Colorado state budget (2008-2009)
- 1 Impact of budget woes
- 2 Budget background
- 3 Ideas about why the crisis occurred
- 4 Proposed actions
- 5 Budget transparency
- 6 See also
- 7 External links
- 8 Additional reading
- 9 References
Colorado faced a $604 million budget gap for fiscal year 2009. In early 2009 Gov. Bill Ritter proposed a series of budget cuts, including closing two prisons, slashing spending on education and furloughing state workers, who were also subjected to a pay freeze. "It's a dramatic situation that we're faced with. The question mark," said Todd Saliman, Ritter's budget director. In addition to several budget cuts, the governor imposed a hiring freeze, stopped several new construction projects and halted non-essential spending requests. However, the governor said that federal stimulus funds would help soften the impact of the cuts necessary to balance the budget. Some lawmakers were hoping to eliminate a 6 percent cap on spending, ending automatic funding transfers to transportation and construction projects and allowing lawmakers to spend more on other state services, such as safety net programs and higher education.
Impact of budget woes
- See also: State budget issues, 2009-2010
- In January 2009 Colorado's unemployment rate rose to 6.6 percent compared to December 2008's rate of 6.1 percent. The lowest rate in Colorado was reported in Summit County with 4.7 percent, whereas the state's highest rate was reported at Pueblo County at 8.6 percent.
- As of March 2009 Colorado did not qualify for 13 weeks of extended unemployment insurance benefits (EUI) from the federal government. Under the nation's federal stimulus bill, states that averaged a 6 percent unemployment rate over three months qualified for the EUI. Colorado's came in at 5.9 percent.
- The governor signed into law a bill that changed the amount that sales-tax revenue businesses could keep to cover administrative costs associated with collecting the tax. The then-current rate was 3.33 percent of taxes collected, but with the new law businesses could only retain 1.35 percent. According to state officials, the state would be able to retain $93.3 million in revenue over the next 3.5 years.
- As of October 1, 2008 the state implemented a hiring freeze. The hiring freeze applied to all general government positions and functions utilizing state funds. Requests for exemptions to the hiring freeze would be submitted to the Office of State Planning and Budgeting.
- See also: Colorado state budget
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. 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 the 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 occurs that runs both through the House and the Senate. Both houses must accept the final bill before it is signed into law.
The following table provides a history of Colorado's expenditures and gross domestic product (GDP).
|Fiscal year||Expenditures (billions)||GDP (billions)|
- NOTE: The figures for FY 2009 had not been finalized at the time this data was compiled.
Ideas about why the crisis occurred
- Due to a decline in construction, professional and business services, according to the Department of Labor and Employment, the state had continued to see its job market decline. The state lost 64,100 non-farm payroll jobs between December 2008 and January 2009. In January, the trade, transportation and utilities sector lost 14,500 jobs. Professional and business services cut 14,400 workers, primarily in the administrative and support sector. Government payrolls shrank by 12,600. Construction employment fell 10,400 and leisure and hospitality declined by 4,300.
- According to the Department of Revenue, Colorado collected $135.6 million in sales tax revenue in February 2009, down 16.2 percent from 2008. However, sales tax receipts for February were 11.5 percent less than had been forecast in December 2008. For the fiscal year to date, sales tax receipts totaled $1.37 billion, 5.7 percent less than the same period a year ago and 1.9 percent less than forecast.
- Individual income-tax receipts for FY 2009 totaled $2.93 billion, 2.1 percent less than 2008 and 2.9 percent behind forecasts. Gross state general fund revenue from sources, including liquor taxes and corporate income taxes, was $305.2 million in February and $4.66 billion for the FY 2009, down 19 percent and 4.6 percent respectively from 2008. Cigarette tax did, however, increase. $3.3 million was collected in February compared to $2.9 million in 2008.
Governor Bill Ritter
Gov. Ritter presents FY 2009-2010 budget recommendation
In response to FY 2009's budget deficit the governor proposed a $631.9 million budget-balancing plan which included: spending reductions and program cuts equal to $201.1 million; cash fund transfers and diversions to the General Fund of $289.7 million; and utilizing the state's emergency reserve, $134.1 million. In October 2008 Gov. Ritter instituted a hiring freeze, which was ongoing, resulting in an $11.3 million savings. "My top priorities would be protecting life, safety and public health, ensuring that we were able to meet our safety-net obligations, and that we try to preserve much of the progress we've made in areas such as higher education the past two years," Gov. Ritter said.
Gov. Ritter's plan for FY 2010, however, included $1 billion of proposals, including $696.2 million in actual General Fund cuts and reductions, and another $126.9 million in reduced obligations, for an overall decline of $823.1 million. The governor's plan also included an estimated $259 million of anticipated revenue from the federal American Recovery and Reinvestment Act to help reduce the impact of the budget shortfall on health care services. In order to increase the state's revenue the governor signed into law a bill that changed the amount that sales-tax revenue businesses could keep to cover administrative costs associated with collecting the tax. The then-current rate was 3.33 percent of taxes collected but with the new law businesses could only retain 1.35 percent. According to state officials, the state would be able to retain $93.3 million in revenue over the next 3.5 years.
Contrary to the state's current trend, Republicans said that they would rather not inflict higher fees on residents and instead would prefer to cut the state's government budget. "There had been a blizzard of fees," said Senate Minority Leader Josh Penry, who favored cutting the budget instead of raising revenue. "The state was balancing its budget by knocking the budgets of families ... out of balance." But the rift between Republican lawmakers and other state politicians didn't end there. Some lawmakers were urging for the passing of a bill that would end automatic funding transfers to transportation and construction projects and allow lawmakers to spend more on other state services. However, Republican lawmakers said that this bill would destroy the Taxpayer's Bill of Rights by repealing spending limits in the state budget. State law allows the total general fund budget to grow only by 6 percent a year. Any leftover revenue must be spent first on highway construction and then other building projects. A Colorado Supreme Court ruling maintained that the bill did not interfere with the Taxpayer's Bill of Rights. However, Republican lawmakers believed otherwise, calling the Supreme Court decision and the bill an effort to trample over Colorado taxpayers. “Government was proceeding as if it was the begin all and end all but where does the money come from?” said Rep. Scott Tipton. "It’s coming from the taxpayer’s hip pocket.”
Colorado Democrats moved a bill,Senate Bill 228, in March 2009 that would end automatic funding transfers to transportation and construction projects and allow lawmakers to spend more on other state services, such as safety net programs and higher education. The bill, sponsored by Sen. John Morse, had been criticized as a deceitful move to remove spending limits. But despite the criticism Morse said that the change was much needed. Morse said that the Democrats would provide money for roads but emphasized that the state needed to consider spending more on treating the mentally ill, helping the developmentally disabled and making sure state colleges and universities wouldn't have to cut enrollment. In another effort to ensure funding for education, a bill was pushed through the legislature that would freeze property tax rates from decreasing. A Colorado Supreme Court ruling on March 16, 2009 ensured that the bill would not interfere with the Taxpayer’s Bill of Rights. "The legislation simply stabilizes funding for our kids’ schools so they can get the quality of education they deserve,” said House Speaker Terrance Carroll.
Economic stimulus package
Gov. Ritter's remarks on the federal stimulus bill
Colorado was expected to receive $2 billion of the $787 billion dollar economic stimulus package. According to White House officials, the package was expected to create approximately 59,000 jobs.
According to preliminary reports, Colorado was expected to receive:
- $400 million for transportation projects
- $103 million for transit projects
- $900 million for education
- $130 million to make their homes more energy efficient
- $248 million for Colorado for extended unemployment benefits
- $85 million for Colorado for bigger unemployment checks
HUD grants, 2009
A year after receiving Neighborhood Stabilization Program funds from the U.S. Department of Housing and Urban Development, Denver had not spent the $6 million awarded them for the buying and repairing of foreclosed homes.
Officials said that Colorado would have a statewide spending database online no later than January 2010. 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."
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. This law would increase Colorado's transparency beyond what Governor Ritter's original executive order (from April 2, 2009) had required.
Economic stimulus transparency
- The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it was estimated that 69%, or over $541 billion, would be administered by state governments.
- It was estimated that Colorado would receive at least $2 billion in federal funding.
Accusation of misrepresentation
In February 2009, GOP state representative Frank McNulty, Highlands Ranch, denounced the state's Department of Natural Resources for deliberately understating the costs of a new oil and gas regulation program when hearings were held on the proposed program in 2007. A February 2007 financial statement given to lawmakers during their deliberations estimated the cost of enforcing the new regulatory regime at $6,840. However, the Associated Press, using documents obtained in a Colorado Open Records Act request, discovered that the agency had a "Plan A" outline of estimated costs for the program, which put the estimated cost of the new regulatory apparatus at $1.2 million for fiscal year 2007-2008.
State Rep. Don Marostica, R-Loveland, tried to get Colorado on board with transparency in 2007 with House Bill 1164, "concerning the disclosure of information related to expenditure of state moneys on a searchable website." According to an article by John Andrews, "Bureaucrats hung a bloated $1.1 million fiscal note on the bill, and Democrats killed it in the first committee."
State Sen. Ted Harvey, R-Highlands Ranch, had introduced Senate Bill 57 in the 2009 legislative session that would require school districts, charter schools, and other local education agencies "to create and maintain a searchable budget database web site that includes data concerning ... revenues and expenditures." Nearly 20 people came to testify in favor of SB 57 before the Senate Education Committee on January 28, 2009. However, the Democratic majority on a party-line voted to convert the bill's requirements into a "voluntary pilot program," giving the bill resolution status. The new legislation was forwarded to the Senate floor for consideration.
The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:
|State database||Searchability||Grants||Contracts||Line item expenditures||Dept./agency budgets||Public employee salary||Exemption level|
Support for creation of the database
The Independence Institute had argued, "Let us see the bank book." John Andrews] of IPI said, "I give the treasurer only a C, and Gov. Bill Ritter gets an F on this issue. His budget director, Todd Saliman, seemed detached about it when I called, merely voicing support for Kennedy's slow-motion efforts. And his press secretary, Evan Dreyer, had never heard of taxpayer transparency."
Public employee salary information
- See also: Colorado state government salary
- State of Colorado, "Gov. Ritter's budget request Fiscal year 2009-2010," November 13,2008
- Gov. Bill Ritter, "2009 State of the State," January 8,2009
- Center on Budget and Policy Priorities, "State budget troubles worsen," March 13,2009
- Politics West, "Ritter's budget cuts would cause 'pain felt by many'," January 27,2009
- Gov. Bill Ritter, "2009 State of the State," January 8,2009
- The Gazette, "Senate OKs bill on broader spending," March 17,2009
- KUSA-TV, "Colorado unemployment rises again," March 11,2009
- ABC, "Colorado Fails To Qualify For Extended Unemployment Benefits," March 17,2009
- Denver Business Journal, "Colorado businesses keep smaller share of sales-tax revenue under new law," March 3,2009
- State of Colorado, "October 1,2008 hiring freeze," accessed March 19,2009
- State of Colorado, "Budget Process and schedule," accessed March 19,2009
- State of Colorado,"The role of the Joint Budget Committee in the budget process," accessed March 19,2009
- US Government Spending, "Colorado State and Local spending," accessed March 18,2009
- Denver Business Journal, "Colorado unemployment at 6.6% in January," March 11,2009
- Department of Labor and Employment, "Colorado labor force developments for January 2009," March 11,2009
- Associated Press, "Colorado Feb. tax collections were below forecasts," March 13,2009
- Denver Business Journal, "Colorado sales tax receipts off 16.2% in February," March 13,2009
- State of Colorado, "GOV. RITTER PROPOSES BUDGET-BALANCING PLAN," January 16,2009
- State of Colorado, "GOV. RITTER CONTINUES BUDGET-BALANCING PLAN," January 27,2009
- USA Today, "Cities, states tack on more user fees," accessed March 19,2009
- CBS, "GOP Angst Building Over Eliminating Budget Limit," March 3,2009
- Republican Party of Colorado, "Colorado Republican statement on Supreme Court decision on Ritter Property tax increase," March 16,2009
- The Watch, "Debate Over Spending Continues at State Capitol," March 18,2009
- Associated Press, "Colorado Senate passes bill changing budget rules after compromise talks break down," March 17,2009
- The Examiner, "Democrats pushing agenda through Congress," March 17,2009
- Associated Press, "Public gets say on Colorado stimulus spending," March 18,2009
- American Recovery and Reinvestment Act, "Estimated job effect," accessed March 18,2009
- Vail Daily, "Web site details Colorado stimulus spending," March 13,2009
- Denver Post, "State's $900 million share spurs excitement, concern," March 15,2009
- Associated Press, "Stimulus package money to weatherize Colo. homes," March 12,2009
- Associated Press, "How stimulus money would affect Colorado jobseekers," March 6,2009
- "Colorado Taxpayer Transparency Act"
- Denver Post, "Full planned text of Ritter's State of the State speech," January 8, 2009
- "Colorado Taxpayer Transparency Act"
- National Taxpayers Union, "Transparency Had Arrived in Colorado, " June 8, 2009
- National Taxpayers Union, "Taxpayer Group: Three Reasons Gov. Ritter's Transparency Order Doesn't Shed Light on Denver," April 2, 2009
- National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
- Wall Street Journal, "Stimulus Spending by State"
- Associated Press, "Lawmakers: State withheld budget figure on energy," February 3, 2009
- Nobody comes. Kill the bill., Colorado Spending Transparency, January 28, 2209