Colorado state budget (2009-2010)

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The state planned to finish FY 2010 with $82 million in the bank.[1] To do so, the state declared a fiscal emergency and delayed payments to doctors and clinics taking care of the state's neediest patients by two weeks. Payments would resume on July 9, after FY 2011 began.[2] Rep. Jim Kerr called the move an "accounting gimmick."[1]

The Colorado General Assembly had just ended its session on May 6, 2009, having addressed a $1.454 billion, two-year shortfall, when a subsequent economic forecast on June 22, 2009, showed a new state deficit well over $300 million.[3][4] Gov. Bill Ritter announced on August 18, 2009 his plan to close the latest $320 million budget gap for FY 2010 (July 1, 2009 - June 30, 2010).[5] Gov. Ritter’s plan included a nine percent overall reduction in spending that included $263 million in cuts and eliminating 270 full-time equivalent state positions.[5] The Colorado General Assembly took measures during the 2009 session to balance the $7.5 billion FY 2010 general fund budget.[6]

Budget background

See also: Colorado state budget

Colorado’s state revenue increased annually 1.9 percent for the period from FY 1999 to FY 2009, while three of its largest general fund appropriations (K-12, corrections, and health) grew 5.4% each year on average. These three spending categories had grown from 54% of the general fund budget in 1999 to 76% within a decade. They were estimated to increase their portion of the budget to 91% in five years.[4]

Colorado's fiscal year begins July 1 and ends June 30. State departments submit their budget proposals to the Governor's Office of State Planning and Budgeting as part of the executive budget process. The governor and his staff review the budget proposals and limit each department's budget request based on the governor's priorities, and they determine which new funding initiatives may be included in the request.[7] Departments submit budgets to the Joint Budget Committee by November 1. Shortly thereafter the committee schedules hearings with each agency. The staff analysts brief the Committee on each budget request a few days prior to the hearing with a department. Briefings and hearings for most departments are scheduled in November and December. By February 1, the legislature is required to certify, by joint resolution, the amount from the state's general fund available for appropriation for the next fiscal year. Once the General Assembly convenes in early January, a series of hearings and joint budget meetings that run both through the House and the Senate take place. Both houses must accept the final bill before it is signed into law.[8]

General fund revenue collections: FY 08-09 compared to FY 07-08[9]

FY 2008 FY 2009 Percent change
Individual income $4,974 $4,424 -11.1%
Corporate income 507.9 350.9 -30.9%
Excise/sales taxes 2,411 2,265 -6.0%
Other 258.1 246.4 -4.5%
Total 8,151 7,287 -10.5%

All figures in millions, and include revenues collected for State Education Fund, based on March 2009 forecast.

Accounting principles

See also: Colorado government accounting principles

The Office of the State Auditor reports to the Legislative Audit Committee. The Legislative Audit Committee (LAC) is a permanent standing committee comprised of four senators and four representatives with equal representation from the two major political parties. The Committee is responsible for reviewing and releasing audit reports and recommending special studies. The LAC also recommends an appointment for State Auditor to the leadership of the General Assembly every five years. Sally Symanski was Colorado’s state auditor as of October 2009. Audit reports are published online.[10]

Credit rating Fitch Moody's S&P
Colorado[11] NR Aa3 AA

2009-2010 budget crisis

Gov. Ritter’s plan included a 9% overall reduction in spending that included $263 million in cuts and eliminating 270 full-time equivalent state positions.[5][12] The Colorado General Assembly took measures during the 2009 session to balance the $7.5 billion FY 2010 general fund budget, some of which included:[6]

  • $760 million from one-time federal stimulus money[13]
  • $77 million in cuts
  • 255 million in new taxes
  • Furlough days (eight per year) for state employees
  • Wage freezes
  • Hiring freezes
  • Transfer of $35 million from tobacco money to general fund
  • One-year suspension of senior citizen property tax exemption for $90 million
  • Reduced percentage of sales tax vendors can keep for administrative costs from 3.33 percent to 1.35 percent to increase state revenue an estimated $93.3 million over the next 3.5 years.[14]

Proposed legislation

Proposed bills: Approximately 12 bills had been introduced to the House which could suspend, eliminate or reduce a number of existing state tax exemptions in Colorado. If approved the proposed legislation would take effect March 1, 2010.[15]

November 2010 ballot: Three ballot measures were scheduled to appear on the November 2, 2010 statewide ballot - Proposition 101 and Amendments 60 and 61. Proposition 101 would make amendments to current vehicle, income and telecommunications taxes and fees. Amendment 60 proposed limiting how property taxes were raised and reversing tax laws that increased taxes. Amendment 61 called for prohibiting borrowing by state or local government and required voter approval for future loans. Gov. Bill Ritter was urging that residents vote down all three measures because, according to Ritter, the measures would "would shut down colleges and prisons, increase class sizes, put thousands of teachers out of work and prevent the repair of unsafe roads and bridges."[16]

Eliminate tax exemptions & add new taxes: In fall 2009 the governor proposed eliminating 13 existing tax exemptions starting in July 2010; however, in light of revenue reports, in January 2010 the governor proposed eliminating 7 tax exemptions in March 2010 instead of July. Eliminating 7 of the existing tax exemptions was estimated to generate $18 million. All 13 tax exemptions, when eliminated, were estimated to generate $132 million. The governor was proposing to cut a total of $600 million from the current year's budget. For example: the industrial energy use sales tax was estimated to bring in $48 million in revenue per year; a candy and soft drinks tax would generate $7.9 million per year; and a pesticides tax would generate $2.9 million.[17]

Budget transparency

See also: Evaluation of Colorado state website

As of 2009, Colorado did not have a statewide spending database online, but the state would have one by no later than January 2010.[18] According to Governor Ritter's 2009 State of the State address, "... we're making government more modern and transparent by putting more services online and soon, working with Treasurer Kennedy's Office and Representative Marostica, we'll have the state's checkbook online."[19]

On June 4, 2009, Governor Ritter signed Colorado House Bill 1288, the "Colorado Taxpayer Transparency Act," into law. HB 1288 mandated the creation of an online spending database by no later than January 2010.[18]

This law would increase Colorado's transparency beyond what Governor Ritter's original executive order (from April 2, 2009) had required.[20][21]

Government tools

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases
State database Searchability Grants Contracts Line item expenditures Dept./agency budgets Public employee salary
Colorado T.O.P. P
Partial.png
P
Partial.png
P
Partial.png
Y
600px-Yes check.png
{{{1}}}
N
600px-Red x.png
  • Contracts were searchable, but the spending site as a whole was not.
  • The budget was presented as a searchable PDF and contained spending for grants. However, grants did not have their own section for easy viewing and were not updated, as the latest budget posted was for 2009.[22]
  • Contracts were posted and searchable.[23]
  • The 2008-2009 budget contained spending by line items, but there were no updated budgets.[22]
  • Budgets by department were available.[24]

Economic stimulus transparency

  • The American Recovery and Reinvestment Plan of 2009 designated $787 billion to be spent throughout the nation. Of that $787 billion stimulus package, it was estimated that 69%, or over $541 billion, would be administered by state governments.[25]
  • It was estimated that Colorado would receive $3,232,477,903 in federal funding.[26]
  • U.S. Secretary of Education Arne Duncan announced on April 12, 2010, that Colorado would receive $39,731,239 million to turn around its persistently lowest-achieving schools through the School Improvement Grants (SIG) program, which was part of ARRP.[27]

One Colorado project was noted in Senator Coburn's and Senator McCain's "Summertime Blues, 100 stimulus projects that give taxpayers the blues" report. One project gave Colorado liquor distilleries, breweries and wineries $5 million in stimulus-backed business loans.[28]

Error in ARRP

According to Recovery.gov, the plan showed its funds would go to 884 congressional districts, though there are only 435.[29][30]

Colorado appeared to have 10 extra districts, including District 00, which received over $10 million.[31]

See also

External links

Additional reading

References

  1. 1.0 1.1 "State budget needs modest cuts this year" June 22, 2010
  2. Denver Post Colorado delays Medicaid payments June 17, 2010
  3. The Capstone Group, “2009 Session Summary,” May 6, 2009
  4. 4.0 4.1 “Colorado’s State Budget Tsunami,” July 2009
  5. 5.0 5.1 5.2 Gov. Ritter’s Office, “Press Release: $320 M Budget-Balancing Plan,” August 18, 2009
  6. 6.0 6.1 Colorado Capitol Journal, “House Gives Final OK to FY 2010 Budget,” Friday, April 17, 2009
  7. State of Colorado, "Budget Process and schedule," accessed March 19,2009
  8. State of Colorado, "The role of the Joint Budget Committee in the budget process," accessed March 19, 2009
  9. Tomlinson & Associates, “2009 Colorado General Assembly Legislative Session Review,” June 6, 2009
  10. Office of the State Auditor Web site, accessed October 11, 2009
  11. "State of Indiana," “State Credit Ratings-as of June 24, 2009
  12. Associated Press, "Governors facing troubles as economy hits home," January 9, 2010
  13. Colorado Economic Recovery Accountability Board, “Overview of the SFSF,” June 11, 2009
  14. Denver Business Journal, “Colorado businesses keep smaller share of sales-tax revenue under new law,” March 3, 2009
  15. The Longmont Times-Call, "House focuses on tax issues," January 23, 2010 (dead link)
  16. "Colorado Gov. Ritter: ‘$10 solutions to billion-dollar problems’ won’t did it," January 14, 2010 (dead link)
  17. "Colo. gov wants to speed up candy, soda tax plan," January 21, 2010
  18. 18.0 18.1 Colorado Taxpayer Transparency Act
  19. Denver Post, "Full planned text of Ritter's State of the State speech," January 8, 2009
  20. National Taxpayers Union, "Transparency Has Arrived in Colorado," June 8, 2009
  21. National Taxpayers Union, "Taxpayer Group: Three Reasons Gov. Ritter's Transparency Order Doesn't Shed Light on Denver," April 2, 2009
  22. 22.0 22.1 Budget to Actual Detail Report, FY 2008-2009
  23. State of Colorado - Contract Management System
  24. Budget Cycly 2009-2010
  25. National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
  26. Wall Street Journal, "Stimulus Spending by State"
  27. Colorado to Receive Nearly $40 million to Turn Around Its Persistently Lowest Achieving Schools April 12, 2010
  28. "Summertime Blues, 100 stimulus projects that give taxpayers the blues" August 2010
  29. $6.4 Billion Stimulus goes to Phantom Districts, Watchdog.org, November 17, 2009
  30. Stimulus Creates Jobs in Non-Existent Congressional Districts, Watchdog.org, November 16, 2009
  31. Colorado, Watchdog.org, November 17, 2009