Colorado falls short of budget by $561M
More state budget cuts are likely following an announcement Monday that the state’s general fund shortfall has increased to $560.7 million.
Gov. Bill Ritter said Monday that going to the ballot for a tax increase would take too much time and place a burden on people already struggling to make ends meet. He said he’s “not entertaining tax increases” to close the widening chasm between what the state has budgeted and what it can afford. Only temporary fixes or cuts remain as options to balance the budget, a task he promised to accomplish.
“We’ll be thoughtful, we’ll be surgical, we’ll be compassionate,” he said when referring to cuts that he plans to announce in mid- to late-October.
A Colorado economic and revenue forecast released in June estimated the state would have to scrape together $320 million in cuts or new revenue to balance the 2009–2010 budget. Ritter presented $320 million in budget adjustments last month. Monday’s Colorado Legislative Council Staff revenue forecast projected the state will need to find or cut an additional $240.7 million.
Filling the new-found gap may take additional furlough days for state employees and layoffs, said Rep. Steve King, R-Grand Junction. He’s “vehemently and adamantly opposed” to any new taxes.
“It has to be new cuts,” King said. “(Ritter) needs to step up and if it is a cut to the bone, it is a cut to the bone.”
Even with permanent fixes to the $560.7 million shortfall in the present budget year, the state still will have to come up with $748.4 million for the 2010–2011 budget and $1.3 billion if the fixes are not lasting. Those figures do not include inflation, case-load increases or constitutional requirements. That will be a difficult hole to plug with just state employment cuts, said Rep. Kathleen Curry, D-Gunnison.
“Even if you do layoffs and furlough days, you’re going to be off by a lot,” she said.
Republican Rep. Laura Bradford of Collbran said the state should do some “spring cleaning” this fall and stay money-conscious this winter as legislators head back into session.
“I’m going to rethink my bills. I certainly won’t push for anything with a fiscal note,” she said.
A worse retail climate than expected in June is mainly to blame for the increased shortfall.
According to the new forecast, sales and use taxes are expected to bring in $130.3 million less than expected in June. The individual income tax forecast decreased by $72.8 million because of an accrual accounting change.
Cash fund revenue will decrease by 8.9 percent this year due in large part to a slowdown in natural gas production and a resulting dip in severance tax and federal mineral lease dollars.
Severance and federal mineral lease taxes are paid by oil and gas operators that extract minerals from state or federal lands in Colorado. This year’s expected take of $54.9 million in severance tax revenue is down 83.7 percent from last year. Federal mineral lease revenue is estimated to drop 60.2 percent from 2008 and total $90.6 million this year.
As for the effect of new bills to generate more revenue, a new hospital provider fee is projected to generate $336.4 million this year, and the FASTER bill is estimated to bring in $303.9 million in vehicle registration dollars and $24.3 million from a new rental car charge of $2 a day.
The increases aren’t likely to result in an increase in cash funds this year, though, as the unemployment insurance trust fund has moved out of the cash funds category and became an enterprise fund this year.
Unemployment benefits paid out by the state this year are likely to total $999.8 million, up 34.8 percent from last year.
Scaled-back budget items, such as the senior property tax exemption, may stick around for another year. But Ritter said he does not plan to get rid of a new tax credit for companies coming to Colorado, saying it has already brought two companies to the state.
“That would be cutting off our nose to spite our face,” he said.
A special session to discuss budget cuts would cost money the state can’t afford to pay,
Bradford, King and Curry agreed. Legislators before the close of the 2009 session in May allowed Ritter and his staff extended power to handle decisions surrounding shortfalls.