Josh Penry Column May 03, 2009

Colorado’s discarded spending cap prevented California-style budget blues

For more than 30 years — through boom and bust, inflation, deflation and stagflation — Colorado’s state operating budget has been subject to a meaningful spending limit. Since 1991, that cap on year-to-year budget growth has stood at 6 percent. Through all of those years and different stages in the economic cycle — under Republican and Democratic governors alike; under Democratic and Republican-controlled Legislatures — Colorado’s political leaders have met the obligations of government under strong laws that limit the growth of our operating budget.


All of which raises this question: If governors named Lamm, Romer and Owens as well as Republican and Democratic Legislatures could live with a meaningful spending limit as they crafted the budget from one year to the next, why in the world can’t Gov. Bill Ritter and the current Legislature do the same in 2009?

The answer to this question is still not at all clear, but that hasn’t slowed the governor’s and ruling Democrats’ headlong push to repeal this prudent policy. In a year when the General Assembly has enacted nearly $1 billion in additional taxes and fees, it shouldn’t be a surprise that this fiscal safeguard has been targeted, too.

The push to gut Colorado’s longstanding spending limit not only upends a decades-old safeguard against runaway spending growth — it also repeals the two transportation-funding laws that have forced hundreds of millions of dollars into road and bridge repair over the last decade.  You read that right: In the same year that Democrats implemented a significant car-fee increase to better fund our transportation infrastructure, the governor and the Democratic majority are simultaneously proposing the largest cut to transportation funding in the history of Colorado.

After a contentious debate in the Senate, the governor announced his own “compromise” on the issue. But Gov. Ritter’s so-called compromise is no compromise at all.  It still emasculates spending limits, and it still represents the largest cut to transportation funding in Colorado history. That’s why leading voices in the business community, like the Colorado Association of Commerce and Industry, National Federation of Independent Business and the Colorado Competitive Council said the compromise was bad public policy.

More specifically, Gov. Ritter’s plan falls far short of the mark in the following ways:

•  It fails to effectively limit spending growth. The governor’s plan replaces the existing limit with a limit that is so lax that it would immediately allow the Legislature to increase spending on programs by more than $3 billion. It is a spending limit set so high that it has very little meaning at all.

•  It shortchanges our badly backlogged highways. The measure provides no funding whatsoever for transportation in its first four years. After that, the bill would cut a small slice for highways — but only for five years, and only if the economy grows aggressively.

Even if those iffy standards are met, this proposal would provide far less funding for highways than the current system. According to one estimate, eliminating the current cap would short transportation by over $300 million in the 2011-2012 budget year alone.

Here’s some further perspective: If the highway-funding formula had been eliminated five years ago, it would have cost Colorado’s highways upward of $1 billion by now.

Make no mistake, the current spending cap has spared Colorado the kind of binge-and-purge budget calamities that have slammed other states, like New York and California.

Their insatiable appetites for increased government spending and lack of common-sense caps on government expenditures have left both the Empire State and the Golden State swimming in red ink — a $15 billion shortfall in New York and a $40 billion gap in California.  Ironically, there is a bipartisan push in California right now to enact the same type of spending limit that Colorado’s governor and Democratic lawmakers have repealed.

The good sense of Colorado’s legislative leaders many years ago has prevented the full-scale fiscal meltdown like those experienced in California and New York. I guess that was at least part of the reason that Roy Romer signed the spending limit that Bill Ritter will repeal when he signs this bill.

In the last analysis, the repeal of this spending limit and these important transportation-funding laws is emblematic of just how out of touch the Democratic leadership has become on fiscal issues.  At a time when families and businesses are making tough choices, and at a time when other states are considering the same type of fiscal restraints that some now propose to repeal, the Democratic majority is spending all its political capital trying to get more and spend more.

That’s been a strategy for fiscal freefall in California and New York.  It’s a shame that the leadership of this state hasn’t paid attention.

Josh Penry, the Senate minority leader, is a Grand Junction Republican.


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