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State's financial windfall filters into complicated budget

January 8, 2012
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	 Photo by Photobucket
Photo by Photobucket 

When the General Assembly opens on Wednesday, Colorado lawmakers will get to do something their colleagues haven’t done in several years — figure out how to spend extra cash.

After all of the hardships over the past few years, the economy is beginning to look up, and so is the state budget. An economic forecast released Dec. 20 estimated there will be $231 million more than previously expected.

Gov. John Hickenlooper has asked for an extra $89 million from that amount to fund public schools. Colleges will get $30 million for financial aid programs under Hickenlooper’s plan.
The governor also requested $20 billion total for the 2012-13 budget, growing the budget by $1 billion from the current fiscal year.

But calling it the state budget can sound misleading, since most people think of a budget as a flexible bank account. That’s not true when it comes to the Capitol, and it’s what drove savage cuts that hit classrooms and college campuses during the economic downturn.

The Colorado state budget is a labyrinth of formulas and numbers, with parts that move and parts that are as hard as cement.

A few quick things many people don’t know — lawmakers have little or no control over most of the money Colorado spends. Education is nearly the only place the state can cut to balance its budget, and it’s probably the first place that will see increases as prosperity returns. Each year’s budget is never, ever finished.

Colorado’s $19 billion budget is cut into three pots of money — the General Fund, federal funding and cash funds. The Legislature only has total control over the $7.2 billion General Fund, and, with few exceptions, can’t touch the rest of the budget, which includes $5 billion from the federal government and $6 billion in cash funds, accounts that collect the fees state residents pay for services.

That drastically limits the state’s ability to adapt to financial changes, including the current economic downturn.

The bad economy has cost the state hundreds of millions of dollars since 2008, and so spending in various departments — but not all departments — has had to be slashed significantly. Two of the top victims of the Legislature have been public schools and colleges.

Those two departments, which account for nearly half of the entire General Fund, are largely unprotected by the state Constitution.

So to help adapt to the recent shortfalls, the Legislature has been fairly creative. While Colorado Democrats controlled the Capitol, they raided various cash funds to fill holes in the General Fund, which were created by shrinking income and sales taxes. In 2011, much of that came to an end, when Republicans took over the House.

In 2009, for example, Democratic lawmakers removed a mandate to increase spending every year on roads and highways. That freed up a lot of previously untouchable cash.

But as the recession continued, so did the spending cuts.

Public schools, for example, lost more than $200 million in 2011, not to mention hundreds of millions lost in 2010.

The declining economy has led to deeper shortfalls, because planned tax money wasn’t forthcoming as the private sector slashed jobs and incomes plummeted.

The state Joint Budget Committee, which writes the budget, introduces its first version of the next fiscal year’s budget — known as the Long Bill — to the Legislature by the end of each April. But the state’s coffers are continuously changing, leaving the budget in flux.

“Managing the budget is all day, every day for many people. It is a living kind of evolving thing until the books are closed for every year,” said Henry Sobanet, director of the Governor’s Office of State Planning and Budgeting. “That shows you the complexity of it.”

Every year, the General Assembly winds up tweaking its last budget with “supplementals,” which are relatively small budget bills to balance the books based on the most recent economic forecasts.

Unlike their federal brethren, state lawmakers can’t just tell taxpayers to dig deeper into their pockets when trouble hits. The Taxpayer Bill of Rights, —TABOR, — forbids the General Assembly from raising taxes without voter approval and limits spending increases, too.

For years, some legislators have been trying to find ways around TABOR’s strict constraints, while others have hollered to defend it. In 2005, the controversial Referendum C gave the state a five-year break from a portion of TABOR that requires unspent tax funds to be refunded. That let the state keep $4 billion  that would have gone back to taxpayers.

Happier budget times at the General Assembly won’t make the budget less of a battleground in 2012, though. In this election year, getting money for public programs and saving cash for taxpayers is how the Republicans and Democrats, and their opponents on the November ballot, will be keeping score.

Contact John Schroyer: 476-4825
Twitter @Johnschroyer
Facebook Gazette John Schroyer

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