House Committee on Finance (04/21/2006)

Final
STAFF SUMMARY OF MEETING

HOUSE COMMITTEE ON FINANCE

Date:	04/21/2006	ATTENDANCE

Time:	11:25 AM to 01:38 PM	Benefield	X
		Cloer	X
Place:	HCR 0107	Crane	X
		Frangas	X
This Meeting was called to order by		Garcia	X
	Representative Vigil	Harvey	X
		Jahn	X
This Report was prepared by		Kerr	X
	Ron Kirk	Marshall	X
		Massey	X
		McCluskey	X
		Judd	X
		Vigil	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
HB06-1402 HB06-1252		Amended, Referred to Appropriations Amended, Referred to Appropriations

11:25 AM -- House Bill 06-1402 - Concerning the Securitization of a Portion of the Tobacco Litigation Settlement Payments

Representative Penry and Representative Plant explained the provisions of the bill. Representative Plant commented on the programs that are dependent on the tobacco settlement stream for funding and said that the proposal holds these programs harmless. Staff distributed a chart on the estimated return of a partial securitization under House Bill 06-1402 (Attachment A). Representative Penry discussed the revenues that the state would realize from a partial securitization under House Bill 06-1402.

Representative Penry said that under the proposal, the state would gain about $683 million in gross proceeds and about $600 in net proceeds from securitization. Interest earning from securitization proceeds would amount to about $61 million over the next five years through FY 2010-11 and be spent for controlled maintenance. The legislation also pays off the FPPA on June 30, 2006, which will save the state about $27 million. This assumes the FPPA repayment schedule that will occur under current law.

Representative Plant commented that under the legislation, the Budget Stabilization Fund would receive about $362 million in FY 2006-07 and reiterated that the legislation holds any diversions to the Highway Users Tax Fund and the Capital Construction Fund harmless for FY 2006-07.

The committee discussed the savings assuming the FPPA payoff and the money that would flow to a rainy day fund over the next five years. Representative Vigil asked Mr. Ben Stein to respond to questions regarding securitization.

The following persons testified:

11:41 AM -- Mr. Ben Stein, Deputy State Treasurer, testified in support of the bill. Mr. Stein responded to a number of issues discussed by the committee. Mr. Stein discussed the timing of the securitization as it is related to risk and said that there are a number of factors that affect risk under the Master Settlement Agreement.

11:47 AM -- Ms. Natalie Mullis, Legislative Council Staff, distributed a memorandum on the impact of the SB 97-1 and Highway Users Tax Fund diversions (Attachment B). Ms. Mullis briefly discussed the bill's impact on the decrease in tobacco payments, the elimination of the FPPA payment, and the impact on SB 97-1 diversions.

11:53 AM -- Mr. Kevin Bommer, Colorado Municipal League, testified in support of the legislation and commented on the benefits of the FPPA payoff. In future years, without the FPPA liability, the money that the state saves becomes available for Capital Construction and transportation projects. This is a key component of the legislation.

11:57 AM -- Mr. Bob Doherty, UBS Securities, testified in support of the legislation and explained that UBS Securities specializes in tobacco securities bond sales. Mr. Doherty commented that the timing for securitization is good because there are a number of factors that increase the state's yield. Mr. Doherty said that due to recent case law, there is greater confidence in the legal environment that governs the payout to states under the Master Settlement Agreement. Thus, bond rating agencies are rating these bonds issues more favorably. Also, since interest rates are lower, the cost to the state for securitization is more favorable. Mr. Doherty closed by saying that some of the debt that has been paid off regarding securitization issues is making more money available to reinvest in other securitization transactions for the states that have not yet securitized their revenues under the Master Settlement Agreement.

12:01 PM -- Ms. Sandra Solin, Capitol Solutions, testified in support of the legislation.

Representative Penry distributed amendment L.001 and commented that it makes a technical change that relates to a quorum for board members.


BILL:	HB06-1402
TIME:	12:03:02 PM
MOVED:	Judd
MOTION:	Moved amendment L.001 (the amendment makes a technical change that increases the number of board members that constitutes a quorum from two to three). The motion passed without objection by those members present.
SECONDED:	Massey
		VOTE
	Benefield
	Cloer
	Crane
	Frangas
	Garcia
	Harvey
	Jahn
	Kerr
	Marshall
	Massey
	McCluskey
	Judd
	Vigil
Not Final YES: 0 NO: 0 EXC: 1 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	HB06-1402
TIME:	12:03:55 PM
MOVED:	Judd
MOTION:	Refer House Bill 06-1402, as amended, to the Committee on Appropriations. The motion passed on a 13-0-0 vote.
SECONDED:	McCluskey
		VOTE
	Benefield	Yes
	Cloer	Yes
	Crane	Yes
	Frangas	Yes
	Garcia	Yes
	Harvey	Yes
	Jahn	Yes
	Kerr	Yes
	Marshall	Yes
	Massey	Yes
	McCluskey	Yes
	Judd	Yes
	Vigil	Yes
Final YES: 13 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: PASS

12:06 PM -- House Bill 06-1252 - Concerning the Colorado Cares RX Program

Representative Frangas, prime sponsor, explained the provisions of the bill and the SBEC to House Bill 06-1252. The bill, as amended by the House Health and Human Services Committee, establishes the Colorado Cares RX Program and the Colorado Cares RX Clearinghouse. Representative Frangas said that the Colorado Cares RX Program provides eligible uninsured people with access to discounts on prescription drugs through a state-sponsored discount card program, and includes the following provisions:

● the state Medical Services Board and the Department of Health Care Policy and Financing are responsible for establishing rules and procedures and for administering the program;
● eligible persons include individuals over the age of 60, over the age of 55 and receiving social security disability benefits, or any age with income less than 250 percent of the federal poverty level with no employer or state provided health coverage;
● individuals seeking to participate in the program must apply to the department, but prior to enrolling the individual, the department must determine if he or she is eligible for Medicaid or any other state-funded program offering prescription drug coverage (the program is the payer of last resort);
● specifications are outlined as to the agreements between the program and pharmaceutical manufacturers, and between the program and participating pharmacies; and
● the Health and Human Services Committee of the House of Representatives and the Senate must review the program annually.

The committee engaged in a discussion on the programs that are currently availably to the uninsured and seniors under federal and state law.

The following persons testified:

12:19 PM -- Mr. A.D. Schnellbacher Jr., AARP, testified in opposition toward the bill, Mr. Schnellbacher said that the cost of the bill is not worth the benefit and distributed a fact sheet on the administrative cost factors on House Bill 06-1252 (Attachment D). Mr. Schnellbacher said that there are better ways to achieve the goals of the bill that would have less administrative costs and distributed an news article from the Rocky Mountain News entitled "Drug discount plan not worth the cost" dated April 21, 2006 (Attachment E).

12:28 PM -- Ms. Susan Cox, Kaiser Permanente, testified in opposition toward the bill and commented on the bill's potential to require Kaiser to disclose proprietary drug discounts to other health care providers. Ms. Cox maintained that the legislation could result in prescription drugs costing more as the bill may hamper Kaiser's ability to negotiate lower prices.

2:40 PM -- Mr. Brad Young, Rx Plus Pharmacies, testified in opposition toward the bill. Mr. Young discussed the Ohio study and the reimbursement rates that drug manufacturers give to pharmacists. Mr. Young said that ultimately, under this legislation, pharmacists will be paying more.

12:56 PM -- Mr. Chris Howes, Colorado Retail Council, testified in opposition toward the bill. Mr. Howes said that the state start-up costs for the program are significant. He pointed out that pharmacists need to be paid on a timely basis and this bill would delay payments that may or may not be in the form of a manufacturer's rebate.

01:06 PM -- Mr. Mark Kinny, briefly testified in opposition toward the bill.

01:08 PM -- Mr. Rob Hernandez, Colorado NAMI, testified in support of the legislation.

01:10 PM -- Mr. Chris Habgood, Mental Health Association of Colorado, testified in support of the legislation. This bill is a benefit for mental health consumers who do not have Medicaid coverage. Mr. Habgood said that the legislation offers a great solution to a significant state problem.

01:13 PM -- Mr. Chris Lepore, PHARMA, testified in support of the legislation. This bill establishes a significant public-private partnership that will work together to solve the problems of funding mental health in Colorado.

01:22 PM -- Mr. Steve Adams, AFLCIO, testified in support of the legislation and said that it will help many working families address the issues associated with mental illness.

Representative Vigil, Chairman distributed amendment L.025 (Attachment F) and said that it removes the role of the CBMS in the application process. The motion passed without objection by those members present (see following votes).


BILL:	HB06-1252
TIME:	01:26:29 PM
MOVED:	Vigil
MOTION:	Moved amendment L.025 (the amendment removes the role of the CBMS in the application process). The motion passed without objection by those members present.
SECONDED:	Cloer
		VOTE
	Benefield
	Cloer
	Crane
	Frangas
	Garcia
	Harvey
	Jahn
	Kerr
	Marshall
	Massey
	McCluskey
	Judd
	Vigil
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	HB06-1252
TIME:	01:28:29 PM
MOVED:	Frangas
MOTION:	Refer House Bill 06-1252, as amended, to the Committee on Appropriations. The motion passed on a 9-4-0 vote.
SECONDED:	Cloer
		VOTE
	Benefield	Yes
	Cloer	Yes
	Crane	Yes
	Frangas	Yes
	Garcia	No
	Harvey	No
	Jahn	No
	Kerr	Yes
	Marshall	Yes
	Massey	Yes
	McCluskey	No
	Judd	Yes
	Vigil	Yes
Final YES: 9 NO: 4 EXC: 0 ABS: 0 FINAL ACTION: PASS

01:38 PM

Adjourn.