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I_ECR_TFER_2021A 09/24/2021 09:09:19 AM Committee Summary

PUBLIC
STAFF SUMMARY OF MEETING
INTERIM COMMITTEE  TASK FORCE ON ECONOMIC RECOVERY AND RELIEF CASH FUND
Date 09/24/2021
Attendance
Lauren Larson E
Liston *
McKean X
Patrick Meyers X
Rodriguez X
Young X
Valdez A. X
Moreno X
Time 09:09:19 AM to 12:26:52 PM
Place SCR 352
This Meeting was called to order by Moreno
This Report was prepared by Elizabeth Burger
Hearing Items Action Taken
Roll Call and Introductions Committee Discussion Only
Allowable Uses of American Rescue Plan Act of 2021 Funds Committee Discussion Only
Economic Overview Committee Discussion Only
Unemployment Insurance Trust Fund Overview Committee Discussion Only
Scope of the Subpanel and Next Steps Committee Discussion Only

Roll Call and Introductions - Committee Discussion Only


09:14:41 AM  
Chair Moreno called
the meeting to order and the members of the task force and subpanel introduced
themselves.  Members of the subpanel in attenance included Phyllis
Resnick, Elissa Bruanstein, Henry Sobanet, Jason Schrock, and Alison Felix.



Allowable Uses of American Rescue Plan Act of 2021 Funds - Committee Discussion Only

09:16:39 AM  
Ed DeCecco, Office of Legislative Legal
Services, began the presentation regarding allowable uses of American Rescue
Plan Act of 2021 (ARPA) funding (Attachments A through C).  He reviewed
the amount of money allocated to the state and the allowable uses of the
funds.  The funds must be spent by December 31, 2024, and the state
must repay any amount that is not used for an authorized purpose.  He
further reviewed the allowable uses of the Coronavirus State Fiscal Recovery
Fund, including 1) to respond to the public health emergency with respect
to COVID-19, or its negative economic impacts; 2) to respond to workers
performing essential work during the COVID-19 public health emergency;
3) For the provision of government services to the extent of the reduction
in revenue; and 4) to make necessary investments in water, sewer, or broadband
infrastructure.  He discussed prohibited uses of the funds, including
directly depositing the money in a pension fund and to directly or indirectly
offset a net tax revenue loss.  He discussed the federal rules implementing
the law.
09:30:44 AM  
Mr. DeCecco continued the discussion of
 allowable uses of the ARPA funding and discussed legislation enacted
in the 2021 session allocating the money.   He noted that most of
the money first flows to the American Rescue Plan Act of 2021 Cash Fund.
 From this fund, money flows to five additional cash funds.  Mr.
DeCecco described the provisions of law that apply to the American Rescue
Plan Act of 2021 Cash Fund.

He continued by discussing the Behavioral and Mental Health Cash Fund;
Workers, Employers, and Workforce Centers Cash Fund; Affordable Housing
and Home Ownership Cash Fund; Revenue Restoration Cash Fund; and Economic
Recovery and Relief Cash Fund (ERRCF). He further highlighted the ERRCF
and discussed the allowable uses for this funding, including assistance
to small businesses; assistance to individuals and households; assistance
to nonprofit organizations; public health expenditures for COVID-19 prevention
and response; administrative costs associated with COVID-19 public health
emergency assistance programs; aid to impacted industries; assistance to
unemployed workers; contributions to the unemployment compensation fund;
relief efforts for unmet needs, especially for communities disproportionately
impacted by the COVID-19 pandemic; and to make necessary investments in
water, sewer, or broadband infrastructure.
09:52:51 AM  
Mr. DeCecco responded to questions from
the task force and subpanel regarding the use of the ARPA funds, and local
government allocations of ARPA funds.  He further answered questions
about determining whether certain uses would meet the requirements of federal
law.
09:58:20 AM  
He continued to respond to questions from
the task force,  providing responses to questions on capital improvements,
public/private partnerships, and updated guidance from the Treasury Department
on ARPA funds.  He continued by responding to questions about whether
ARPA moneys could be used to match federal funds, the use of funding by
local governments, and special districts.



Economic Overview - Committee Discussion Only


10:13:14 AM  
David Hansen, Legislative Council Staff,
began the presentation on the Economic Outlook and Economic Trends to Date
During the COVID-19 Pandemic (Attachment D). He began by discussing the
continuing economic recovery, noting that consumer activity is driving
growth. He continued by discussing how spending compares to pre-pandemic
levels. Mr Hansen shared information about different economic sectors,
and highlighted Colorado's labor market and levels of unemployment.
10:22:38 AM  
Mr. Hansen discussed the jobs recovery in
various industries. He explained that job openings surpass unemployment
and outpace hiring activity, noting that the employment recovery varies
by region. Mr. Hansen discussed energy production in Colorado.
10:27:46 AM  
Mr. Hansen discussed U.S. personal income
growth and the effect of declining transfer payments. He continued by discussing
inflationary pressures, especially in the energy and transportation sectors,
and noted that persistent supply chain issues raise the risk of inflationary
pressures. He discussed home price acceleration in recent years, noting
that demand is expected to cool and supply to increase, reducing home price
acceleration in the future.
10:31:11 AM  
Mr. Hansen responded to questions from the
task force regarding the labor force participation rate in Colorado and
oil and gas activity. Kate Watkins, Chief Economist, Legislative Council
Staff, discussed inflation in the energy and transportation sectors.  The
task force discussed the current labor market and labor market participation.
Mr. Hansen responded to questions regarding retail sales data and contributing
factors to the labor force participation rates in Colorado. Mr. Hansen
and Ms. Watkins further addressed inflation.
10:44:19 AM  
Ms. Watkins responded to questions from
the committee regarding inflation and potential bubbles in the housing
market and stock market. The task force and presenters discussed costs
associated with public and employee benefits. Ms. Watkins responded  to
questions regarding the unemployment rate and GDP.  Representative
Young asked if health and safety concerns were affecting the labor force
participation rate in Colorado.



Unemployment Insurance Trust Fund Overview - Committee Discussion Only


11:03:32 AM  
Daniel Chase and Ryan Gedney, Colorado Department
of Labor and Employment, distributed copies of their presentation regarding
the status of the Unemployment Insurance (UI) program in Colorado (Attachment
E). Mr. Chase reviewed the status of UI prior to the pandemic, and federal
changes to the UI program as a result of the pandemic.  Mr. Chase
responded to questions from the task force regarding gig workers and whether
they or their employers paid into the UI Trust Fund prior to the pandemic.
Mr. Gedney shared charts related to UI claims (found in Attachment E).
11:10:55 AM  
Mr. Chase and Mr. Gedney responded to questions
from the task force regarding state and federal obligations for UI benefits.
Mr. Chase continued by discussing the UI Trust Fund, describing how the
trust fund is funded, and how benefits are paid from the trust fund. He
emphasized that the UI Trust Fund can only be used to pay benefits for
state unemployment insurance claims, and the federal government provides
loans to continue to pay unemployment benefits if the states' trust funds
run out of funds.
11:15:25 AM  
Mr. Gedney discussed the employer UI contribution
schedule and how the schedule has changed since 2020. He described how
the employer contributions are calculated. Mr. Gedney responded to questions
from the task force  regarding modeling of future employer costs.
He discussed recent legislation that made changes to employer premiums
and surcharges.  Mr. Chase and Mr. Gedney discussed the availability
of federal loans for the trust fund.
11:22:19 AM  
Mr. Chase discussed interest payments due
to the federal government, and Mr. Chase noted that Governor Polis has
issued an executive order directing that the interest payments be paid
from Coronavirus Relief Funds. Mr. Gedney explained that most employers
are concentrated on the lower end of the premium rate schedule, and explained
that layoffs during the pandemic are not counted against employers' experience
ratings. Mr. Gedney responded to questions from the committee regarding
how the industries most affected by the pandemic are typically affected
by recessions.
11:27:06 AM  
Mr. Chase responded to questions from the
task force regarding fraudulent claims, overpayment claim notices, and
liability to victims of unemployment insurance fraud.
11:35:35 AM  
Mr. Gedney discussed the balance of Colorado's
UI Trust Fund, noting that it became insolvent on August 18, 2020. He explained
that the state has had to borrow to pay benefits twice before. Mr. Gedney
explained the various UI benefit programs. Mr. Chase explained the various
provisions of law that become effective when the UI trust fund is in deficit,
including the interest surcharge (by law interest payments cannot be made
by traditional premium revenue); the solvency surcharge, a rate schedule
shift which will move employers to the highest rate schedule in 2022, and
the Federal Unemployment Tax Act (FUTA) credit reduction.
11:41:52 AM  
Mr. Chase discussed considerations for policy
makers regarding the trust fund, and noted that any reduction to employer
contributions should be backfilled with stimulus funding to ensure the
stability of the UI Trust Fund. Mr. Gedney shared a forecast of the UI
Trust Fund balance, assuming current law, and based on the strength of
the economic recovery. He continued by discussing the solvency surcharge
and estimates of employer costs and how long the surcharge may be in effect.
11:49:52 AM  
Mr. Gedney discussed the FUTA credit reduction,
and explained how a reduction in the FUTA credit could affect employers.
He responded to questions from the committee regarding the FUTA credit,
the UI Trust Fund, and the calculation of the solvency surcharge.
12:01:24 PM  
Mr. Gedney discussed impacts to other states'
UI trust funds during the pandemic, and noted that some states have paid
off their loans or bolstered their UI trust funds with federal relief funds.
Mr. Chase and Mr. Gedney discussed the employer wage base and rate schedule
over time.  Mr. Chase and Mr. Gedney discussed the importance of SB
20-207 to the solvency of the UI Trust Fund in future years.
12:10:15 PM  
Mr. Gedney discussed
borrowing and the repayment strategy during the Great Recession, including
bonding.  



Scope of the Subpanel and Next Steps - Committee Discussion Only


12:19:12 PM  
Phyllis Resnick, Chair of the subpanel,
announced that the subpanel would hold its first meeting on Thursday, September
30, from 11 am to noon. She discussed the potential scope of the subpanel's
work. Senator Moreno asked if any task force members had direction on study
topics for the subpanel. Director Meyers asked for modeling on how using
ARPA moneys for the UI Trust Fund would affect employers. Representative
McKean focused on the one-time nature of ARPA moneys and how to best use
the money to provide a stimulative effect.  Representative Young asked
for information on household debt, and asked for further information on
household financial health across all income levels.
12:25:31 PM  
Senator Moreno made comments related to the task force's upcoming meetings.


12:26:52 PM   The committee adjourned.






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