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State Budget Plan Focuses Investments Instead Of Cuts

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Gov. John Hickenlooper (credit: CBS)

Gov. John Hickenlooper (credit: CBS)

DENVER (AP) – Colorado Gov. John Hickenlooper’s budget proposal released Thursday includes more funding for education, more Medicaid spending, and pay increases for state employees for the first time in five years.

The Democratic governor’s budget plan represents something the state hasn’t seen in years: no major cuts.

But Hickenlooper’s economists have emphasized a theme of cautious optimism. They point out that state’s economy is growing slowly, and that it has been boosted by taxes on one-time stock sales, not necessarily by more jobs.

“The Colorado economy is rebounding substantially, but we are still not there in total number of jobs,” said Henry Sobanet, the governor’s chief economist. Sobanet said the state has also benefited from savings lawmakers have made in previous years.

Still, Hickenlooper said the growing tax receipts “gives us the ability to restore some cuts and modestly increase funding in critical areas of the state’s budget.”

The state general fund that lawmakers have control over will grow to $8.1 billion next year, up from about $7.6 billion last year. The state’s total funds budget, which includes the general fund, cash funds and federal money, will be $21.9 billion. It’s $1.1 billion more than last year.

Hickenlooper is proposing $201.6 million more for schools, to bring the K-12 budget to $3 billion — the largest part of the general fund. Hickenlooper is also requesting about $174 million for Medicaid. It brings the total general fund spending for Health Care Policy and Financing, which administers Medicaid, to $2 billion.

Lawmakers will work on the budget and make any changes in the spring before voting on it.

Projected revenue increases mean Colorado will exceed the pre-Great Recession peak in tax receipts this year. But the state is still $1.1 billion below the general fund level of 2007, when accounting for inflation and population growth, according to the governor’s economists.

Sobanet said the proposed increase in school funding next year means the state will cover inflation and enrollment growth. Higher education is also receiving more money, $37.5 million, bringing the department’s general fund budget to $656.7 million.

Hickenlooper is also asking lawmakers to give all state employees raises of 1.5 percent, and another 1.5 percent in merit-based raises. It would be the first time in four years state employees have gotten raises.

The governor also wants lawmakers to increase the state’s savings reserve to 5 percent of the general fund — or $387.3 million — in case of any unexpected expenses. The current reserve level is 4 percent.

Hickenlooper also is proposing $13.1 million for services for people with developmental disabilities, $6.8 million in food assistance for low-income families, and $2 million to promote tourism.

More than 90 percent of the general fund budget is spent on K-12 schools, higher education, health and human services, and public safety, the governor’s office said.

By IVAN MORENO, Associated Press

(© Copyright 2012 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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