Lawmakers expect education to take biggest budget hit

JOHN SCHROYER

THE GAZETTE

DENVER - Will it be higher education? What about the Department of Public Safety? Or K-12 programs? What if two dozen agencies will have their funding cut completely?

That's pretty extreme. No agency is going to get it's funding completely cut. And if "agencies" means departments, we don't even have two dozen of them.

Those were just some of the possibilities buzzing around the Capitol this past week as lawmakers debated where hundreds of millions of dollars in budget cuts will have to be made. The questions could be answered as soon as Friday morning, when Gov. Bill Ritter's director of the office of state planning will deliver a series of proposed rollbacks to the Joint Budget Committee.

Ritter, a Democrat, said in his State of the State address last week that he'll seek an across-the-board 10 percent budget cut from each state department, which would total roughly $800 million in cuts. The LegislaAs part of that process, the governor asked each state department to come up with cuts equal to 10% of their budgets. That gives him -- and us -- a range to pick from.ture is facing an estimated $631 million shortfall for the current fiscal year due to the economic downturn, but many lawmakers fear that the actual number will be much greater.

Not really. We've said over and over that there won't be across-the-board cuts. Those never work out well. It's a lot better to look at what can be cut, then pick the cuts that do the least damage to state services.

As part of that process, the governor asked each state department to come up with cuts equal to 10% of their budgets. That gives him -- and us -- a range to pick from.

Colorado's constitutional funding restrictions, however, have left many legislators pointing to a single target - higher education.

"We are completely boxed in. Higher education will be where the cuts will have to come," said Sen. John Morse, D-Colorado Springs, a former member of the JBC. "The people of this state have dictated where we have to go, (because of) TABOR. People say, well, we have limited options. That's not true. We have no options."

Morse pointed out that the top half-dozen departments funded by the state eat up 94 percent of the state's $18.6 billion budget, but all of those except for higher education are protected either by state or federal law.

The Taxpayers Bill of Rights, authored by Colorado Springs anti-tax crusader Douglas Bruce, prohibits the Legislature from raising taxes without a vote of the people, and a separate constitutional provision precludes state expenditures from growing by more than 6 percent each year.

JBC Vice Chairman Rep. Jack Pommer, D-Boulder, agreed with Morse that the state's colleges and universities are in the cross hairs.

"We're going to lose another generation of kids. Literally, we're going to cause dropouts over the next few years," he said.

Pommer estimated that in this fiscal year and the next one, the Legislature will have to figure out how to cut the budget by perhaps $1 billion, adding, "Literally everything we can think of is on the table."

Legislators said they aren't certain what the governor has in mind, and no one in his office would let loose any hints. Speculation was rife, though, that gains made last year in education could be rolled back.

Rep. Michael Merrifield, D-Colorado Springs, said there's more than $100 million in K-12 education programs that are not shielded by Amendment 23, which safeguards most of public school funding.

Merrifield said the Legislature could decide to remove a portion of the $34.5 million it appropriated in last year's budget for full-day kindergarten.

Any school funding above the requirements of Amendment 23 could be on the table for cuts, said Glenn Gustafson, deputy superintendent and chief financial officer for Colorado Springs School District 11.

Every school district in the state received about $20 extra per pupil, in two payments, that could be cut, he said. For D-11, that would be about $600,000, he said.

Other at risk areas include the extra money provided to districts that receive the lowest per pupil allotment; extra money provided under a formula for districts with declining enrollment, and capital construction money for charter schools, he said.

"If they take it back right now, we would have to find those cuts," he said. "We would be in kind of pickle but they could retroactively take that away.

"While we're concerned about any reduction, we understand that the state has a problem and we do have reserves that can help us with some cuts Merrifield, who chairs the House Education Committee, said, "I'm going to try to protect as much as I can, but... I can see the writing on wall. We are just in deep, deep doo-doo."

Those cuts could also wind up hurting charter schools around the Colorado Springs area, said Rep. Amy Stephens, R-Monument.
She said she's heard rumors that a $10 million appropriation for charter school capital construction could be sliced in half.

"We have a lot of students affected by that," Stephens said.

She's another one who's also worried about higher education funding, especially for the University of Colorado at Colorado Springs, which she said "took a harder hit than some of our other universities" when a recession hit the state earlier this decade.

Stephens said she hopes the governor won't protect any sacred cows, but will demonstrate a willingness to withdraw many of the new state programs begun under his watch.

As long as we protect her sacred cows, like the additional $5 million earmarked just for charter schools last year, we can cut money for children in special education, preschool and anything else.

Sen. Dave Schultheis, R-Colorado Springs, linked much of the budget shortfall to illegal immigration. He referred to a recent
report by the Federation for American Immigration Reform, or FAIR, which found that illegal immigrants cost Colorado roughly $1 billion in taxpayer dollars each year.

"Part of the solution to this budget problem is to deal with the illegal immigration problem, so that the people who are losing jobs have jobs to get," Schultheis said.

The bottom line for the JBC, however, is simple, said Rep. Don Marostica, R-Loveland.

"Anybody's ox could get gored. They have to just be prepared."

Gazette writer Sue McMillin contributed to this report

Tuition Caps May Go Away

Lawmakers Look For Higher Ed Alternatives

Steve Saunders, 7NEWS Anchor

DENVER -- Some Colorado lawmakers say it's time to scrap the formula for funding higher education and get rid of the caps on tuition. As an alternative, the state would provide more financial aid to needy students.

Members of the Joint Budget Committee briefed members of the Education Committee Thursday on how budget cuts are impacting higher education. The state is facing a $600 million shortfall. "The question becomes, do we hang on to them (colleges) and choke them until they are dead or do we look for an alternative?" asked Rep. Jack Pommer of Boulder.

He added, "We don't have any money." Currently, the state caps tuition increases at the major universities at 9 percent.

It would be a drastic change and some say a mistake.

Rep. Karen Middleton of Arapahoe County told lawmakers, "I wouldn't throw the whole thing out. I would be very cautious."

Throw what whole thing out? What we're suggesting is a funding system used in other states that lets tuition rise, but uses financial aid to make it affordable for everyone.

Under the plan, the state's three research universities -- CU, CSU and Mines, would accept every Colorado student who met the academic standards, regardless of ability to pay. The state and the universities would guarantee that every student accepted could go with some state contribution, financial aid and reasonable amounts of family contribution and/or debt.

The alternative is continuing the current trajectory of slowly eroding the quality of the schools while making them unaffordable for lots of Coloradans.

CU, as an example, was just about to get back to it's 2001 level of state support. It would have reached it this year, but instead of increasing the school's funding, we're cutting it.

Ritter outlines tough road ahead for state

By Michael Davidson (Contact)
Saturday, January 10, 2009

DENVER -- Colorado is facing tough times that will try residents and require painful cuts to the state budget, Gov. Bill Ritter told lawmakers Thursday in his annual State of the State address.


That means creating new jobs and making up a budget shortfall that could reach $630 million must be the state's top priorities, Ritter said.

"Over the next 120 days, our collective focus must be on protecting business, creating jobs and managing the budget. I will look at everything we work on this session through the lens of the economy -- of what's responsible and what's best for the long run," he said.

Broomfield's legislators had mixed reviews of the governor's speech, as could be expected by their party affiliations.

Ritter touted plans to create tax credits for businesses that hire new employees, extend loans to small businesses and nurture companies working on advances in renewable energy technology as ways to sustain the economy and keep the unemployment rate -- currently at 5.8 percent in Colorado -- from climbing.

Sen. Shawn Mitchell, R-Broomfield, said Ritter's vision is flawed.

"Gov. Ritter is a decent guy with good intentions, but he's got the wrong idea about weathering a downturn if he thinks raising taxes on hard-working families is the ticket out of our problems," Mitchell said.

Ritter didn't propose a tax increases per se, but did criticize the Taxpayers' Bill of Rights, which requires voter approval for tax increases and limits government spending.

Ritter blasted the law, part of the state Constitution, as a "straitjacket that makes modern, sensible and value-based budgeting an impossibility."

Republicans ardently defend the amendment, while Democrats criticize it, in part, because whenever the Legislature has to cut the budget during a recession it cannot later increase the budget without taxpayers' approval. That's a continuing problem, said Rep. Dianne Primavera, D-Broomfield.

"We're elected to do this job, but we're hamstrung sometimes because of the budgetary process," Primavera said.

Mitchell viewed Ritter's comment as irrelevant to the current budget shortfall.

"He made the tired attack on the Taxpayers' Bill of Rights, which has nothing to do with our current crunch. The budget is down because the economy is down. When the economy comes back, state revenues will rise without a tax increase."

Actually it has everything to do with our current crunch. And state revenues will not rise enough without a tax increase.   Just like they didn't rise enough last time.

We're still dealing with a legacy deficit from tax cuts and lost revenues that happened between 1999 and 2005.  TABOR partially caused the deficit and partially compounded some bad decisions from the legislature. 

If we pretend TABOR doesn't cause a problem, we'll repeat the same mistakes we made last time.  During 2001-02 the state lost a billion dollars in revenue.  The legislature cut $15 million in spending.  That's the kind of absurd budget management you get when you ignore reality, and TABOR is part of our reality.

The governor also didn't go into detail about from where the budget cuts would come. Primavera said the heads of major state departments should be given time to figure it out.

One area sure to be hit hard is the budget for higher education, said Rep. Jack Pommer, D-Boulder. Pommer is a member of the budget committee and chairs the House Appropriations Committee.

"Higher education is going to get killed," Pommer said.  Among the possible cuts is $210 million for the University of Colorado system.

This caused a bit of concern at CU. If you read it carefully, you'll see that it doesn't really say that I suggested the possible $210 million cut for CU.  The line about the cuts just follows a quote from me.  The juxtaposition combined with my injudicious use of the word "killed" caused some people to think I said we might cut $210 million from CU.  I think that's the total amount of money CU gets from the state, so cutting it would come pretty close to shutting down the entire CU system.

So far we've only discussed cutting the new money CU, and all of higher education, would get next year.  That pretty certain.  Higher ed won't be getting any increase next year.  As for cutting money they already get, we've only talked about it in general terms.  It's certainly a possibility.  We could cut some in the current year and we could cut some for next year -- it all depends on the economy and what other cuts we can make.  It won't be $210 million from CU.

The fate of 160 transportation projects with a price tag of $1.4 billion also wasn't clear on Thursday. Mitchell criticized the governor's hope that the incoming Obama administration would pass an economic stimulus plan that could be used to pay for the work.

"He seems to be leaning pretty heavily on a federal bailout check that may or may not come," Mitchell said.

But it may come.  And if it does come it won't make much difference for our state budget.  The money will put some people to work, and it will help us patch up the deteriorating transportation system, but it won't patch up our deteriorating finances.

Our economists calculate that if we were to get $1 billion from the federal government for transportation it would generate $33 million in state tax revenues.

That $33 million, of course, would be spread over the entire time we're spending the billion dollars, which is unlikely to be in a single year, let alone this one, or what's left of it.  (Our fiscal year ends in June).

And once we spend the billion dollars, it's gone.  The people who got jobs lose them, the parts of the transportation system that didn't get fixed stay broken and the tax revenue stops flowing into the state budget.

Don't get me wrong, I'll take the billion dollars.  It's  just not going to solve our problems.

The Republican did praise Ritter's support for a measure that would put the state budget online and make it easier for residents to access. He called that a step forward for more transparent government.

Oh boy.  I don't mean to be Johnny rain cloud here, but I spend every day accessing the state budget and it's not as exciting as you might think. 

Thursday's speech reordered some priorities Ritter emphasized when campaigning for office in 2006 and through his first two years in office. The governor still pushes "the New Energy Economy" -- one proposal this year will require all new single-family homes to have the capability to install solar panels -- but issues such as improving education and expanding health care coverage moved farther down the list of priorities.

Just last year, those two areas were the subjects of high profile special committees charged with completely overhauling teaching standards and curriculums and providing medical care to more than 700,000 uninsured Coloradans.

Primavera said the speech stayed true to Ritter's commitments to promoting renewable energy research and expanding access to health insurance. She also liked Ritter's comments about lawmakers' "sacred trust with the people who elect us."

"It gave me pause for thought again about the level of faith people put in you when they elect you to do this job," Primavera said.

She was unhappy with what she viewed as tepid Republican support.

"It was disappointing not to see the entire room erupt in applause when he talked about how important it would be to work in a bipartisan fashion," she said.

Ritter: Cut $800M from Colorado budget

Governor unveils infrastructure plan in State of the State address

Associated Press
Friday, January 9, 2009

DENVER -- With Colorado's recession deepening, Gov. Bill Ritter announced Thursday he is seeking a cut of about $800 million in the state budget, and he unveiled a plan that he says will fix crumbling roads and bridges while creating much-needed jobs.

In his annual state of the state address, Ritter told lawmakers, who began their 120-day session on Wednesday, that he has asked state agencies to prepare plans to cut nearly $800 million from the state's current $18.6 billion operating budget. He said covering that budget deficit can be achieved in part by using emergency funds set aside for reserves.

"Families and businesses throughout Colorado are facing challenges they haven't seen in generations," he said. "Families are making different decisions, setting different priorities and sacrificing. Just like every family in Colorado, we'll need to make tough choices here in the Capitol as well."

Legislative economists have warned the state faces a $600 million shortfall in this year's budget because of a drop in tax revenue. The governor's office estimates the figure is closer to $230 million. However, Ritter's spokesman Evan Dreyer said the governor, who must work with state lawmakers to make cuts, has proposed a bigger cut to be on the safe side.

Ritter said the transportation plan, which he calls FASTER, will require Colorado to raise fees and issue bonds. It has not been introduced as a bill because lawmakers say they are still working on a compromise.

This is a very odd proposal.  It would raise the fee for registering a vehicle and use the additional money to repair roads and bridges.  The reason for raising the fee is because the legislature can do it without a public vote. 

Of course the public does get a chance to vote -- it's just later when legislators are up for reelection.  Some people will oppose it simply because it seems like a way to get around TABOR's requirement that the public has to approve tax increases.

What makes it odd, is two things.  First, any reasonable fee increase won't raise enough money to pay for a significant amount of our transportation costs.  They run into the billions.  Getting just a bit of money through a means that's bound to be controversial will compound the conservatives accusation that the state is always asking for more money and no amount will ever be enough.

In truth, there is an amount that would be enough, but it's around a billion dollars a year.  Trying to nickel and dime our way up to that is frustrating for everyone.

It's also odd because it's a regressive way of raising money for what a lot of us don't see as the state's top priority.  We're destroying higher ed, for instance, and not talking about ways to save it.

But FASTER -- or Funding Advancements for Surface Transportation and Economic Recovery -- will only provide short-term solutions, Ritter warned. He said Colorado needs a more sustainable funding plan that is fair and affordable.

Sure, but when do we work on that?  Next year?  How do we explain that a big hike in registration fees was just a warm up for a bigger proposal?

House Minority Leader Mike May, R-Parker, said it will be tough to sell taxpayers on a proposal to raise vehicle registration fees for bridge repairs. He said voters also won't like a proposal to study ways to track motorists and force them to pay for the miles they travel in their vehicles, rather than relying on declining gas tax revenues.

"That just seems to be a bizarre invasion of privacy," May said.

Ritter got a stony reception from Republicans and even some Democrats when he proposed changes to the Taxpayer's Bill of Rights, which limits the ability of lawmakers to raise taxes without voter approval and would require voter approval to change it.

Rep. Jack Pommel, D-Boulder, said voters passed Referendum C, giving up their tax surplus refunds for five years, and the state is still in a budget hole.

That's Pommer, with an "r" at the end.  But more important, this is a bunch of separate comments all pushed together.  The governor was very specific about a TABOR fix being a change to all of it (it's a big, complicated law) except the provision that the legislature can't raise taxes without a public vote.

For the most part, that's what we have right now while Referendum C is still in effect.  It means the state can use the money it collects from the existing tax rates.  When C ends and TABOR goes back into full effect, the state will have to refund some of the money it gets from existing taxes.  That will be a problem, but not the biggest problem.

Right now we're spending all of the money that comes in from existing taxes (because Ref. C allows it) and we're cutting some pretty important state services.  The problem is that our existing taxes are too low to cover the cost of running the state. 

Why?  Because in 1999 and 2000 the legislature cut taxes 23 times.  Then, a year later, the recession compounded the effect of the tax cuts and pushed our revenue down to what amounts to about a billion dollars today.  TABOR locked in those losses.  The legislature never fully cut that amount of state services and Ref. C didn't make up the money.

That leaves us with a legacy deficit of about a billion dollars.  We can cut a billion dollars from the budget, or raise a billion dollars through taxes.  By that I mean raise taxes.  It's confusing because conservatives call raising or eliminating the TABOR revenue limit a tax hike.  It's really not, it just lets the state spend all of the money it gets from the existing tax rates.   I'm talking about actually raising those tax  rates, like increasing the income tax rate or the sales tax rate.

Talking about TABOR reform misses the real point.

"I don't think raising fees on car registrations would even make a dent," he said.

The governor said a bill to establish a tax credit for companies that create more than 20 jobs and revive the Colorado Credit Reserve Program to help businesses get credit will help Coloradans through rough economic times.

He also promised to continue promoting companies that provide renewable energy.

Sen. Greg Trophy, R-Wray, said Republicans could work with the governor on his transportation proposal, which Brophy said was based on Republican principles of pay-as-you-go and could possibly include toll roads. But he rejected Ritter's call to bring 100,000 people onto the Medicaid rolls, taking hospital fees and leveraging them to get matching federal dollars.

"It's a Madoff-style scheme balanced on the backs of our children and grandchildren," Brophy said.

Not really.  It's not going to cost anyone in Colorado any more money, it just increases the amount of Medicaid money we get from the federal government.   A lot of other states already do it, and more are sure to start. 

To the extent it affects the long-term federal budget deficit, it will put some burden on our children and grandchildren (and us too, if you hadn't noticed), but I don't think it's significant.

For one thing, we'll (and they'll) already have to pay it for the other states, why not get some of the benefit in Colorado?  For another, while we're running up trillion-dollar-deficits to pay for wars, rebuilding countries we've destroyed and bailing out big banks and insurance companies, why not use a tiny fraction of the money to help our health care system? 

Legislators are expected to focus on the deficit, jobs and the economy this session.

On Wednesday, Senate President Peter Groff said 43,000 Coloradans received $48 million in unemployment benefits in November -- and the numbers are rising. He noted there were 30,000 foreclosure filings in Colorado the first three quarters of 2007 and that half a million people now rely on food banks.

Democrats say they will look at increased taxes and fees to balance the budget, while Republicans suggest Colorado sell bonds to investors, using state buildings as collateral.

Associated Press writer Colleen Slevin contributed to this report.

Technorati Tags: Colorado, Budget