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Hickenlooper Suggests Cuts To Deal With Budget Shortfall

DENVER (AP) - Public colleges in Colorado face funding cuts and the state needs to dip into to its rainy day fund for schools to close a $373 million shortfall in next year's budget, Gov. John Hickenlooper said in his annual spending proposal to lawmakers Monday.

The plan Hickenlooper outlined serves as a blueprint for lawmakers as they craft and vote on a budget next spring. The state is in the head-scratching position of having a shortfall even as a Colorado's economy prospers because of years of budgeting laws now coming to a head.

The state owes taxpayers $289 million in refunds over the next two years because of Taxpayer's Bill of Rights, which says the amount of money the government keeps can't exceed the rate of inflation and population growth. At the same time, there's a minimum requirement for school funding, the Medicaid caseload is growing, and there are required transfers to transportation funding when certain financial triggers are met.

"We are at a point in time where you see many, many years of uncoordinated fiscal policy colliding together," said Henry Sobanet, Hickenlooper's budget chief.

To make matters worse, there was a slight slowdown in the economy this spring as the state dealt with a pullback by the oil and gas industry and volatility in the stock market.

In next year's budget, Sobanet said the state has $830 million in obligations it must meet, including the refunds to taxpayers. In addition to that, it must honor $301 million in new funding for schools to keep up with enrollment and inflation. Then there's $80 million for new Medicaid enrollees, and on top of that the state needs to restock $160 million to its budget reserves that were used in the current budget year.

But while there's $830 million already spoken for in next year's budget, the state is expected to bring in only $457 million in new revenue, hence the $373 million shortfall.

In all, the state's budget next year is nearly $27 billion, including federal funds. The state's general fund, which is made mostly of tax revenue from the state, will be about $10.4 billion.

Part of Hickenlooper's balancing plan includes cutting $20 million from higher education, which has a budget of $857.4 million this year. To help with school funding, which takes up a big portion of the general fund at $3.5 billion, Hickenlooper is suggesting using nearly $240 million from the state's education savings account, bringing it down to about $103 million. Hickenlooper is also proposing reducing spending on capital construction projects.

Republicans argued the state's financial woes are due in large part to the growth in spending for Medicaid, a federal entitlement to which the state also contributes.

"The real problem is the Medicaid expansion keeps crowding everything out," said Sen. Kent Lambert, a Republican member of the budget-writing Joint Budget Committee. "It's just not really sustainable."

Lambert also said the state has overspent in recent years, and argued that the refunds required to taxpayers are not the problem like many Democrats suggest.

Before lawmakers vote on a budget next spring, state economists will present them with two revenue forecasts, which could drastically change the current financial picture. That means the state's budget plan could be different in a few months.

"The governor's submission today gives us one roadmap for how to do it," said Democratic Sen. Pat Steadman, another budget writer. "I'm sure that there are going to be a lot of ideas and lots to talk about."

- By Ivan Moreno, AP Writer

(© Copyright 2015 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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