Improving Economy Helps Colorado Budget
DENVER (AP) – An improving economy is giving Colorado more tax money to spend next year. And Democrats and Republicans at the Capitol are already haggling over how to spend it.
Economic forecasts delivered to lawmakers Monday predicted more than $150 million in additional income taxes and sales taxes for the fiscal year that begins in July. Revenues are improving with increases from personal income and business taxes, economists said. They noted that the state’s manufacturing, farming, ranching and oil industries have also grown.
With more money, lawmakers will begin what could be a divisive debate over where to spend the additional funds in a general fund of about $7.4 billion.
“It’s wonderful to have good news. However, now that we’re having revenue return to the state, it almost makes some of our decisions more difficult,” said Democratic Sen. Pat Steadman, a member of the Joint Budget Committee.
Democratic Gov. John Hickenlooper’s budget director outlined the governor’s plan to lawmakers, saying the additional revenue should first go to K-12 schools and colleges – areas cut by hundreds of millions of dollars in recent years. Hickenlooper also wants money from severance taxes to go to local governments, and a portion of a property tax cut for seniors based on their need.
Those plans could trigger the biggest fight with Republicans, who want to restore all of the nearly $100 million of the voter-approved tax break for seniors.
“I don’t know whether people don’t like seniors, if that’s why they’re trying to take the money away from them,” said Republican Rep. Cheri Gerou, JBC chair. When asked if she implied Hickenlooper didn’t like seniors, she quickly responded: “I never said that.”
Hickenlooper laughed when told about Gerou’s comment later. He repeated Democrats’ argument that seniors in need should get the tax break, but not wealthy seniors.
Current law allows homeowners 65 and older who have lived in their homes for at least 10 years to deduct 50 percent of the first $200,000 of property value from their taxes. But lawmakers from both parties have eliminated that exemption in recent years to balance the budget.
Republicans insist they won’t support any more delay in the seniors’ tax break.
“I don’t think that getting rid of the homestead tax exemption helps anybody at this point in time,” said Republican Rep. Jon Becker, another JBC member.
Under Hickenlooper’s plan, several areas that faced nearly $200 million in cuts would see their funding restored.
The governor wants lawmakers to send $38.1 million of the additional taxes to K-12 education, another $23.8 million to higher education, and $23.8 million in local grants. Another $63.4 million would go to a property tax break for seniors based on need, but the governor’s office said the details are being worked out.
“Certainly we may not get to the biggest mansions in Cherry Hills, the largest homes in Aspen, but we’re going to get to most. I mean, the vast majority of seniors’ homes will get their exemption back,” he said.
Hickenlooper’s plan to provide assistance to needy seniors would total about $80 million. However, Republicans rejected part of his plan last week when a GOP-controlled committee defeated a bill to increase funding for a rent, tax and heating assistance program for seniors.
Democratic Senate President Brandon Shaffer said his party remains open to negotiations on all areas of the budget. “I’ve said all along that this does not need to be a zero-sum discussion,” he said.
During Monday’s forecasts, economists told lawmakers that Colorado was adding jobs, that parts of the housing market were improving and that retail sales were approaching pre-recessionary levels.
“The recovery has matured, and it’s not as fragile as it used to be,” said the Legislature’s chief economist, Natalie Mullis.
Not all was rosy in the forecast, however. Economists pointed out that plummeting natural gas prices mean a weaker job picture in parts of Colorado and declined severance tax revenue for the state.
They also warned that high gasoline prices could put a damper on economic growth, and said public officials need to be wary of the European debt crisis.
– By Ivan Moreno, AP Writer
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