12 January 2010

Proposed CO Revenue Increases & Spending Cuts

Governor Ritter's Colorado state budget plans to close a $1 billion gap in the state budget, with a combination of $222 million from 14 terminated tax benefits (the path for doing so despite TABOR having been cleared by an unexpectedly broad decisions of the Colorado Supreme Court last year), and big spending cuts including $260 million of cuts to K-12 education in areas claimed not to be protected by the state constitution. Other big ticket items include:

• Cutting higher-education funding by $56 million.

• Cutting Medicaid payments to doctors and other health care providers by $28 million.

• Saving $20.1 million by a 2.5 percent cut in total compensation for about 25,000 state employees.

Many of the eliminated or suspended tax breaks are sales tax exemptions including those for:

"[P]urchases of energy used in manufacturing. Savings: $48 million"

"[C]andy and soft drinks. $17.9 million"

"Expanding the definition of what type of software is taxable, including software purchased online. $15 million"

"Enforce sales-tax law on Internet purchases at online vendors with in-state affiliates. $5 million"

"[P]esticides. $2.9 million"

"[C]artons, napkins, condiments, plasticware and other items used to serve food at restaurants. $2.1 million

"[P]rinted materials used in direct-mail advertising. $1.5 million"

"[A]nimal vaccines, hormones, animal drugs, bull semen and other compounds used in agriculture. $1.5 million"

Revenue raisers on the income tax side include (omissions quoted above not noted):

Scaling back a tax credit for alternative-fuel vehicles. $1.3 million

Repeal a state income-tax credit for the wealthy that is tied to the federal "alternative minimum tax" system for high earners. $2.5 million

Limiting to $250,000 per taxpayer each year, for three years, a tax credit for equipment purchased and used in an enterprise zone. $4.5 million

Reduce for three years an income-tax credit on conservation easements up to $375,000 to a credit for no more than $175,000. $13 million

Limit for three years the amount of losses companies could carry forward to offset income in future years to no more than $250,000 a year. $16.8 million

And, in the area of property taxes: "Saving $90.2 million by suspending, for the second year in a row, a property-tax break for seniors."

The Joint Budget Committee is likely to come up with a similar, but not identical list of budget balancing steps in its proposed long bill.

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