Colorado state budget (2010-2011)

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Colorado Then-Gov. Bill Ritter signed the FY2011 $18.2 billion budget into law on April 29, 2010.[1] On Nov. 2, 2010, Gov. Ritter to submit his proposed $19.1 billion FY2012 budget.[2]

The state faces what the University of Denver's Center for Colorado’s Economic Future had described as an “Economic Tsunami” - a $1.5 billion budget gap for the upcoming FY 2011 budget. In January 2010, Gov. Ritter proposed a $260 million cut in funding for K-12 schools and a sales tax on candy and soda which was estimated to raise $312 million.[3][4][5]

The state would receive approximately $315 million from HR 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.[6][7]

Colorado had a total state debt of $25,681,980,195 when calculated by adding the total of outstanding debt, pension and OPEB UAAL’s, unemployment trust funds and the 2010 budget gap.[8]

2011 State spending & deficit in billions[9]
Total spending Pension Healthcare Education Welfare Protection Transport Debt
$21.4 $3.5 $5.1 $5.2 $2.0 $1.7 $0.9 $20.3
2011 Local spending & deficit in billions[9]
Total spending Pension Healthcare Education Welfare Protection Transport Debt
$33.4 $0.5 $2.7 $7.8 $1.3 $2.8 $2.5 $38

Fiscal Year 2011 State Budget

On April 9, 2010, the Colorado Senate passed an $18.2 billion budget bill for FY2011 by 22-13 vote with only one Republican, Sen. Al White of Hayden, a member of the Joint Budget Committee, voting in favor of the bill.[10] Republicans had previously called for across-the-board cuts from state agencies, the largest of which would have cut $396.8 million from the general fund and cash fund appropriations to state agencies, but Senate Democrats rejected that plan.[11]

Gov. Bill Ritter signed the $18.2 billion budget into law on April 29, 2010.[1] The FY2011 budget was 6% higher than the budget for the prior year, an increase of approximately $399 million.[1] The budget negotiators expected tax revenues to increase 5.8% in FY2011 after declining a total of $1.3 billion the two prior years.[1] The extra tax revenue would plug the hole left by federal stimulus money that was not renewed.[12]

Highlights of the budget included[10]: A $260 million, or a 6 percent, cut to aid for public schools, a move that districts said would result in teacher layoffs and larger class sizes.

  • Elimination of various tax exemptions and credits, mostly for businesses, that was expected to generate as much as $140 million in additional revenue for the state.
  • A $61.5 million, or an 8.7 percent, net reduction to colleges and universities.
  • A $93 million cut, or a complete elimination for one year, of the state's Homestead Exemption property-tax break for seniors.
  • A 2.5 percent reduction to state employee paychecks to help shore up their pension plan.
  • A $17.9 million cut to Medicaid providers.
  • A $6.3 million cut, or a 0.9 percent reduction, to the Department of Corrections.
  • A $257 million, or a 5.9 percent, increase to the Department of Healthcare Policy and Financing, an increase primarily owing to forecasted growth in the state's Medicaid population and for kids served in the Children's Basic Health Plan and to an increase in federal matching funds resulting from a new fee on hospitals.
  • A $3.1 million, or 0.1 percent, increase to the Department of Human Services, a budget that reflected $29 million in federal stimulus money disappearing and being replaced with general-fund money and facilities for the mentally ill and developmentally disabled in Fort Logan and Grand Junction being closed.
  • 13 tax credits and sales tax exemptions were suspended, adding $140 million in state revenue.[13]

Budget deficit

Seven weeks into FY2011, the state faced a $60 million deficit.[14] The governor presented his plans to address the shortfall on Aug. 23, 2010, which included using $9 million from medical marijuana registrations.[15] Other cuts announced by the governor included:[16]

  • Saving $4.9 million from a 1 percent reduction in payroll costs achieved largely by not filling vacant jobs.
  • Cutting $1.3 million from the Department of Corrections
  • Transfer $15 million from a cash fund generated by oil and gas drilling that was used to provide grants to local communities affected by the energy companies' activities.
  • Taking $11.4 million from a grant reserve fund for local communities generated by federal mineral lease royalties.
  • Taking $9.4 million from a fund for higher education funded by federal mineral lease earnings.
  • Taking $3.5 million from a cash fund in the secretary of state's office.

In Oct. 2010, the gap in the budget was estimated to be $262 million.[17]

Gov. Ritter announced that his plan to close the gap relied on federal stimulus funds and the delay of $55 million in Medicaid payments by one month.[17] His plan also lessened state funding for education by $156 million.[17] Budget transfers were a key part of the plan, with $55 million in severance taxes, $10 million from the base account, money used for loans to water users, and $2.5 million the Travel and Tourism Promotion Fund being moved to the state bank account.[17]

In Dec. 2010, the National Conference of State Legislatures said that the state faced a midyear shortfall of $248.7 million, which represented 3.6% of the FY2011 state budget.[18]

Education

Under the FY2011 budget, funding for Colorado schools had been cut by $365 million, which represents a 6.5 percent cut.[19]

Colorado would receive $160 million for education under the stimulus bill of August 2010.[19] U.S. Rep. Jared Polis said that federal funding would save 2,600 teachers' jobs statewide[20], but some officials disputed that number.[19]

Fiscal Year 2010 State Budget

The state plans to finish FY2010 with $82 million in the bank[21] To did 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 FY2011 year begins.[22] Rep. Jim Kerr called the move an "accounting gimmick."[21]

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.[23][24] Gov. Bill Ritter announced August 18, 2009 his plan to close the latest $320 million budget gap for the current FY 2010 (July 1, 2009 - June 30, 2010).[25] Gov. Ritter’s plan included a nine percent overall reduction in spending that includes $263 million in cuts and eliminating 270 full-time equivalent state positions.[25] The Colorado General Assembly took measures during the 2009 Session to balance the $7.5 billion FY 2010 General Fund budget.[26]

Budget background

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.[24]

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.[27] 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 were scheduled in November and December. By February 1, the Legislature was 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. Both houses must accept the final bill before it was signed into law.[28]

See Colorado state budget (2008-2009) for more information.

General Fund Revenue Collections: FY 08-09 compared to FY 07-08[29]

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 Colorado State Auditor reports to the Legislative Audit Committee. The Legislative Audit Committee (LAC) was a permanent standing committee comprised of four senators and four representatives with equal representation from the two major political parties. The Committee was 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. Audit reports were published online.[30][31]

Credit Rating Fitch Moody's S&P
Colorado[32] NR Aa3 AA

2009-2010 budget crisis

Gov. Ritter’s plan had a 9% overall reduction in spending that includes $263 million in cuts and eliminating 270 full-time equivalent state positions.[25][33] The Colorado General Assembly took measures during the 2009 Session to balance the $7.5 billion FY 2010 General Fund budget, some of which include:[26]

  • $760 million from one-time federal stimulus money[34]
  • $77 million in cuts
  • 255 million in new taxes
  • Furlough days (8 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 collected 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 ½ years.[35]

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.[36]

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 proposes limiting how property taxes were raised and reversing recent tax laws which increased taxes. Amendment 61 calls for prohibiting borrowing by state or local government and require 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."[37]

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 recent 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.[38]

Budget transparency

See also: Evaluation of Colorado state website

Colorado currently did not had a statewide spending database online, but the state would have one by no later than January, 2010.[39] 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 had the state's checkbook online."[40]

On June 4, 2009, Governor Ritter signed Colorado House Bill 1288, the "Colorado Taxpayer Transparency Act," into law. House Bill 1288 mandates the creation of an online spending database by no later than January, 2010.[39]

This law would increase Colorado's transparency beyond what Governor Ritter's original executive order (from April 2, 2009) had required.[41][42]

Government tools

The following table was 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 a searchable PDF and contains spending for grants. However, grants did not had their own section for easy viewing and were not updated, as the latest budget posted was 2009.[43]
  • Contracts were posted and searchable.[44]
  • The 2008-2009 budget contains spending by line items,[43] but there were no updated budgets.
  • Budgets by department were available.[45]

Economic stimulus transparency

  • The American Recovery and Reinvestment Plan 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.[46]
  • It was estimated that Colorado would receive $3,232,477,903 in federal funding.[47] In the next two years, that number was expected to be approximately $85 billion.[48]
  • 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.[49]
  • The economic recovery website for Colorado was available online.[50]

One Colorado project was noted in Senator Coburn 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.[51]


See also

External links

Additional reading

References

  1. 1.0 1.1 1.2 1.3 Denver Post "Gov. Bill Ritter signs $18.2 billion budget" April 30, 2010
  2. The Denver Post "Ritter unveils $19.1 billion budget for Colorado in 2011-12" Nov. 3, 2010
  3. Associated Press,"Colorado Lawmakers to Tackle Difficult Budget Cuts," January 11, 2010
  4. Associated Press,"Colorado Lawmakers Cutting Budget to the Bone," January 11, 2010
  5. University of Denver's Center for Colorado’s Economic Future
  6. Federal Fund Information for States “ARRA FMAP Extension & Education Jobs Fund Totals” Aug. 11, 2010
  7. H.R. 1586
  8. State Budget Solutions “States Hide Trillions in Debt” July 22, 2010
  9. 9.0 9.1 USA Spending, State Guesstimated* Government Spending
  10. 10.0 10.1 The Denver Post "'Ashamed' senators pass Colorado budget" April 10, 2010
  11. Denver Post "GOP thwarted as Colorado Senate advances budget April 9, 2010
  12. Business Week "Colorado Gov. Ritter signs $18.2B budget into law" April 30, 2010
  13. The Rocky Mountain Collegian "Budget makes more cuts to higher ed" May 2, 2010
  14. The Denver Post "Ritter to announce how Colorado would bridge $60 million budget gap" Aug. 23, 2010
  15. Salon "Colorado gov. says pot fees helping budget deficit" Aug. 23, 2010
  16. The Denver Post "Ritter turns to medical-marijuana fund to help balance Colorado budget" Aug. 24, 2010
  17. 17.0 17.1 17.2 17.3 Businessweek "More cuts coming to Colorado budget this year" Oct. 22, 2010
  18. The Wall Street Journal “States Face Budget Shortfalls of $26.7 Billion“ Dec. 8, 2010
  19. 19.0 19.1 19.2 San Francisco Examiner "Colo. school districts get stimulus to save jobs" Aug. 13, 2010
  20. "$26 billion for schools, Medicaid stokes debate" Aug. 6, 2010
  21. 21.0 21.1 "State budget needs modest cuts this year" June 22, 2010
  22. Denver Post Colorado delays Medicaid payments June 17, 2010
  23. The Capstone Group, “2009 Session Summary,” May 6, 2009
  24. 24.0 24.1 “Colorado’s State Budget Tsunami,” July 2009
  25. 25.0 25.1 25.2 Gov. Ritter’s Office, “Press Release: $320 M Budget-Balancing Plan,” August 18, 2009
  26. 26.0 26.1 Colorado Capitol Journal, “House Gives Final OK to FY 2010 Budget,” Friday, April 17, 2009
  27. State of Colorado,"Budget Process and schedule," accessed March 19,2009
  28. State of Colorado, "The role of the Joint Budget Committee in the budget process," accessed March 19, 2009
  29. Tomlinson & Associates, “2009 Colorado General Assembly Legislative Session Review,” June 6, 2009
  30. Office of the State Auditor Web site, accessed October 11, 2009
  31. Audit reports
  32. "State of Indiana," “State Credit Ratings-as of June 24, 2009
  33. Associated Press,"Governors facing troubles as economy hits home," January 9, 2010
  34. Colorado Economic Recovery Accountability Board, “Overview of the SFSF,” June 11, 2009
  35. Denver Business Journal, “Colorado businesses keep smaller share of sales-tax revenue under new law,” March 3, 2009
  36. The Longmont Times-Call,"House focuses on tax issues," January 23, 2010
  37. "Colorado Gov. Ritter: ‘$10 solutions to billion-dollar problems’ won’t did it," January 14, 2010
  38. "Colo. gov wants to speed up candy, soda tax plan," January 21, 2010
  39. 39.0 39.1 Colorado Taxpayer Transparency Act
  40. Denver Post, "Full planned text of Ritter's State of the State speech," January 8, 2009
  41. National Taxpayers Union, "Transparency had Arrived in Colorado," June 8, 2009
  42. National Taxpayers Union, "Taxpayer Group: Three Reasons Gov. Ritter's Transparency Order Doesn't Shed Light on Denver," April 2, 2009
  43. 43.0 43.1 Budget to Actual Detail Report, FY 2008-2009
  44. State of Colorado - Contract Management System
  45. Budget Cycly 2009-2010
  46. National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
  47. Wall Street Journal, "Stimulus Spending by State"
  48. Colorado Economic Recovery
  49. Colorado to Receive Nearly $40 million to Turn Around Its Persistently Lowest Achieving Schools April 12, 2010
  50. Colorado Economic Recovery
  51. "Summertime Blues, 100 stimulus projects that give taxpayers the blues" August 2010