The home stretch

2018 legislative session ends on May 9

home-stretch

With three working days left in the 2018 legislative session after today, compromise on a couple of huge issues is tantalizingly close. Politics, feelings, power plays, and good, old-fashioned strong-arm tactics could still change the final outcome.

Transportation

After the Senate unanimously passed SB 18-001, the House has taken its time working on a package that incorporates three main components necessary for a statewide transportation funding solution:

  1. A shot in the arm of one-time revenues for state and local transportation and transit
  2. A timeout on a referred bonding question, in order to allow a chance for a 2018 citizen initiative (Denver Metro Chamber/Colorado Contractors Association sales tax proposal) to make the ballot and pass
  3. A 2019 referred bonding question (if the 2018 effort is unsuccessful) that – if passed – leaves no part of the state behind. State and local transportation and transit will receive funding.

The key in the House has been working to calm fears that the funds necessary for one-time and ongoing funding will not impair education funding, and the House amendments appear to hit the mark. SB 18-001 now requires the establishment of a $335 million reserve account if a 2019 bonding measure is approved. This will ensure that the state’s new obligations to transportation will not impact other areas of the budget in the event of an economic downturn. The bill still has to get through the full House, where additional tweaks are expected. However, the goal of the sponsors is to work with the Senate sponsors and deliver a bill that the Senate will agree to and avoid a conference committee.

Municipal courts and public safety

The drumbeat continued in 2018 with multiple bills, mostly backed by the American Civil Liberties Union (ACLU), with which CML continues to work with to try to meet in the middle. Key bills include:

  1. HB 18-1353 that provides state funding toward the unfunded mandate created by the state with HB 16-1309. Municipal courts will apply to the Department of Local Affairs (DOLA) for the funds to reimburse the mandate for defense counsel at first appearance. A small portion of the funds will also go to the Office of Alternative Defense Counsel (ADC) to prepare for implementation of SB 18-203 (below).
  2. SB 18-203 has been perhaps the most challenging bill of the session on this issue because, once again, an ACLU-backed bill is tinkering with aspects of municipal court operations. The final bill will require defense counsel for indigent defendants in one of three ways – but will allow municipal courts to continue contracting with a public defender of their choice. The only requirement is an evaluation by ADC or the court’s choice of other methods. The funding mentioned above in HB 18-1353 will allow ADC to determine how much to request to fund the evaluations once required. Faced with certain passage of this bill, CML worked to provide as many options for courts as possible, rather than risk a massive unfunded mandate ending up on the books. Whether or not the process mandate is an infringement of home rule authority for those municipal courts in home rule municipalities is a matter for the courts, should any municipality choose to pursue it.
  3. HB 18-1404  deals with internal affairs investigations and the accessibility of those records to the public. The introduced version of the bill was particularly troubling. Again, faced with the prospect of bad bill making it through the process, CML worked with the sponsors and other legislators to amend the bill such that the League could remove opposition. The bill is in the Senate now, and there are still efforts to clean up a few points that need clarity.

PERA

The unfunded liability of the Public Employees Retirement Association (PERA), with 27 CML-member municipalities included in the Local Government Division, is somewhere between $32 – $50 billion, depending on the source. PERA has become unsustainable in its current state, and months of effort have culminated in SB 18-200 that passed the Senate and House with different solutions and is now in a conference committee. The atmosphere around this bill is markedly different from many others, as legislators seem to fully understand that the must come to a compromise this year to stop the bleeding.  The key issue for CML is protecting the CML municipal members and their employees from unnecessary additional contributions because the Local Government Division is poised to be fully funded much sooner than the others.  It appears the League will be successful in that regard, although attention to the conference committee process is necessary to ensure no problematic language gets stuck into the committee report.

Beer and Liquor

The conundrum described in a recent CML Legislative Matters blog is the subject of SB 18-243, although the solutions proposed are not unanimously supported.  SB 16-197 changed the landscape of alcohol beverage licensing forever, with the biggest changes yet to come on January 1, 2019. At that time, existing fermented malt beverage (FMB) licensees that are only allowed to sell 3.2 beer will be able to sell malt liquor – or full-strength beer. Whether they realized the significance of that provision when it passed in 2016 or not, Colorado’s retail liquor stores became very concerned about it after a required working group created by SB 16-197 failed to recommend a solution to the legislature the retailers wanted. While SB 18-243 contains some of the consensus recommendations of the working group, the version that passed the Senate and is now under consideration in the House has some distinct additions to those statutes.

The League has managed to negotiate out some problematic language and is neutral on the legislation. Language CML asked for that ensures no new FMB licenses can be within 500 feet of a school (or at a distance less than that, if determined by the municipality) is included in the bill. It is also the subject of an “insurance policy” bill to be introduced today and pushed through in the event that SB 18-243 falters.

In the last few days, the bill is now a battle of Goliaths from various aspects of the alcohol beverage and retail industry.  Once the final outcome is known, the League will fully evaluate where liquor licensing in Colorado is headed and how municipalities may be impacted

When the dust settles…

All of the remaining bills alive, as well as logs of those bills CML supports and opposes, are on the CML website’s current legislative session page.  Shortly after the session ends, CML will publish a newsletter article alerting members of legislation that passed is already or will soon be effective. In early June, a full compendium of all the laws enacted affecting Colorado municipalities will be published and available on CML’s website.

Until then and any time, feel free to contact any of the advocacy team members on bills or issues in which you have an interest or on which you have questions.

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Impacts of 2016 market shifting liquor bill still to come…along with more bills

SB 16-197 more than grocery stores selling liquor

The background in brief

In the waning days of the 2016 legislative session, powerful alcohol beverage industry lobbyists gathered behind closed doors in the Colorado State Capitol. They labored to come to a fast (think six days) compromise that averted an expensive fight over a proposed ballot initiative to put beer and wine in any grocery store that wanted to sell it, instead of being restricted to 3.2 beer (fermented malt beverages). Had the initiative gone forward, the fight was sure to continue throughout the summer and fall and get quite expensive.

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Grocery stores, which had tried for years to find a means to be able to sell at least beer and wine, had banded together to push the initiated statute onto the fall ballot. Retail liquor stores pushed back hard, fearful of the impact on them if grocery stores were able to sell two of their main products. Liquor store interests blinked first, and a series of complicated, if not poorly conceived compromises were woven into SB 16-197. Everyone cheered, patted themselves on the back, and the bill was signed into law by Gov. John Hickenlooper on June 10, 2016.

Gov. Hickenlooper said at the time that he “preferred the status quo” that was “unlikely to remain” – referring to the ballot measures waiting in the wings. He signed the bill saying that it “implements inevitable change in a measured and reasonable process,” having no reason to think that within a few months, some of the parties to the so-called compromise began to dispute the practical effect of some of the language to which they agreed.

In effect, the legislation:

  • Halted the issuance of any new retail liquor store licenses that were within 1500’ of an existing license (3000’ in municipalities under 10,000 population)
  • Allowed multiple liquor licensed drugstore (LLDS) licenses to be acquired by grocery stores, provided:
    • No retail liquor stores were located within 2500’ of the location
    • A grocery store acquired by purchase two retail liquor store (RLS) licenses within the same jurisdiction (or adjacent jurisdiction if one or both licenses were not available)
  • Set December 31, 2018 as the last day in which grocery stores that did not convert and convenience stores holding fermented malt beverage (FMB) licenses would be restricted to selling only 3.2% fermented malt liquor and allowing the sale of full-strength malt liquor.
  • Created a working group to talk about processes related mostly to #3, but also to investigate and recommend updates to alcohol beverage tastings statutes, whether or not RLS licensees should be able to fill growlers, and other miscellaneous items.

(For more comprehensive information on all the elements of SB 16-197, the Colorado Liquor Enforcement Division (LED) has a page dedicated to resources and bulletins on the bill and its implications)

Slow rollout since passage

A recent check showed that only two municipalities have been notified by a grocery store that it had begun the process of attempting to purchase two retail liquor store licenses in order to be able to acquire an additional LLDS license, as required by SB 197. It is still too early to tell, but the cumbersome and expensive process may be a limitation on new LLDS licenses. Score one for the retail liquor stores.

Regardless, the biggest impact of SB 197 has nothing to do with additional LLDS licenses, and it was an element hidden in plain sight in the bill that subsequently caused some of the parties to “the deal” to dispute whether the plain meaning in the bill was actually the intent. It matters little because – barring a change in the statute – the biggest change comes with the change in definition of “fermented malt beverage” effective on January 1, 2019 to include “malt liquor.” The result is that any FMB licensee may sell full-strength beer and any other beverage that is considered malt liquor.

That single issue dominated the discussions of the working group assembled by the LED, as directed by SB 197. It was clear from an early stage (late 2016) that liquor stores had realized the allowance for convenience stores and grocery stores to sell the same beer they sell was going to shift the market. At first, there was complete denial of the legal implications of the statute, followed by acceptance and proposals for a complicated new licensing scheme for FMB licensees. The League countered with a proposal that would change the licensing parameters for new FMB licenses but leave untouched those that were in place. In essence, the proposal was to treat new FMB licenses like retail liquor stores as it pertains to distance restrictions from schools, daycares, and higher education institutions. In the end, no one proposal was embraced.

What to expect in 2018

As the 2018 session draws near, it is clear that there will be at least one bill that attempts to alter the “automatic conversion” to full-strength beer by creating a new license for all FMB licensees. The new license would create certain limitations on grocery stores and convenience stores that want to continue selling beer and malt liquor. CML has authority to request legislation mirroring the proposal made during the interim, as well. However, if groups pushing the other proposal can incorporate key municipal issues, then there may be no need for a competing bill. That process will continue through the end of 2017 and into the next session.

Other legislation is likely, considering the myriad issues SB 197 created that changed beer and liquor business and licensing in Colorado in ways that have still not yet been fully comprehended. (i.e. updates to the alcohol beverage tastings statutes and prohibitions on open containers) The key for CML is ensuring that all existing local control is retained and that anything new also provide for similar or broader local authority. Stay tuned and cheers!