Amendment 78: Legislative authority for spending state money, explained

Every year, the legislature approves a state budget that lays out how Colorado will spend its state tax revenues, the proceeds of various fees, and much of the annual funding it gets from the federal government.

But there are certain types of one-time money that pass through the state treasury that aren’t included in the standard budget process. These are so-called “custodial funds” and range in both dollar amount and type.

For example, Colorado is due to receive $400 million in the settlement with drugmaker Purdue Pharma, money the Attorney General’s office is in charge of doling out. And last spring, Gov. Jared Polis acted on his own to allocate $1.67 billion sent to the state by the CARES Act to deal with the impact of the pandemic. 

Generally, the money comes with guidelines about what it can be spent on, but ultimately, it’s up to the state agency that receives it to make the final decisions.

Amendment 78 would change that process to give the state legislature authority over those funds, requiring lawmakers to pass bills saying how the money will be spent.

As a constitutional amendment, the measure will need approval from 55 percent of voters to pass.

In addition to giving lawmakers spending authority over these funds, Amendment 78 says that any interest this money generates while it sits in the treasury will go to the budget’s general fund, instead of being spent by the agency that received the money.

Backers of the amendment, which was put on the ballot by the conservative group Colorado Rising Action, say it will bring more transparency and accountability to this corner of state finances. They also say that it will give the public a chance to weigh in.

“The same process should be done for all money that comes through the state,” said Michael Fields, the head of Colorado Rising Action. “It allows everybody to push for what they think is the best way to spend it.”

However, opponents say the change will take spending decisions away from staff experts and independent boards, and will instead subject those decisions to a more politicized process in the legislature. And some of the lawmakers currently in charge of setting the state’s budget argue the amendment would make Colorado less nimble during times of crisis.

“In an emergency situation, we have to call the legislature back into session and pass appropriations bills. That is something that's going to take a lot of extra time. And if COVID taught us anything, we need to be able to react very quickly to emergency situations,” said Democratic state Sen. Chris Hansen, who sits on the Joint Budget Committee, known as the JBC.

JBC Chair Dominick Moreno, also a Democrat, said he supports the amendment's goal of increasing transparency around how custodial funds are spent. But he believes the actual language of the change could spur a host of unintended consequences that would make budgeting more difficult overall.

He said in practice, the amendment would be, “actually limiting options for the legislature, even though this is about giving the legislature more autonomy.”

Fields believes that lawmakers could pass bills in advance to dictate how to handle funds that are received outside of their regular session. 

But there too, Moreno sees pitfalls. He warns that, “trying to allocate funding prospectively, before you even receive it (and) before you actually even know what is truly needed ... that is not a wise move.”