Governor: Colorado Faces Nearly $700 Million Budget Deficit

DENVER (AP) — Colorado’s economy is growing, state revenues are too, and that paradoxically means a gap lawmakers would have to close if they adopted Gov. John Hickenlooper’s proposed budget is close to $700 million, his chief budget writer reported Friday.

That projection was $500 million when Hickenlooper released his proposed $28.5 billion budget last year for the fiscal year that begins this July 1.

Lawmakers start crafting their own budget next week.

Henry Sobanet, director of the Office of State Budgeting and Planning, told lawmakers that Colorado is coming out of a slow-growth period caused largely by depressed oil and gas prices. Consequently, state revenues are expected to grow by 4 percent this year and more than 5 percent in fiscal year 2017-18, he said.

That’s great news — except that constitutionally-mandated tax rebates, transportation, capital construction, educational, Medicaid and other spending have created a pending $697 million gap in the governor’s proposed budget, Sobanet reported.

Lawmakers will use the quarterly economic forecasts presented Friday by Sobanet and by Natalie Mullis, chief economist of the Legislative Council Staff, to craft a balanced budget during the Legislative session that ends in May.

“We have a healthy, strong economy. This is good for the people of Colorado,” said Republican Sen. Kevin Lundberg. “But for the state of Colorado, it’s a bit of a wake-up call. Even in good times, we’re spending more than we have to work with.”

Under the forecasts, the government would have to issue between $135 million and $264 million in taxpayer refunds next fiscal year. The Taxpayer’s Bill of Rights requires refunds whenever revenues surpass a cap that is based on population growth and inflation.

In recent years, lawmakers have been able to avoid refunds through a series of maneuvers that, even then, left Colorado’s K-12 schools with an accumulated $800 million shortfall in spending.

Mullis said the state will have $538 million more to spend next year — but that that figure would be nearly halved by the spending mandates and a requirement that a rainy-day general fund reserve by replenished.

Moreover, officials won’t know until April how much income from personal property taxes will be reduced under another legal mandate to cut them because commercial property taxes have slumped in recent years.

To close the budget gap, Hickenlooper has proposed reducing payments from hospitals; not fully funding K-12 education; cutting transportation spending increases; and keeping severance taxes normally used to compensate local governments for mineral extraction.

“In Colorado, unlike many other states, we are required by law to deliver a balanced budget on schedule, so we have no choice but to make this work,” said Republican Sen. Kent Lambert, chairman of the Joint Budget Committee.

Friday’s forecasts said that growth, mainly in metropolitan Fort Collins, Denver and Colorado Springs, is being restrained by tight labor and housing markets, rising federal interest rates and an aging population that spends less and generates less tax revenue.

Low agricultural prices mean Colorado’s rural areas continue to struggle.

By JAMES ANDERSON, Associated Press

(© Copyright 2017 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

Comments

One Comment

  1. Robert Chase says:

    Just wait until Jeff Sessions acts to shut state-regulated markets in cannabis — Gov. Hack and the General Assembly certainly are — 200-300 million dollars will be added to the deficit and many thousands of workers working in the cannabis industry or supporting it will be rendered unemployed.

  2. Kirk Roberts says:

    Just sell more pot the is the magical answer to all of the liberal spending and waste.

Leave a Reply

Please log in using one of these methods to post your comment:

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

More From CBS Denver

ROCKY FLATS: COLORADO'S NUCLEAR SHADOW
CBS4 INVESTIGATES

Watch & Listen LIVE