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State Budget Shortfall Tops $3 Billion, Severe Cuts Planned

DENVER (CBS4) - In just two months, the COVID19 crisis has caused the state's general fund budget to go from a $27 million surplus to an $893 million deficit.

"What has transpired over last two months unimaginable," the legislature's chief economist told budget writers.

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Currently, 95 percent of the budget comes from sales and income tax. That revenue has plummeted with businesses closed and 15 percent of the state's workforce out of work.

"Every service that state government offers will be affected," said Senator Dominic Moreno, Vice Chair of the Budget Committee.

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The coming year's revenue forecast is even worse. In all, lawmakers need to cut $3.3 billion from the budget and the options are limited. K-12 education accounts for 36 percent of the budget and higher education accounts for another 9 percent.

"Almost half of our general fund budget goes to education, so if we were to look at all other departments, it still wouldn't be enough," said Senator Rachel Zenzinger, a member of the Budget Committee.

Human services and health care are the next biggest expense in the general fund, accounting for just over a third of the budget. Medicaid can't be cut without losing a higher federal match, so that leaves things like child welfare, food assistance, and services for the elderly.

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"These are services that are needed more than ever, that people are depending on, and the reality is that the state may have to dial some of those back in light of the numbers that we received today," said Moreno.

The numbers in the forecast only account for the loss in revenue, not increased expenditures due to increased needs. Lawmakers say budget cuts could top $4 billion or more.

Senator Bob Rankin says much depends on the ability of the state to fully reopen and stay open.

RELATED: State Economists: $3.3 Billion Needed In Cuts To Make Balanced Budget

"This forecast so sensitive to how fast we recover," said Rankin.

The state's Unemployment Insurance Trust Fund is also taking a hit. Economists say twice as many Coloradans have filed for unemployment in the last two months as did in the first year of the Great Recession. The fund will run dry by next month, forcing the state to borrow money and businesses to pay a surcharge.

Congress has allocated about $2 billion in aid to the state, but it can only be spent on crisis response, not to back fill the budget. A bill by Rep. Ed Perlmutter, a Democrat who represents Colorado's 7th Congressional District, would increase aid to states and allow more flexibility in how it's spent. The bill will be included in the next relief package Congress plans to take up.

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