Posted March 18, 2020
As we all should be aware, our State legislature is now in an emergency recess due to Covid-19 concerns. This means the hearings scheduled for March 18, 2020 on two bills that significantly impact common interest communities will not take place this week and those hearings will likely be rescheduled at some point in the future. When we know more, we will let our CAI members know. In the meantime, our Public Relations firm Strategies 360 recently provided CLAC with an update on the current status of the legislative session and what this may mean for the bills proposed that impact common interest communities. With their permission, their report is included below so you too can be up to date:
In this unprecedented time, we wanted to share with you some of the news that has come to light regarding the legislature and the 2020 session.
Legislation passed to date:
Any bills that have been passed and signed into law by the Governor have become law. This doesn’t prevent the legislature from passing subsequent legislation to modify those new laws if they had a fiscal impact associated with them.
Legislation sent to the Governor in the last few days:
The legislature worked late on Thursday and Friday and also came in on Saturday to pass bills that were already in the Second Chamber and not controversial. Those will eventually be sent to the Governor and he would have 10 days to sign, veto or become law without his signature. But those bills can be held in the enrolling room of each chamber for an indefinite amount of time as we try to ride out the current storm and see what the future holds. They can send them to the Governor now, but also realize there are more important issues at hand.
Current Bills going through the process:
All pending legislation will remain in place until lawmakers return on March 30. They may decide to extend the recess if the coronavirus continues to spread and leadership decides it remains unsafe to resume lawmaking.
Any bill with a fiscal impact, no matter how small, may be at risk of not passing. Please see the budget explanation later below. The forecast was far worse than anticipated and there are no additional funds for constitutionally or statutorily required budget expansions, much less new programs.
Sponsors will likely be looking for ways to eliminate the fiscal note on HB 1200 and HB 1333 and possibly pass only those portions of the bill that don’t cost the state money. The legislature will likely have to prioritize bills moving forward if the session is shortened and given the financial strains the state is facing. HB 1200 and HB 1333 are constitutionally required to have one committee hearing, so we need to gear up for that but wait and see what direction the sponsors decide to head.
What is a legislative interrogatory and why is it going to the Supreme Court:
The legislature’s actions are presumed to be constitutional unless challenged in court. The legislature has the ability to send a written question to the Supreme Court when they need an answer on the legality of an action the legislature is taking. Most often, it is seen when the legislature is about to pass a bill on 2nd Reading in the second chamber. Given that the legislature has never been faced with having to temporarily adjourn and because some
members of the minority party disagreed with both Democratic and Republican leadership’s mutual decision to recess, the interrogatory process was used. Rather than wait for an undetermined amount of time for an answer, the legislature is using its presumptive constitutional position that they can temporarily adjourn in light of the health crisis. What is at question is whether the legislature has a ‘use or lose’ approach to the 120-day legislative session when the state is in a declared health emergency and continuing to work is no longer safe.
Today’s revenue forecast changed dramatically from the December 2019 forecast from a surplus of at least $832m and an approximate $450m TABOR refund to a surplus of $27M and no TABOR refund. To translate that, the legislature only has $27M in revenue to spend on existing program expansions, inflationary increases, or constitutionally or statutorily required increases. This lack of revenue has the current forecast for the state budget $629m below the allowable Ref C cap.
For fiscal year 2020-2021 and after, factoring in inflationary increases and population growth for those programs that require either or both, the budget this coming fiscal year is in a deficit of $426m (inflation + population) or $258m (inflation only).
COVID-19 (Source: Legislative Council March 2020 Forecast)
The spread of the novel coronavirus and associated disease, COVID-19, and the efforts to contain it pose a significant downside risk to the economic outlooks for the U.S. and Colorado.
Measurable economic impacts are generally limited to slowing global economic activity, supply chain disruptions—particularly for products manufactured in China—and financial market volatility. The impact on U.S. consumer spending, the largest driver of economic activity, has not yet been quantified, but changes in consumer behavior are already evident as growing fear has prompted stockpiling of shelf-stable goods. The cancellation of business travel has been widespread, demand for leisure travel is below levels following September 11, 2001, and major sporting and cultural events have been cancelled. These actions will ripple through the economy, and the full magnitude of their effect will not be known for some time.
The timing and severity of the COVID-19 outbreak will influence the policy tools used to contain the virus and sustain economic activity. After lowering U.S. interest rates in an emergency preemptive move on March 3, 2020, the Federal Reserve announced on March 12, 2020, that it would use capital injections, as well, to buoy volatile financial markets. The Federal Reserve announced further interest rate cuts and asset purchases on March 15, 2020. Additionally, Congress and President Trump are moving to provide fiscal stimulus to address COVID-19. These and other policies may blunt the economic impact of business closures, the standstill in travel and related tourism, and event cancellations. However, even with offsetting policy responses, the economic impacts of COVID-19 are expected to pose a sizable drag on economic activity in 2020. The number of confirmed COVID-19 cases in the U.S. and Colorado will grow in the weeks and months ahead. However, early actions to contain the virus will slow its contagion and the virus will subside in the summer months. A rapid, widespread outbreak and/or multi-month, large-scale actions taken to contain its spread will result in slower economic activity than forecast. Additionally, a strong return of the virus in the fall poses ongoing downside risks for the current and next year. Conversely, COVID-19 may be contained more quickly than expected, resulting in a rapid return to the sustained economic expansion following the current slowdown and market volatility.
While the unemployment rate is low in February 2020, the labor force will experience significant upheaval through the spring in response to COVID-19. Contract employees and gig workers have the most significant exposure with little job security and little income due to the drop in demand. Many other employees will be forced to work from home or take time off work in order to maintain social distancing. The first measure of the impact on the unemployment rate will likely be reported in May 2020 when April employment figures are reported.
Jeff Kutzer, CLAC 2020 Chair