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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PERA reform: One size fits most

PERA_Logo

The hardest part about pension reform is explaining it to the majority of public and private sector employees that are not guaranteed a specific retirement income in their retirement years. Trying to fulfill obligations of billions of dollars may not compute to those that sweat over their 401(k) or 401(a) performance, stress over whether they can kick in another percent or two to a 457 or IRA, and often wonder what they will have in their retirement years.

There is, however, one incontrovertible fact. Similar to a credit card, the balance due has to be paid to employees that enter retirement having faithfully participated in a pension plan and played by the rules in place. Unlike a credit card, bankruptcy for a public pension is not an option. Obligations have to be paid.

At this point, it matters less how the Public Employees Retirement Association (PERA) got to the point it is at now than it does how PERA moves forward on two fronts. One, how does PERA chip away and eliminate its unfunded liability? Two, what – if any – changes will be made going forward? The first question is the most urgent at this time because every day that goes by exacerbates the unfunded liability. Simply put, the grand reforms in 2005, 2006 and again in 2010 that were supposed to stem the losses were not enough.

If those unfamiliar with pensions were lost before, then trying to explain how each division of PERA is calculated separately might finish them off. People explaining that it would currently take as much as 78 years to fully fund the State and School Divisions of PERA rarely mention that the Local Government Division (LGD) timeframe is more like 45 years. Neither of these fall within PERA’s laudable goal to have all divisions fully funded in 30 years, but it illustrates that the LGD is in a much better situation than PERA’s other divisions.

Before the legislative session, both PERA and Gov. John Hickenlooper proposed plans to fully fund PERA in 30 years. While elements of the plans varied, the result for the LGD was full funding in 18 years under PERA’s plan and 19 years under Hickenlooper’s plan. The takeaway is that the LGD can be afforded a lighter touch than the other divisions and still meet the goal of full funding in 30 years.

There are 27 municipalities that are members of the PERA LGD – from Colorado Springs, Boulder, and Pueblo to Alma, Eckley, and Rico. Some of the municipalities are also in Social Security – an extra contribution required for the town and the employee. The impacts of increased contributions on both the employer and the employee are worthy of larger discussion, but they are significant. The League stands firm that if they can be minimized, then they should be minimized.

To that end, CML will advocate for proportional treatment of the Local Government Division in any legislation proposed this session:

  1. CML and PERA Member Municipalities support the goal of passing legislation in 2018 that will allow PERA to achieve 100% funded status in all divisions in 30 years or less with the following inclusions:
    1. Oppose any additional employer contribution in the Local Government Division.
    2. Support the governor’s proposal that employee contributions for new employees in the Local Government Division should be the same as current employees
    3. Support a reduction of the proposed additional employee contribution for employees in the Local Government Division
  2. CML and PERA Member Municipalities retain the discretion to oppose fixing in state statutes an automatic ratchet-up contribution mechanism that would:
    1. Unnecessarily create another automatic trigger affecting budget and revenue (i.e. TABOR, Amendment 21, Gallagher)
    2. Create budgetary impacts when local governments would be focused on reducing new costs in the budget to avoid layoffs or program cuts
    3. Bypass the legislative process that should rightfully be part of any potential increase in the expenditure of taxpayer dollars

Setting PERA on the path to good fiscal health is imperative to all Coloradans. Doing so in a fair and equitable manner to each current member and retiree is equally imperative, and applying the necessary prescription to heal the Local Government Division on its own merits is the only appropriate cure.