Given that budgets are inherently political documents, the proposed 2016-2017 spending framework Gov. John Hickenlooper distributed on Nov. 1 is exactly what it should be: a detailed accounting of the imbalance between Colorado’s available revenue and the expenses required to keep the state functioning at the level taxpayers expect – and proposed cuts to balance the scales. For the upcoming fiscal year, that discrepancy is projected to be $373 million – a gap that Hickenlooper proposes to close with cuts to higher education, slashing the capital construction budget – including cutting maintenance funding in half, and no money given to pay back the K-12 negative factor, among other painful belt-tightening. That this near-term future looms in a rosy economic climate for Colorado is testament to the need for a fiscal overhaul in the state. In the meantime, the year to come will be challenging indeed.
Despite the fact that property and income tax collection have risen statewide in the past year, a combination of Taxpayer’s Bill of Rights restrictions on revenues – requiring refunds to taxpayers when the state collects more than TABOR allows – and growing inexorable demands on limited state dollars has left Colorado in the position of having to make cuts to other crucial programs. Hickenlooper’s budget projects $830 million in new expenditures for the next fiscal year: $301 million from increased K-12 enrollment and inflation, $160 million to pay back the reserve fund the state borrowed from this year, $80 million for new Medicaid enrollees and $289 million in TABOR-required rebates. Meanwhile, the proposed budget projects just $457 million in new revenue for the coming year.
The constitutional and statutory spending requirements that have left Colorado increasingly hog-tied each year coming dangerously close to paralyzing state services if the trend continues. TABOR, Amendment 23, which requires that K-12 spending increase by inflation plus 1 percent each year, and the Gallagher Amendment, which permanently fixes the ratio of commercial to residential property tax paid, as well as requirements that transportation and corrections be funded adequately each year, are combining with increased demand for Medicaid – and the associated shifting financial burden from the federal government onto the state to make for a budgetary mess with no easy answers.
Hickenlooper’s proposed budget does not sugar coat the reality. There are a few quick and minor fixes the state can make – including removing the Hospital Provider Fee from the general fund and placing it in a separate enterprise fund, therefore bringing down the revenue total that triggers TABOR refunds – but the larger, far more complex problem remains. And it will worsen over time without a significant correction of the competing forces that hamstring state spending, even when the economy is strong.
The governor’s proposed 2016-17 budget should – in fact, must – get lawmakers’ and voters’ attention that something must be done to unwind the limiting factors that threaten to starve essential programs and services like education – K-12 and beyond – transportation, medical care, corrections, as well as those less obvious but equally important including public health, social services, parks and wildlife, building construction and maintenance. There is way more to do in the state than there are resources to accomplish those goals. Hickenlooper’s budget makes that clear. A change is needed.
