Colorado legislators this week are engrossed in shaping a state budget for the fiscal year beginning July 1 that sheds a looming $1.2 billion shortfall, layered with only a suggestion of the fiscal disruptions that could come as a result of the White House’s severe reductions in federal funding and the unknown ramifications of wildly increased federal tariffs.
Not in the proposed $44 billion budget are reductions or eliminations of dozens of small programs that improved Colorado main streets, expanded multimodal transportation and added electric school buses, all to as best as possible fund the increase in Medicaid costs (one out of four Coloradans) and the initial year of the preK-12 public school funding formula that better supports rural schools and students with special needs.
It’s Colorado’s 1992 Taxpayer’s Bill of Rights spending cap – population growth plus inflation – that makes the budget balancing so frustrating for those more comfortable with government spending. The TABOR cap does not meet the increased program costs that affect so many programs. Medicaid, for example, is not serving more Coloradans, it’s that medical services have increased in cost and that more per client are needed. And, bluntly, it’s possible that a portion of the federal portion of Medicaid funding will be reduced. What will be done, then?
Other reduction in federal health care funding that flows through the states, which for example is impacting La Plata County’s new public health department, could put further pressure on state spending. And in terms of revenue, will any high tariffs by other countries reduce the profitability and thus the taxes paid by Colorado companies?
For additional revenue in future years, there are legislators who would like the state to impose a graduated income tax. Rather than the current 4.4%, or the temporary 4.2 depending on state revenues, they picture 8.5% on those making $750,000 and 9.5% for those at $1 million. Because of TABOR, the possibility of those changes would go to the voters.
Colorado’s legislative session ends in four weeks. Expect that until the final days, numbers will be pushed back and forth.
