 23.7 million of HAZF fee would become a general fund obligation instead of a HAZF fee obligation. The department is already interpreting that the statute says this is an appropriate use of the HAZF fee. but in talking with legal services they are advising that it would be better for somebody to run a bill to clarify that this is an allowable use of the HASF fee. And part of the argument is that when the original legislation for the HASF fee went through, the fiscal note didn't assume that this would be a population that was funded from the HASF fee. It assumed that it would be funded from the general fund AND all the appropriations up until the 2526 supplemental also assumed that this would be paid for from the general fund So it pretty clear from that that there is some ambiguity in the statute about what the appropriate fund source for this population and their argument is that if you clear that up and run some clarifying legislation, it is going to make it less likely of a legal challenge that someone would say you're not using the HAS fee appropriately.
Senator Kirkland. So what we did in the supplemental is essentially ambiguous.
Mr. Kurtz. Correct. I mean, my reading of the statute is that, and I'm not an attorney, I think there's a strong case to be made that this is an appropriate use of the HASV. But I'm not an attorney and legislative legal services is saying that there's potential ambiguity here. So that's the basis for the staff recommendation.
Senator Kirkmeyer. What about the possibility of putting the whole provider, the whole house, be at risk if you were to try and pull down, do they think they're a whole federal match?
We are pulling a federal match for this. I don't think that there's, I haven't heard any concerns from legal services that this would jeopardize the whole HASFI. The concern is just that this particular use, this narrow use of the HASFI, somebody could question whether that was consistent with the statute. So one option available to you guys is not to do anything,
and then if somebody were to challenge you, you could just run a bill to change it at that point.
That seems easier.
But legal services is saying they think you should run a bill now, so I'm passing along. I'm the messenger passing along their advice.
Okay.
Senator Kirkmeyer. How much do we set?
We're talking about using, and where would those in fund design? Are they offsetting our general fund requirements for the providers and stuff, for the expansion population? So the table at the bottom of the page four shows you the actual and projected, well, these are all projected expenditures for the non-citizen emergency services FOR THIS SUBSET OF THOSE SERVICES THAT'S RELATED TO THESE EXPANSION POPULATIONS. SO WHAT YOU GUYS APPROVED IN FIGURE SETTING FOR FISCAL YEAR 26-27 WAS 23.7 MILLION FROM THE HAS FEE FOR THIS POPULATION. If you decide that the house fee is not an appropriate source for that, then that $23.7 million would come from the general fund.
Senator Kirkman It is where it was coming from Correct
Well, does anybody have a preference?
PREFERENCE. I LIKE THE ALTERNATIVE OPTION, WHICH IS TO PRESUME THAT THIS IS ALLOWABLE UNLESS SOMEONE SAYS OTHERWISE. BECAUSE I'M NOT SAYING IT'S NOT ALLOWABLE. I'M JUST SAYING IT'S NOT
EXCEEDINGLY CLEAR. VICE CHAIR BRIDGES. THINKING ABOUT IT, OTHER STATES ARE DOING IT. I MEAN, TO ME, THAT'S THE EVIDENCE THAT IT'S OKAY, RIGHT? WELL, NOT THE FEDERAL MATCH PART,
just the utilization of the provider fee, right? Yeah, it wouldn't be relevant what other states are doing because they're not necessarily using their version of the hospital provider fee for this purpose.
We're very special. Senator Chris Meyer. So does this impact the funding that like our small rural hospitals are getting from the provider fee because it's going here now instead of maybe to them?
Yes and no. There's some small interactions around the margins because it does affect the upper payment limit calculation and how much supplemental payments we can do. So the fact that we're using the money, the hospital provider fee for this purpose instead of using it for supplemental payments for the hospitals, there may be some marginal differences in how much an individual hospital is going to receive based on how much they serve the non-citizens versus other activities. So I haven't asked HICPUF to do a calculation that would estimate how that would change things. I don't think it's going to be a massive difference in how much any individual hospital gets, though. It's going to be some small marginal differences.
Senator Kirkman. What about when the reductions start coming in on the hospital? It gets it reduced down to 3.5.
At that point, we don't have enough money. So the fact that we are spending more for an expansion population here is going to mean that there's more pressure on the fund. So if you're looking down the road, this is a problem. but that problem is such a big problem I don't know that this is going to solve it.
Senator Kirkbar. Thank you, Madam Chair. Fair. Senator Bublé. So I guess I would agree with Madam Chair that if it's not broken maybe we don't need to try to fix it but also if we get a bunch of feedback which I'm starting to get So I expect more is coming. We can come back to this. I mean, I guess I would suggest we don't do anything about this right this minute and we see what we learn in the next few days. Senator Kroegmeyer.
So, but when we were matching it with general fund, straight up general fund, and not hospital provider, not has to be policy, we were pulling out a federal match then. Correct. And that's not set to stop at any point because of the status of immigration status. Correct. So we were drawing a federal match before. We're going to continue to draw a federal match. That's the assumption, at least. And it's just where is the state match coming from? Is it coming from the hospital provider fee or from the general fund?
I agree with you guys' recommendation. Okay.
Okay. Thank you, Mr. Kurtz. So we don't have to come back to this because we're not voting on it. Not unless people feel compelled to. Okay.
I'm just thinking about Brown because we can't vote.
Right. Oh, yeah. I don't know. We just don't need to come back. Well, I understand, but going forward, do we want to hear from staff on the rest of these and vote later or just table the rest of this until Brown is back? I don't know what the expectations are. for committee for state affairs right now? Well, we're going to have to wait on . We have to wait on all of it. So. I think we might as well wait. So I don't know what the, does anyone here know the status of what's happening in state affairs? The Joint Budget Committee will stand in a recess for a little while. Thank you.
Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. . . Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you Thank you. Thank you. . Thank you. Thank you. Thank you. Thank you. Thank you.
The Joint Budget Committee will come back to order. We are on staff comebacks for, well, oh, we moved on from Mr. Kurtz, so we're on to Ms. Kanagaraja, labor and employment. Did we vote on that? No, we decided not to do anything about it. We're not doing anything. For now. We're coming back to me now. Ms. Kanagaraja.
Thank you. Phoebe Kanagaraja, JBC staff doing staff comebacks for the Department of Labor and Employment. So this first issue on double counting is new to the committee. It is something that Ms. Bickle found through her sleuthing, and then OSPB did some investigative work and question asking with OSC on what's causing this. And then our conversations with OLS determined that the best path forward was to run a bill to make sure that there's clarity to OSC on how they should treat this money in question.
Yeah, we should. Senator Mobley. I move staff rec. Is that what you're doing? Yeah. I move staff rec division of vocational rehabilitation double counting of certain reappropriated funds. Are there any objections?
That passes on a vote of 4-0 with Bridges and Taggart excused.
The next staff come back starts on page 6. This one is more technical. It came up during figure setting Senator Kirchmeyer to split up the line items in the Colorado Disability Opportunity Office.
So that staff and FTE costs are separate from grant and other operational expenses.
And so that is what staff recommendation here is doing. It's eliminating the existing line item and splitting out those appropriations into two new ones. Through that process, I also realized there was an annualization that's not in the right spot, and so staff recommendation is to move it.
Okay. Senator Mobley.
I move CEDU line item split and correction staff recommendation. Are there any objections? That passes on a vote of 4 to 0 with Bridges and Taggart excused. All right, Ms. Bova.
Good afternoon, Julia Bova, JBC staff, doing a staff comeback for the Department of Personnel. The memo I have here basically provides an overview of the decisions that the committee made during figure setting related to some of the ARPA funded projects. My recommendation has not changed in terms of the amount that I recommend transferring but I do have some updated information based on the conversations the committee was having related to FTE for monitoring and compliance for ARPA funds and the capital facilities round two project funding. So the table on page eight basically just provides an overview of the decisions that were made during staff figure setting. So the committee adopted my recommendation to transfer $4.3 million as well as the $9.9 million from the Burnham Yard Project. And then page 9 has additional information. The committee had requested information on the need for FTE related to the fact that those funds were refinanced with general fund. And I did speak to OSPB about this and got some information from the department. And basically the funds were weaved. So even though some of the projects were originally funded with federal funds and now are general fund, they still have to do reporting for the original federal funds, and they don't do that reporting until the projects are finalized, which is why those 12 FTE are needed in the Department of Personnel. Yeah, that's basically the information that I got there and why I have not changed the recommendation. AND I DID CONFIRM THAT ALL FIVE PROJECTS IN DPA ARE NOW GENERAL FUND REFINANCED BUT THE FTE ARE NEEDED FOR THE MONITORING AND COMPLIANCE. AND THE OTHER PIECE OF INFORMATION THAT I GOT FROM OSPB IS THAT THE STATE CAN'T CERTIFY AND CONDUCT THE FINAL CLOSEOUT OF THOSE PROJECTS UNTIL ALL OF THE FUNDS HAVE BEEN SPENT, why those funds were showing up as unencumbered, because they're not going to spend them until close to the end. And then, relatedly, at the bottom of page 9, the committee had asked for information on why the FTE costs seem so high. And then, 9 to 10, this table shows that the reason that those costs were seeming high is because the FTE were spread over multiple years. So the governor gave about $4.7 million for 12 FTE, but it wasn't 12 FTE in one fiscal year. It was spread over four fiscal years, which amounts to about $99,000 per one FTE per year. So that was that part of the recommendation. And then, unless there are questions, I'll move on.
Sorry, Senator Korkmeyer. Sorry. That's all right. It is a recurring theme. I think it's the first time I did that. That's what made it funny. So basically a year or so from now, the 12 term limited staff agreements will be ended and over, and that will be removed from the budget, and we're going to guarantee that. Somebody's guaranteeing that someplace, right?
Ms. Bova.
Thank you, Madam Chair. SENATOR KIRKMEYER, IN MY CONVERSATIONS WITH OSPB, THAT WAS MY UNDERSTANDING. THEY ARE TERM LIMITED. THEY WILL END AT THE END OF THE REPORTING PERIOD WHICH IS APRIL 2027. SO NEXT YEAR YOU'RE GOING TO LOOK FOR THAT. MAKE SURE THAT THEY TOOK THOSE 12 OUT. OKAY, GREAT.
OKAY. WE DON'T NEED ANYTHING HERE. WELL, VICE CHAIR BRIDGESS, WE DON'T, DO WE NEED AN ACTION ON THIS OR IF WE HAD THOUGHTS on what we had already approved, I think now would be the time to bring it up.
We don't have any action. I'm good.
Well, does everyone want to keep the Burnham Yard transfer in there?
Yeah. They can come do a comeback.
Senator Mobley. They will. Okay. All right. I'm good.
Yeah. They'll do a comeback. Fine.
Vice Chair Bridges.
Thank you, Madam Chair. I'll move taking it out, but I don't think it's going to win. But I move removing the Burnham Yard. No.
We don't need to take any action. We can wait. We already voted on that. Motion withdrawn. I don't think it passes right now.
Well, I actually think it's...
Okay. Let's go ahead. I will make the motion and then we'll...
We don't have to.
We can hear their comeback. That's totally fine.
I will just say that I think that this is a transfer that has to be included in a bill, and I think everybody is entitled to an objection to a transfer. And we have one, at least.
So we'll hear their comeback. Great. Anything else for us, Ms. Bova?
No, the page 10 just shows the 2 million unencumbered funds for state capitals facilities projects. I think originally it was 11 million unencumbered, but they've been encumbering those funds. They noted that they expect some of them to happen right at the last minute just due to the nature of capital projects. and I did put the institutions there, the number of projects in the current status as of this month of the encumbered and unencumbered balances. So they have been encumbering them on a short timeline and they expect to encumber the rest.
Okay. All right. Thank you. Mr. Catlett.
Thank you, Madam Chair. John Catlett, JBC staff, here with two comebacks. The first is for the Department of Military and Veterans Affairs. This was a decision item, staff-initiated decision item, that was tabled during figure setting for a continuation of last year's budgeting, budget balancing action that was a grant funding adjustment, a reduction of $250,000 general fund to the Veterans Assistant Grant Fund, and a simultaneous increase in spending authority from the Colorado State Veterans Trust Fund. So staff is relatively agnostic about this recommendation. It was put forth as a way to reduce general fund expenditures in the department. The department is not opposed to this one-time action. But if you're looking for general fund savings in this department, this is one of the very few ways you can get it without impacting matching federal fund dollars or veteran services in the Division of Veterans Affairs.
Senator Kirkman. So the new suggestion is that instead of doing it this way, taking money away from the Veterans Grant Fund that we would do a one-time $250,000 funding reduction or transfer from the Tobacco Settlement Defense Account to the General Fund instead and not do this $250,000. And I would hope that we could agree to that and not reduce the Veterans Assistance Grant Program.
Vice Chair Bridges. Thank you, Madam Chair. Tell me about this fund. The Tobacco Settlement Defense Account. Yes. Could you tell me about it? Well I guess my question about this account what I understand is that this is the money for the lawyers to keep negotiating the master settlement agreement Yes And they need to keep going back and dealing with that I'm told this has been underexpended. I don't know what happens with the dollars once it's underexpended, but as long as there's $250,000 in there that has been underexpended, AND WE WOULD PRESUME TO CONTINUE BEING UNDER EXPENDED. I'M OKAY WITH THAT AS A ONE-TIME MOTION. SO I DON'T KNOW WHO CAN CONFIRM THAT. THAT WOULD BE WITH THE DEPARTMENT OF LAW. AND IT SOUNDED LIKE WHEN THERE WAS AN INQUIRY THEY DIDN'T ANSWER. BUT IT WASN'T OUR STAFF THAT WAS ASKING. SO MAYBE WE CAN FIND OUT. BUT IT WOULD BE ONE TIME. BECAUSE THEN WE'RE GOING TO LOOK AT THE TOBECO SETTLEMENT DOLLARS, the master settlement agreement and see where all those funds are going. Just like we do the marijuana tax cash fund. Thank you, Madam Chair.
Is this an allowable use of tobacco master settlement agreement dollars? I think that's something I'd want to make sure we confirm first.
Well, these aren't the settlement dollars that she's talking about. Well, it comes from them. They are. But it's...
Oh, look at that. I think we said it three times. So, Beetlejuice, Beetlejuice, Beetlejuice.
Well, Commission, I'm not sure how much you heard of what was proposed. Senator Kirkmaier? Thank you. It was to, instead of reducing the veterans grant that we're talking about here, which is funded with, oh, I don't know what it's funded with. But anyways, instead of reducing the veterans assistance grant by 250,000.
No, no, no, we would do that. We would reduce the general fund of the Veterans Assistance Grant, but we would backfill that or offset that instead of from the Veterans Trust Fund, Veterans Services Trust Fund. Instead of that offset, it would be your proposal to take from. The idea was a one-time $250,000 funding from the Tobacco Settlement Defense Account to go to the general fund instead of reducing the $250,000 from the Veterans Assistance Grant Program. So we would be taking tobacco settlement money and helping with general funds. We were told that this has been underexpended. It looked like it the other day.
Thank you, Madam Chair and Senator Kirkmeyer. So we, I'm working with Mr. Thompson to get some of that information. There's been various inquiries. We're sort of, it's been a little tougher to, I think, get it than anticipated, but we are working on it. I think you could. So like the master settlement agreement, the distribution is in statute, that piece. So if you would want to spend some of that account money here, like you could theoretically, like you're saying, transfer the money from the other account to this trust fund, I guess, this cash fund, right? Yeah, you can transfer to, I guess, this cash fund, trust fund, and then spend out of that. But that would require a bill to transfer that money. Yes, but to be clear, we were only talking about the legal services for the MSA, not taking from the program allocations.
Director Harper. Thank you, Madam Chair. And was the proposal to move it out of the defense account into the general fund? So really this is totally apart from the proposal for the veteran services. It just we would veteran services would continue as it is Yes Or as you would annualize the one change out And then this would be instead of the balancing action that Mr Catlett proposed this would just be an entirely separate from defense straight to the general fund Well, yes. Am I understanding that correctly? I guess, but the point was to replace the – I don't know. I mean, maybe it's six and one half dozen of the other, because the whole point was to replace the general fund appropriation that is being made to the Veterans Assistance Grant Fund in the amount of $250,000, which is in the request just from a different source.
Senator Kirkmeyer. So right now the item that we were talking about before was to reduce $250,000 of general fund from the Veterans Grant Fund, the Veterans Assistance Grant Fund. And what this proposal is saying is instead we would take $250,000 from the defense account and put it into the general fund. That's what Jordan was talking about. I assume she was talking to all of us about it. Yes. I'm just processing. It's a different way of accounting for general fund, and I don't know if there's a difference or not.
Director Harper. I mean, I think, thank you, Madam Chair. I think the way that Senator Kirkmeyer described it would be the simplest, which is just $250,000 stays in DMVA's budget, goes to the line item as requested, and then this $250,000 goes, which I can't speak to the merits or the availability of the funds, but assuming this is viable, this $250,000 goes straight to the general fund, so you've accomplished the same thing without more complicated. complicated. And does that need a bill to move it to the general fund? Yes. So it does still. Absolutely needs a bill, but it wouldn't need to be as complicated as one. Otherwise, I think to accomplish the goal, you'd have to take it from tobacco defense, put it into this cash fund, reduce the general fund appropriation. It feels unnecessarily complicated if you're just trying TO GET $250,000 TO THE GENERAL FUND. THANK YOU, MADNESS YOU. AND I THINK SINCE IT'S A CASH FUND, A GENERAL FUND TRANSFER, YOU COULD JUST PUT IT IN THE JOINT TRANSFER BILL, TOO. IT WOULDN'T BE A SEPARATE BILL. OKAY.
OKAY. REPRESENTATIVE BROWN.
YEAH, I THINK FOR ME, I JUST WANT TO KNOW THAT THIS MONEY IS ACTUALLY THERE AND THAT THE FUND IS ACTUALLY UNDER EXPENDED. AND THAT I THINK TO THE VICE CHAIR'S POINT THAT WE CAN USE THESE FUNDS FOR THIS PARTICULAR PURPOSE AND OTHERWISE I'M GOOD WITH IT.
So would you like to make a contingent motion, Vice Chair Bridges?
Thank you, Madam Chair. Insofar as this is an allowable use of the MTCF dollars, not MTCF, the Tobacco Master Settlement. And then they're there. Defense Fund. Defense Fund. Well, Tobacco Master Settlement dollars have restrictions on them in order for us not to violate the settlement. So I want to make sure this is an allowable use for those dollars. and then assuming there is money in that fund that is not needed for, you know, defense and settlement and whatnot, that we transfer $250,000 from there into the general fund. And we don't do the transfer of $250,000 general fund out of the Veterans Assistance Fund.
Yeah that would be to reject the other transfer Okay Are there any objections That passes on a vote of 5-0, with Taggart excused. Just the easy button.
Can we go lottery?
Mr. Catlett, the lottery.
Thank you, Madam Chair. The next comeback is for the Colorado lottery. There were no decision items in this request. It is only the line item detail to fund the lottery. So staff has no recommendations or input other than staff recommends to approve the department's request for funding for the Colorado lottery.
Thank you, Madam Chair.
Last year, the lottery fell short of the GOCO cap by just like a million dollars, I think, by the end of the year. And we increased their ability to spend by more than $14 million. So the reason they didn't hit the cap last year is because we gave them millions and millions and millions of dollars in both staff and advertising, and otherwise they would have hit their cap. Moreover, they're doing great. Last month, this was written in January, the lottery set a new scratch sales record by reaching $16.3 million. They also say they're on track to exceed the GoCo cap by $4.5 million in this coming year. So it just doesn't seem to me that the best and highest use of money from generated by Lotto is for an incredibly high advertising budget, especially since that advertising budget will now go towards things like iGaming, which they call iLottery, but is iGaming. Senator Mamalee and I are working on ways to tighten that down and make it less addictive, but it is still more addictive, and I don't think that we should be spending millions of dollars that could be going to supporting the outdoors, to supporting outdoor equity, to supporting the best program and trailheads and all that on encouraging more Coloradans to play games that are extremely, like by orders of magnitude, more addictive than what we see with scratch tickets and lotto tickets. So I genuinely don't want to give back the 14 that we gave them, the 14 FTE that we gave them last year, the 14.6 million. Sorry, it was actually 13.8 FTE last year that annualizes this year to 17. I don't want to give them the extra three. I don't want to give them any money for advertising. I would take back everything we did last year, but I don't think that that motion passes. So I don't know, committee, what do you think?
Do we give them an extra three FTE this year from the decision last year?
Do we give them the full 18 million in advertising?
What are you proposing?
We didn't. We didn't. We held it.
Well, we voted. It was 3-3, so it didn't pass. The marketing and communications 17 is... 18.2. I would say we, Mr. Catlett, what are the three FTE that they get this fiscal year? That would be you if you call on.
Thank you, Madam Chair. I'm sorry, it'll take me just a minute to pull that out. Take your time.
Take your time. The Vice Chair is just impatient.
Well, I've got all the time in the world.
Last year we gave them $14.6 million from the lottery cash fund, $13.8 FTE in 25-26, and the cost increased to $17 FTE and $14.8 million in 26-27. There is $200,000 of that that goes to the responsible gaming fund. Madam Chair, it looks like it would be the 3FT, we're a retail business analyst, an analyst 2, which is I believe an account executive, a salesperson, and a marketing comm specialist.
Vice Chair Bridges. Thank you, Madam Chair. I think the committee would be open to cutting the latter division marketing communication budget from 18.2 in half to 9.1.
Senator Kirkmeyer. And what percentage is that of their overall dollars that they bring in? Right? I mean, don't they bring in like 300 million or something? So high amount, how could this?
What did they bring in? It's approximately 900 million.
900 million. And so they would have $9 million to do marketing for lottery. They have $18 million now.
Mr. Catlin. Yeah, and we would reduce it to $9 million.
Is that the request? Vice Chair Bridges. Thank you, Madam Chair. We gave them $10 million extra last year and $3.3 million extra last year. We gave them $10 million for vendor fees and $3.3 million for marketing communications. So I kind of feel like we're just setting them back to where they were before this year, the year where they ignored a letter that we sent to them saying maybe ask the legislature about this before you go ahead and authorize iGaming.
Oh, wait, but now you're talking about cutting into their, like, now I'm shaking loose a little bit of my memory from last year about the justification for at least the work they had to do with the vendors and all of that. I don't think that would be fair to take away those dollars. Was that for a one-time purpose, Mr. Catlett, or that's ongoing?
Madam Chair, the request was an ongoing request. The increase was overwhelmingly driven by $10 million in spending authority for lottery vendor fees. They shifted several years ago from a fixed cost model to a variable cost model in terms of their vendor compensation. And so in order to fund that, the department requested this significant increase in the lottery vendor fee line item.
So I'm not in support of cutting that. If you want to take a haircut on the marketing budget, I'm okay with that.
Thank you, Madam Chair. The marketing communications budget is separate from the vendor fees budget The vendor fees is two down Vendor fees is on 18 Marketing communications is on 17 I proposing a half cut on 17 not the vendor fees
Senator Perkner. So how much did we increase the marketing budget by last year? And how much are they proposing to ask to have an increase by this year?
Mr. Catlett. Thank you, Madam Chair. Last year, the increase in the marketing budget was $3 million.
What's this? Senator Malk. What's the global marketing budget? Yeah, I think what we're having trouble understanding is what is all wrapped up in the 18.2 million that we see on page 17.
Madam Chair, that's the marketing and advertising budget. That's not their total budget. It is? For marketing and advertising. It was $18 million. And last year it was $15 million.
We increased it by $3 million. And now you want to take it all the way down by $9 million? Last year they weren't advertising products that are 10 times more addictive than the products that they're authorizing this year. So I think it's pretty different. So this year you just want to do, we're only increasing by $3 million this year.
Everything we did last year you were okay with.
I was not. Oh, but the committee was okay with.
Yeah. So now you want us to redo what we did last year and cut them all the way back down. So last year we went from $15 million to, no, we went up to $15 million. How much did we increase did we give them last year?
Mr. Catlett, can you tell us the.
No, we're doing $3 million this year.
No, we're doing three FTE this year.
What appropriation did they have in fiscal year 25, and then what did we boost it to, and then what is it going to now?
Just so every, I think those three numbers is what we're trying to do.
So last year the request was for an increase of $13.8 million. Of that $3 million was marketing. Overall, the increase that they requested last year was for $14.6 million, $13.8 FTE annualizing this year to 17 FTE and $14.8 million. But that's spread across different line items.
Correct.
Okay, so Vice Chair Bridges.
Thank you, Madam Chair. It's five FTE in the sales team expansion, three FTE in marketing, three in operations, two in the warehouse, one in licensing, one in compliance, one in responsible gaming, and one in security and investigations.
Senator Kirkmayer. I'm still not clear. So for the marketing line item here, that's on page 17, that is in the long bill, it says $18.2 million. So that would be for this 26-27 year. And it doesn't have any FTE associated with that. What was that line last year before it got increased to million Or did it even get increased to million Madam Chair it was million last year I sorry prior to the increase last year
So in fiscal year 25-26, at the top of the table it was $18.2 million, because it reflects that $3 million increase. Prior to that, it was $15.2 million.
And then this year they're asking for nothing?
Continuation.
And you want to reduce the whole thing in half? I do. So go against what we said we would do last year and pull that all the way back?
Madam Chair.
Where are the annualized three FTE? Madam Chair, all the FTE are in the personal services line.
So we don't know what they're attributed to?
Not in the long bill, no.
Vice Chair Bridges. Thank you, Madam Chair. Two things. One, yes, I do want to take not just what we gave them last year away, but more, because, again, last year they were advertising a different product than what they're advertising this year. The product they're advertising this year is ten times more addictive. It's like if you're going from cigarettes to vapes, this is a much more addictive product that they're moving to, and it is not one that I think this committee said that they were fine increasing advertising for. In fact, members of this committee sent a letter, assigned a letter to Lotto expressing their opposition to the change that they made in rulemaking that allowed for this new product to be promoted by Lotto. So things have changed significantly from last year, and I'm not comfortable putting $18 million that could go to parks, that could go to GoCo, that could go to outdoor equity, that could go to the BEST program. I don't want to put $18 million towards advertising for a product that is 10 times more addictive than the product they were advertising last year. On top of that, the three FTE that we give them, they are already actually right now only at 103 FTE. The increase we gave them last year brought them up to around 120 FTE, I think maybe a little more than 120. So if we did reject FTE, which I would like to, but that's not what I'm suggesting we do here. But if we did reject the FTE, they have plenty of room in their personal services line to absorb that cut. They're not fully staffed at the moment.
Senator Kirkman. So I pulled up the figure-setting document. State Lottery Division. I want to make sure I'm on the right area. I think I am, said the actual for 2425 was 13.175 for marketing and communications, 13.175. And in 2526, we appropriated 18.2. And this year's request is 18.2. So they're not requesting new dollars for marketing. Okay.
No. The FTE actual in 2425, it says it was 102.1. And in 2526, we appropriated 115.9. And now they're requesting in this area another four FTE. Is that correct? For 2627, they're requesting to go to 119 FTE. What's being annualized?
Yes, annualized.
Part of last year's request.
So it wasn't a request to increase by four FTE. It was annualizing what we did last year. to go to four more FTE Correct So we agreed last year to give them the additional FTE and this year Correct Okay And what you want to do is reduce them all the way back to I don know when their marketing campaign was million and take away the annualization and keep them at $115 FTE.
No?
I'll try to figure out what you want to do.
Thank you, Madam Chair. No, I would love to do all of that, but all I'm proposing right now is cutting the advertising budget in half. because, again, it's a much more addictive product, and I'm not comfortable with the state being the agent of addiction.
I wonder if you might think about making said reduction in your bill.
Vice Chair Bridges. Thank you, ma'am. Sure, but I'm not comfortable voting yes on an $18 million advertising budget this year.
Okay. It is the budget committee's duty to determine line item detail. We vote on it every year, and this line item detail is not, I think, commensurate with what it is that we decided we would do last year, because the change that lottery made in November, two weeks after the legislature would have the ability to weigh in, I think completely changes what it is that these dollars do.
And I only suggested that because what you are doing is making a policy change to make certain things disallowable that are allowable right now. And so if it was something that would go along with the things that you're making disallowable, some commensurate cut with that. That's all I?
Yeah.
I was just spitballing. Thank you, Madam Chair. I feel a lot more comfortable with the advertising if the product that they're advertising is significantly dialed back. So this is my discomfort with this, sure, I opposed it last year, but my sort of increase in the extreme discomfort I feel with spending $18 million advertising this product is the change in the product. And in previous years, I have quietly said I think this is bad and I'm not changing. And this year, with what they have done, I think they have crossed a line. They have legalized something that the people of Colorado did not legalize. and I'm extremely uncomfortable giving $18 million to advertise that product. So I would be happy putting it back in if there is some change in the product that's being advertised, but at this moment I am not comfortable with the current product that this money would go to advertise.
Senator Kirkmeyer.
Well, it sounds like you do need to carry a bill then to say that they can't legalize what you say you think they legalized, but not everybody signed that letter. and last year we agreed to $18.2 million. They're not asking for an increase. You just don't like the way they're spending their marketing funds. Prior to that, it was $13.175 million. Prior to that, 23-24 actual was $14.773. So, you know, I can see if maybe you wanted to skim some money off, but I guess I don't know how much they're actually using to advertise and market the stuff that you don't like, that you're saying they legalized all of a sudden something else. Do we know how much they're using to even market that, and are they even marketing that? Mr. Catlett, anyone seen any ads? I guess I don't watch enough TV or something or YouTube or whatever it is. I don't even buy lottery tickets.
Rep Brown, did you have a question?
I was just going to say, I mean, I think with the vice chair recommending, recommending I would likely support, I think that a logical thing also to do to take away what we gave them last year. I know that's not as much as what the vice chair wants, but if we are concerned about changes that they have made in the last year, that seems also logical to me.
Vice Chair Bridges.
Thank you, Madam Chair. Then motion withdrawn. I move that we, if it was 13.175 last year. It was basically 5 million. In 24-25, it was 13.175. 25-26, we did 18.2. I move to approve line item detail and base appropriation for State Lottery Division except for the Lottery Division Marketing Communications number instead of 18.2 is 13.175237.
Are there any objections? That passes on a vote of 3 to 2 with Taggart excused.
So, Madam Chair?
I'm sorry. Oh, yes. And Kirkmeyer and Sirota objecting. Senator Perkmeyer.
I'm going to ask that we bring this back when Taggart gets here.
Okay. We can. Okay. We're just moving right along.
Thank you Madam Chair Andrew McLear JBC staff So there was an item I forgot when I was in front of you before with OIT. Related to this memo, this is just a technical correction for an annualization of SB 24-111. So the issue that came up is in submission of the request, the department annualized a reduction for SB 24111. That should not have been included in the request because there was never an initial appropriation made to reduce out. So I'm recommending removing that reduced appropriation for annualization since there wasn't an initial appropriation made to DOLA to then be reappropriated to OIT.
Vice Chair Bridges.
Thank you, Madam Chair. That seems like the right thing to do. I move that we make that adjustment.
Do that. Are there any objections? That passes on a vote of 5-0 with Taggart excused. Thank you. All right. Given Rep. Taggart's absence, we'll hold off on the pinnacle discussion. Director Harper, anything else for us?
Thank you Madam Chair Just a quick reminder that we have the CDC coming tomorrow at 8 in the morning That meeting is here. And then tomorrow we're going to have a good number of staff come back, I expect. And you have a number of bills that Ms. Shen sent out as a preview over the weekend. We also have some others that are ready for review if you're ready to see them tomorrow. So I would expect tomorrow to be a fairly heavy day of staff comebacks and potential legislation review. There's an agency comeback for, and the potential legislation is falling, as the calendar is drafted right now, falling under the meet as necessary, but it's being added to the calendar. In terms of the agency comeback scheduled for tomorrow, I do believe that you will hear from Treasury. My understanding at this point in time is that there are not comebacks from the other agencies that are shown. We'll keep them on the calendar in case that changes. But I believe that the Treasury is the only one for agency comebacks tomorrow. I would expect the main action on agency comebacks to be on Wednesday when you have courts and probation and then Office of State Planning and Budgeting. I think we can say with a lot of certainty that OSPB will be coming back with a number of comebacks.
Okay. Do we have all those bills in a binder?
Thank you, Madam Chair. I believe that the bills came via email because it was too late to get them in the binder for tomorrow and we didn have a Tuesday binder We can try and have them printed now if you would like Can we do that I would I would like that
Does anybody else want them printed? Yes, please. Does anybody not want them printed? Please. We'll probably need a little bit of time to get them printed and organized. Okay.
I don't need my putting up on dirt.
That helps.
Yeah, just a packet would be fine.
Okay. Okay. All right. The Joint Budget Committee will stand in recess and tomorrow. See you bright and early for CDC meeting.
Thank you. Thank you.