Raising the bar for state budget cuts, Gov. Bill Ritter's office has called on state agencies to trim $437 million from their spending in the 2009-10 fiscal year, which began July 1.

When the state Legislature's economists issued their quarterly economic forecast on June 22, they predicted a budget shortfall of $384 million in the 2009-10 fiscal year, including a $249 million shortfall inherited from the 2008-09 fiscal year. Ritter then gave the various state departments a July 20 deadline to submit plans to cut their budgets by 10 percent.

Todd Saliman, Ritter's budget director, notified state agencies of the higher total on Monday, and the governor's office released Saliman's memo on Tuesday, hours after the University of Denver issued a report describing the state's fiscal system as being "on the verge of becoming unworkable."

State revenues have been hammered by the recession, but Evan Dreyer, Ritter's spokesman, said the deeper cuts were not because the economic outlook had soured in the last two weeks.

Saliman's memo included mandatory budget-cutting targets. The Department of Health Care Policy and Financing will take the biggest hit, nearly $145 million, followed by Human Services at $90 million and Higher Education at $69 million.

"I cannot emphasize enough how difficult our budget situation is," Saliman wrote in his memo. "I know these reductions are painful and difficult to develop."

Labor and Employment, which disburses unemployment benefits, was spared further cuts. So was Transportation, which maintains the state's roads and bridges, and Education, which funds the state's portion of K-12 public school funding and is constitutionally protected from budget cuts.

Even so, Saliman's memo targeted the Education Department for a $200 million cut in the 2010-11 fiscal year. "Because K-12 is more than 40 percent of the state's budget, it needs to be on the table as well," Dreyer said.

The DU report, written by Jeffrey Roberts and Charlie Brown of the university's Center for Colorado's Economic Future, said the state's budget woes weren't over.

"The budgetary tsunami that washed over Colorado government last fall and winter was likely just the first wave," it said. "More tidal waves in FY 2010-11 threaten to keep the general fund underwater."

"There is simply not enough money to pay for the government we have created and the services many of us have come to expect," the report said. The authors called for a comprehensive study to identify options for voters and policymakers, saying, "the time for jerry-rigging has passed; our fiscal system needs an overhaul."


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