Further state budget cuts needed

State budget faces additional $74.5 million shortfall

Gene Davis, DDN Staff Writer

Tuesday, June 22, 2010

Gov. Bill Ritter announced yesterday that the latest less-than-expected budget and revenue forecast means he must cut an additional $74.5 million from next year’s fiscal state budget.

The budget and revenue forecast issued by the non-partisan Legislative Council added that recovery has been slower in Colorado than most of the rest of the country, which the GOP argues is largely due to “Democrats’ anti-business polices.” Rep. Mark Ferrandino, D-Denver, however, said that because Colorado wasn’t as badly effected by the recession as many other states, it doesn’t have as much to recover.

Ritter said that everything is on the table when considering areas to cut to rebalance the 2010-11 budget that starts July 1. But he is hoping to spare K-12 and higher education from this round of cuts since they have already lost hundreds of millions of dollars in state funding.

Those areas would become very vulnerable, however, if Congress doesn’t extend the Federal Medical Assistance Percentages — the program in which the federal government matches the state’s payments for certain social services. Colorado is one of approximately 30 states counting on a six-month extension of FMAP for its 2010-11 budget. Colorado would face an additional $210 million budget shortfall next year if Congress does not pass the FMAP extension.

Job losses

Colorado lost nearly 90,000 nonagricultural jobs in 2009, a 4.5-percent reduction. The job rate is expected to decrease at an annual rate of 1 percent for 2010.

According to Sen. Greg Brophy, R-Wray, Colorado lost more jobs than most other states in large part because Ritter eliminated a series of tax credits and exemptions for a variety of different businesses while also implementing new oil and gas regulations.

“Governor Ritter and the Democrats have been taxing, feeing, fining, and penalizing Coloradans every way they can to increase state revenues,” he said. “It’s no wonder the Democrats’ bad economic policies have caused real economic harm in Colorado.”

Ferrandino fired back, though, saying that Democrats resisted Republican pressure to “continue to give corporations special tax breaks” and “restore funding of pet programs.”

Colorado’s unemployment rate remains below the national average.

“We Democrats resisted calls to spend every last dime, and now that we are hitting the expected bumps in the road, we have a cushion to lessen the pain of those bumps,” he said in a statement. “We won’t have to cut hundreds of millions of dollars. We crafted a responsible budget, we were fiscally prudent and cautious, and we resisted pressure to act otherwise.”

The 2009-10 state budget was able to end in the black, barely, thanks to the two-week delay of Medicaid payments to clinics and doctors. Ritter acknowledged that dealing with budget shortfalls is nothing new for him — the outgoing governor and his fellow lawmakers have cut nearly $3.5 billion over the last two years.

Regardless, the 2011-12 fiscal year budget is still facing what could be a $1 billion shortfall when stimulus funds dry up and costs, Medicaid caseloads and expenses continue to increase faster than revenue growth. Ritter will submit his 2011-12 budget-balancing plan on Nov. 1.

“Clearly were experiencing what best be called a very slow and protracted recovery,” he said. “Were headed in the right direction, but we still have a tough climb ahead of us.”

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