19 December 2008

Colorado Budget Busted

The Legislative Counsel of Colorado's General Assembly says that state revenues will be $604 million short of those budgeted. The Governor's office had earlier predicted a mere $77 million shortfall.

Either way, deep cuts are in store for state spending in 2009. Unlike many states, TABOR and related Colorado Constitutional provisions make it almost impossible for the state legislature to increase taxes in any way in short term, so the pain will have to come almost entirely from spending cuts and user's fees. Colorado also has very limited powers to incur debt to pay for current expenses and has no meaningful rainy day fund.

Previous budget battles in recessionary times have shown that much of the state budget is largely untouchable, either because it is outside the state general fund, or because it has protections as a result of the state constitution, federal grant provisions, or the simple impractibility of, for example, prematurely releasing prisoners serving long prison sentences in numbers large enough to make a short term budget dent. Other budget line items, such as those in the Department of Regulatory Agencies or Department of Revenue, either are too small to make a difference or pay for themselves in fines and other revenue generation.

Higher education is the most vulnerable state budget item. General fund transportation expenditures are also very vulnerable.

4 comments:

Dave Barnes said...

Andrew,

You should be ashamed of yourself. You don't have to be as conniving as the Post and the Rocky.

While $600M sounds like a HUGE number, it should be put into the context of: "The $19.2 billion budget proposal [for FY2009-2010]". $600M is only 3%. Freeze state employees' pay and freeze Medicaid payments and the 3% is easily taken care of.

Many families in Colorado would enjoy having ONLY a 3% cut in income over the next year.

Andrew Oh-Willeke said...

Forgive me if I am mistaken, but the $600 shortfall appears to be for the existing FY 2008-2009 budget, and comes all out fo the second half of the current fiscal year. So, the cut is really more like 6%. Also, the cut comes atop cuts in local budgets (those with strong sales tax components are much harder hit than those with largely property tax components).

Given the inflexibility of parts of the budget in that time frame, some of the budget is likely to be held harmless, while other parts are likely to be hit quite hard.

alyysa said...
This comment has been removed by a blog administrator.
Dave Barnes said...

Andrew,

OK, so it is 6%. This is still small. It just takes guts/nerve/cojones to solve the "crisis".
The State just needs to do what a private enterprise would do.
Wage freeze. Hiring freeze. Pay vendors slightly less and tell them they are lucky to get paid at all.