State a quarter-billion in debt
Senate Minority Leader Josh Penry predicted the 2009-2010 budget would remain balanced for a mere 45 days when the legislative session ended May 6.
Forty-seven days later, the state revenue forecast confirmed his fears.
The forecast, released Monday, showed the state with a budget deficit of $249 million for fiscal 2009, which ends June 30. State officials will need to borrow that much from the 2009-1010 budget, which will push the fiscal 2010 deficit to $384 million, according to the state forecast.
It predicts major deficits in both the general fund and cash funds during the 2009-2010 new budget year.
How those holes will be filled has not been determined, but Penry, a Grand Junction Republican, said education will likely take a hit. The Legislature asked each school district to set aside money this year, with the possibility that the state could yank the money back into its coffers by way of a vote at any time before the end of January 2010.
Penry said there’s no question that vote will happen sometime between now and then.
“That was a cruel fiction that (the districts) were going to be spending that money,” Penry said, adding that he told School District 51 School Board President Leslie Kiesler the district’s reserve money would likely end up being returned to the state.
Rep. Kathleen Curry, D-Gunnison, said cuts will have to be made somewhere but was hopeful that education may avoid deep cuts — other than taking back reserves — because the state is set to receive millions in federal stimulus dollars for K-12 and higher education during the next two years. If the state drops education funding below 2006-2007 levels over the next three years, however, Colorado will lose its education stimulus money.
“Then we would have a double-hit,” Curry said.
Some action has been taken to make up the looming budget deficit. A new hospital provider fee and new transportation fees created in the 2009 legislative session will provide $336.4 million and $151.1 million, respectively. This year’s suspension of a senior property tax exemption will add $91.5 million to the state budget. Gov. Bill Ritter also has $45.4 million federal stimulus dollars to funnel into the state general fund.
Ritter said he will meet with the joint budget committee, legislative leaders and his budget office staff to determine his options for making up the shortfall — whether to trim the budget, call the legislature back into session or both. Democrats and Republicans alike have said a summer session may not be necessary, but the possibility has not been ruled out.
Rep. Laura Bradford, R-Collbran, said Ritter can make cuts to the budget and she’s not interested in being called back.
“We just hope if he does call us back in, it’s to help with cuts, not to legislate new taxes,” Bradford said.
Wage, revenue, economic trends
• According to the forecast, one out of every 25 jobs in Colorado was lost between May 2008 and June 2009. The state projects a 9.6 percent state unemployment rate for 2010. Colorado’s unemployment insurance trust fund could go into the red next year. In 2009-2010, revenue for the fund is expected to reach $571.9 million. Unemployment insurance payouts, however, are expected to climb to $1.05 billion.
• Colorado has dropped from 10th to 35th in a ranking of states with the best personal income growth. Wages and salaries in the state dropped 0.9 percent in the first quarter of 2009.
• Revenue from severance taxes, which are paid by companies that extract minerals from state land, jumped in 2008-2009, but the state estimates severance tax collection will drop 81.9 percent — from $303.2 million to $54.8 million — in 2009-2010.
Oil and gas production generates 90 percent of severance tax dollars. Oil and gas rig counts in Garfield County dropped from 63 at this time last year to 18. Rigs elsewhere in the state fell from 100 to 41. Much of the decline can be traced to the falling price of natural gas, which dropped to $2.75 per thousand cubic feet this month, down from $7 a year ago. Limited pipeline capacity also continues to be a factor, according to the state revenue forecast.
• State housing and construction markets are suffering, according to the report. Single-family housing permits are down 42.3 percent this year compared to the first half of 2008. The number of single-family housing permits in Mesa County has fallen 67.3 percent during the first half of 2009, compared to the first half of 2008.