DENVER DAILY NEWS
Gov. Bill Ritter yesterday announced a new plan to re-balance the state’s current budget and close a nearly $60 million revenue shortfall through revenues from medical marijuana applications and cuts to the Department of Corrections.
Higher-than-anticipated June revenue and additional Medicaid funding from the federal government kept the budget gap from being significantly wider, the governor’s office said yesterday.
“Today’s balancing plan continues the same strategies we’ve utilized throughout the downturn,” Ritter said in a statement. “We are preserving essential services, protecting the safety net, minimizing pain and requiring shared sacrifices and shared solutions from everyone. This is a responsible plan that continues to position Colorado for a healthy and sustainable recovery.”
Over the past three fiscal years, Ritter and lawmakers have closed recession-induced shortfalls of $4.3 billion.
The primary components of Ritter’s latest budget-balancing plan include:
Ą Cutting $1.3 million from the Department of Corrections and imposing a $4.9 million, or 1 percent, across-the-board reduction in personnel costs by keeping positions vacant and delaying hiring; and
Ą Transferring $53 million from other accounts into the state’s general fund to cover operating expenses. The transfers will come from $9 million from the Medical Marijuana Program Fund and $20 million from accounts that support local communities with discretionary grants funded by severance tax and federal mineral lease revenues, along with $11.4 million from a grant reserve fund.
Ritter’s office points out that it makes sense to go after medical marijuana revenues given the huge spike in applications over the last year. The state anticipates ending the year with 150,000 applicants for medical marijuana cards Ń up from 41,000 in 2009, according to the governor’s office. A marijuana card costs $90 per year.
The governor’s plan allows the state to maintain a 2.1 percent, or $150 million, general fund reserve in case of worsening revenue conditions, according to Ritter’s office. The next revenue forecast is due Sept. 20.
Republicans yesterday blamed Democrats for a tax-and-spend agenda that they say is adding to the state’s budget deficit.
“The Democrats’ partnership with Washington is not working for Colorado taxpayers,” Senate Republican Leader Mike Kopp, R-Littleton, said in a statement. “Colorado businesses and families cannot afford any more financial burdens because Democrats in the state Legislature and Gov. Ritter speculated on federal funding and guessed wrong.”
Republicans say Ritter and Democrats expanded Medicaid eligibility, adding hundreds of thousands of people to its rolls while increasing the state’s caseload, which has widened the budget gap. The GOP points out that in 2001 Colorado’s Medicaid caseload was around 275,000, while during last year’s budget it grew to over 476,000. One estimate projects Colorado’s Medicaid/CHIP enrollment to grow by 44 percent over the next four years to 897,000, say Republicans.
“The promise of increased federal Medicaid funding was one of the arguments used to sell Obamacare,” said Kopp. “Under the expanded eligibility rules in Obamacare, Colorado taxpayers will be forced to bear the financial burden of the Democrats’ out of control entitlement spending.”
“We cannot afford this unsustainable partnership with Washington any longer,” Kopp continued. “It is time we created real priorities in the state budget and stopped the budgeting gimmicks that have plagued the budget setting of the majority party.”
Ritter, however, said $76.8 million in higher-than-estimated individual and corporate income tax revenue, and $144 million from a six-month extension of the Federal Medical Assistance Percentage, helped ease this latest round of budget balancing. Unlike his foes in the Republican Party, Ritter praised Washington for helping Colorado by providing schools with additional education funding, including $160 million for local districts in Colorado.
The governor acknowledges that further cuts may be necessary following the September forecast. Ritter said he is preparing for the possibility of additional cuts, and has placed a hold on $40 million in local grants funded by severance tax and federal mineral lease revenue.
The September forecast will also be used to help shape Ritter’s Fiscal Year 2011-12 budget proposal, which will be submitted to the Legislature’s Joint Budget Committee on Nov. 1. Previous forecasts have indicated a $500 million to $1 billion shortfall in FY11-12, meaning more tough decisions will be made.
“While Colorado’s economy is showing signs of stability and encouragement in areas like the New Energy Economy, tourism and health care, we face more struggles and more difficult choices in the months ahead,” Ritter said. “All options must be on the table in order for us to keep our budget balanced.”

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Although Colorado’s economy continues to recover from recession, growth is lagging the nation and is expected to decelerate in the second half of 2010, state economists said in a forecast today.

“Growth will continue at modest rates over the next few years,” Chief Economist Natalie Mullis writes. “Once the expansion gains solid footing and banking and real estate problems are resolved, Colorado’s economy is expected to again outperform the nation.”

The FY 2009-10 General Fund budget is in balance. However, only $80.9 million, or 1.2 percent of General Fund appropriations, will be left in the reserve at the close of the year. In FY 2010-11, General Fund revenue will be suficient to fund the amount budgeted to be spent and about one third of the reserve required by law. Revenue will fall short of the required reserve by $175.7 million.

Read Mullis’ report below:

Economic and Revenue Forecast June 2010

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STATE BILL COLORADO

The Senate Democratic caucus today elected Sen. Mary Hodge, D-Brighton, to succeed Sen. Abel Tapia, D-Pueblo, on the Joint Budget Committee. Tapia resigned this week because he is term-limited and will not be back for the next legislative session.

“Drafting the budget is a thorny, complex task, but I am eager to take on this challenge,” Hodge said.

Hodge leaves a vacancy as the chair of the Agriculture and Natural Resources Committee, and as a member of Local Government and Energy and Appropriations Committees.

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Sen. Abel Tapia resigned his post on the Joint Budget Committee on Thursday to allow his successor time to acclimate to the job on the Legislature’s most powerful committee, The Pueblo Chieftain reports.

He is encouraging Sen. Gail Schwartz, D-Snowmass Village, who represents a portion of the San Luis Valley, to seek a spot on the JBC. Schwartz is up for re-election to her seat.

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A bill that would have stalled the sale of Trinidad State Nursing Home until next spring died Thursday in committee, The Pueblo Chieftain reports.

The Senate Health and Human Services Committee voted 5-2 to kill HB1217, sponsored by Rep. Wes McKinley, D-Walsh, and Sen. Ken Kester, R-Las Animas.

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Gov. Bill Ritter on Thursday signed the $18.2 billion state budget, a plan that relies on cuts to schools and the repeal of many business tax breaks, The Durango Herald reports.

“It’s been a very, very difficult budget year, and there’s no saying anything other than that,” Ritter said.

The plan uses “shared sacrifice” to get to a balanced budget, which is required by the state constitution, Ritter said.

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A referred legislative measure to the November 2011 ballot that would exempt a portion of K-12 and postsecondary education funding from TABOR restrictions passed the House Education Committee on Monday. But its success likely ended with the education committee vote as it is unlikely to gain the half-dozen Republican votes it needs to get out of the House, The Colorado Statesman reports.

House Concurrent Resolution 1002, known as the DECIDE ballot initiative, passed the House Education Committee by an 8-4 party line vote on Monday.

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By Debi Brazzale, COLORADO NEWS AGENCY

Tax credits and exemptions are once again garnering attention at the capitol with a measure still  being drafted, that would give more tools to future lawmakers when they are considering tax policy.  Opponents say it could be a trojan horse, possibly eliminating all of Colorado’s tax exemptions over time, and that the “tools” may not be constitutional.

The measure proposed by Democratic House Majority Leader, Paul Weismann  of Lousiville,  would direct the General Assembly’s Legislative Council to prepare a report that reviews each tax exemption and credit at prescribed intervals.  The reports would then be provided to the legislature for their consideration.

“Dynamic analysis” is at the heart of the measure, which is a process that takes into account the effect of the exemption or credit on the budget and the economy.  Rep. Kent Lambert, R-Colorado Springs, said dynamic analysis has been bandied about over the years, but he questions the notion of singling out tax credits and exemptions as the sole barometer of decisions regarding tax policy.

“To say we’re going to apply this concept just to tax credits and exemptions — the only action that can possibly be taken is we’re going to eliminate the tax credit or exemption,” said Lambert.  “That’s the only actionable thing.”

Lambert further asserts that the impetus for the measure may be just a political maneuver.

“It’s only going after tax credits and exemptions that were put there for a particular reason,” said Lambert. “I think it’s become a political analysis and not an objective economic analysis.”

Weismann was not immediately available for comment.

While there is not yet a determination on the cost of the proposal, Lambert speculates that to develop this new capability would probably require increases in staff and budget.  However, he believes that regardless of the cost the proposal may not pass constitutional muster.

“This whole thing is built on what we think is an illegal notion, and a faulty notion that denies the clear text of the constitution,” said Lambert.

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The state Senate gave initial approval to an $18.2 billion 2010-11 state budget Thursday evening after a nearly seven-hour debate that touched on topics as varied as metal detectors at the Capitol and solitary confinement for prisoners, The Denver Post reports.

Republicans tried to push across-the-board cuts to the state payroll but did not offer specific programs they believed should be pared.

A final vote is scheduled for today, and the budget likely will then move into conference committee.

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The proposed opening of a portion of Colorado State Penitentiary II survived a barrage of amendments to the state budget Thursday that sought to redirect the $10.7 million earmarked for the project, The Pueblo Chieftain.

As the state Senate debated the budget bill, two proposals that sought to delay the Canon City prison’s opening were defeated.

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