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Strategic Budget Advisory Committee (SBAC)
Strategic Budget Advisory Committee

Colorado's Budget Woes Linger

February 17, 2009

Grim appraisal

By Tim Hoover
The Denver Post

Colorado's economy is still bad, and the state's budget — which faces a $1 billion shortfall over the next 16 months — won't be much better off even two years from now.

That was the grim assessment lawmakers heard Monday as they were briefed on the budget in an unusual joint House and Senate session. The purpose was to help all lawmakers understand how the six-member Joint Budget Committee crafted a plan to balance the budget in the current fiscal year, which ends in June.

The plan relies on transferring $230.9 million from cash funds, spending down $148.6 million in reserves and cutting a variety of programs. It pushes as much of the pain into next year as possible, meaning that some $800 million in cuts would be necessary then.

Republicans have been critical of raiding cash funds, which are financed by fees on goods and services, such as permits. Rep. Frank McNulty, R-Highlands Ranch, said the state should look at cutting eligibility to social programs such as the Children's Basic Health Plan.

"We shouldn't balance budgets on the backs of people who have paid fees into these cash funds," McNulty said.

Natalie Mullis, chief economist on the legislative staff, told lawmakers that the state lost 35,000 jobs between September and December. Meanwhile, the state is projecting corporate income taxes in the current budget year to plunge 23 percent and capital-gains taxes to dive 26 percent.

"While we do have a recovery in our forecast, it's not a very fast recovery," Mullis said.

Figures released Monday from the Department of Revenue show January sales-tax revenues were 4 percent below projections, individual income-tax collections were 6.8 percent lower, and net corporate income-tax collections were 208.1 percent below estimates.

Meanwhile, tax collections on cigarettes were 20.2 percent higher than estimates, and revenue from other tobacco products saw a 54.8 percent jump over projections.

Lawmakers are nervously awaiting a March forecast that could show revenues poised to slip even more.

The state has another $150 million in reserves that could be spent this year, but after that, more cuts would be needed.

Tim Hoover: 303-954-1626 or thoover@denverpost.com

Where the cuts will fall

Highlights from the Joint Budget Committee's plan to balance the budget in the fiscal year that ends in June

FEDERAL MONEY

  • With at least $107 million already expected from the federal government to help with Medicaid costs, state officials think Colorado could receive as much as $90 million more to bolster the health program for the poor and disabled.

FEES AND COLLECTIONS

  • The state would significantly raise fees to obtain a water-well permit, with one permit increasing from $100 to $600. The fees would help the state save $500,000 but are controversial.
  • Businesses would not be allowed to keep more than $417 a month in fees from the collection of state sales taxes. This would save the state $12.8 million in the current budget year, affecting some 1,700 businesses out of an estimated 91,500 that collect sales taxes.

GENERAL FUND CUTS

Meanwhile, the Joint Budget Committee has proposed the state cut $124.8 million from its general fund, the $7.6 billion pot of money that finances most of the operating needs for state government. Some of the spending cuts include changes in policy that would save the state money.

Here's how the proposed cuts break down by department:

  • Agriculture: $472,744, a 6.1 percent cut.
  • Corrections: $5.8 million, a 0.9 percent cut.
  • K-12 education: $65.3 million less, a 2.1 percent cut.
  • Governor's office: $2.6 million, a 16 percent cut.
  • Higher education: $30 million, a 3.7 percent cut.
  • Human services: $17.1 million, a 2.5 percent cut.
  • Judicial branch: $1.8 million, a 0.5 percent cut.
  • Law: $790,000, an 8.2 percent cut.
  • Local Affairs: $425,548, a 3.3 percent cut.
  • Military Affairs: $168,551, a 2.9 percent cut.
  • Natural Resources: $1.5 million, a 4.8 percent cut.
  • Personnel: $594,261, a 9.3 percent cut.
  • Public Health and Environment: $247,480, a 0.9 percent cut.
  • Public Safety: $2.6 million less, a 3.2 percent cut.
  • Regulatory agencies: $112,765, a 7.1 percent cut.
  • Revenue: $1.4 million, a 1.4 percent cut.
  • Treasury: $35 million, a 28.7 percent cut.

ADDITIONS

The Department of Health Care Policy and Financing would receive $41.2 million more, a 2.7 percent increase.

HOLDING STEADY

The legislature, which has a $34.9 million budget, would not take a cut in its general-fund appropriation.