Colorado faces a short­fall as high as $260M even as it plans tax­payer re­funds.

The Denver Post - - FRONT PAGE - By John Frank

Colorado faces a deficit as high as $260 mil­lion this year even as it pre­pares to re­turn $158 mil­lion or more to tax­pay­ers in 2018, a rid­dle that in­ten­si­fies pres­sure on law­mak­ers be­fore the dead­line to in­tro­duce a new state bud­get bill.

Colorado faces a deficit as high as $260 mil­lion this year even as it pre­pares to re­turn $158 mil­lion or more to tax­pay­ers in 2018, a rid­dle that in­ten­si­fies pres­sure on law­mak­ers ahead of the dead­line to in­tro­duce a new state bud­get bill.

The chal­lenge is ev­i­dent in new eco­nomic fore­casts pre­sented Fri­day to leg­isla­tive bud­get writ­ers show­ing that the econ­omy con­tin­ues to grow at a moder­ate pace even though the state’s rev­enue caps and spend­ing obli­ga­tions will make it dif­fi­cult to cover project ex­penses.

Demo­cratic Gov. John Hick­en­looper es­ti­mates the rev­enue pro­jec­tions fall $700 mil­lion short of the amount needed to meet the pri­or­i­ties in his $28.5 bil­lion bud­get pro­posal for next year, an in­crease from the $500 mil­lion gap he an­tic­i­pated in Novem­ber.

The ac­tual spend­ing gap in the fis­cal year 2017-18 bud­get be­ing drafted by law­mak­ers is still un­clear, as ma­jor spend­ing decisions re­main un­fin­ished ahead of the bill’s March 27 in­tro­duc­tion.

“Our op­tions just got uglier,” said Rep. Dave Young, a Gree­ley Demo­crat and mem­ber of the Joint Bud­get Com­mit­tee. “Our spend­ing lev­els for K-12 ed­u­ca­tion are very much at risk, and other belt­tight­en­ing mea­sures will have to be taken un­less we act.”

The much-an­tic­i­pated March fore­casts only am­plify the on­go­ing de­bate at the state­house about spend­ing — one en­tan­gled in the dis­cus­sion about a bi­par­ti­san pro­posal for a statewide sales tax hike to im­prove traf­fic con­ges­tion and ex­pand high­ways.

A num­ber of con­ser­va­tive law­mak­ers want to re­di­rect more money within the ex­ist­ing state bud­get, rather than in­crease tax col­lec­tions, while pro­po­nents of the deal say there’s no room to cut.

“We have a healthy, strong econ­omy. This is good for the peo­ple of Colorado,” said Sen. Kevin Lund­berg, a Repub­li­can bud­get writer, about the fore­casts. But, he added, “For the state of Colorado, it’s a bit of a wake-up call that even in good times, we’re spend­ing more than we have in rev­enues to work with.”

The two eco­nomic re­ports, one from the gov­er­nor’s bud­get of­fice and an­other from leg­isla­tive economists, di­verge in how much money the state can spend in the next bud­get year and how much must be re­turned un­der the voter-ap­proved Tax­payer’s Bill of Rights.

The leg­isla­tive economists sug­gest state rev­enues will in­crease 2.4 per­cent from the cur­rent year and give law­mak­ers an ad­di­tional $539 mil­lion to spend, an im­prove­ment from pre­vi­ous pro­jec­tions.

But law­mak­ers must pre­pare for $287 mil­lion in pos­si­ble re­funds and set aside an­other $169 mil­lion to fill the cur­rent year’s bud­get

deficit, leav­ing them with only $254 mil­lion to spend on cur­rent op­er­a­tions and new pro­grams.

The gov­er­nor’s es­ti­mates are more cau­tious, pre­dict­ing a $260 mil­lion deficit in the cur­rent bud­get year and a $158 mil­lion re­fund, re­sult­ing in $375 mil­lion in new dol­lars to spend.

The 2018 re­funds are es­ti­mated to range from $31 to $96 per per­son, ac­cord­ing to the gov­er­nor’s fore­cast.

Bud­get writ­ers are ex­pected to take this more con­ser­va­tive es­ti­mate as the base­line for their plan. The next big ques­tion is how to close the spend­ing gap within the $11 bil­lion gen­eral fund, which rep­re­sents the state’s dis­cre­tion- ary spend­ing.

Hick­en­looper’s of­fice pro­posed a list of op­tions that bud­get writ­ers so far are re­luc­tant to ac­cept. The pro­posed cuts in­clude re­duc­ing the scope of the hos­pi­tal provider fee pro­gram, which hurts ru­ral hos­pi­tals; in­creas­ing the gap in re­quired ed­u­ca­tion spend­ing, which would mean less money for class­rooms; trim­ming trans­fers for pri­or­ity roads projects; or cut­ting sev­er­ance tax money for lo­cal gov­ern­ment projects.

The sit­u­a­tion be­came so dif­fi­cult that the gov­er­nor of­fered a sec­ondary list in Jan­uary that in­cluded in­creases in pot taxes to fund schools and a cut in the se­nior home­stead tax break.

“They are not pop­u­lar,” said Sen. Do­minick Moreno, a Com­merce City Demo­crat on the bud­get com­mit­tee. “So we are go­ing to have to con­tinue to have dis­cus­sions.”

In ad­di­tion, nei­ther fore­cast takes into ac­count po­ten­tial fed­eral bud­get cuts that would trickle down to Colorado and leave a big­ger hole in the state spend­ing plan.

Repub­li­can Sen. Kent Lam­bert, chair­man of the evenly split bud­get com­mit­tee, ex­pressed cau­tion about get­ting March bud­get mad­ness.

“When we get down to a cou­ple hun­dred mil­lion, that is big money,” he said. “But it is also a rel­a­tively small per­cent­age of the to­tal amount in the whole state gov­ern­ment.”

Still, he al­lowed: “It’s cer­tainly more than you’d bet on the Sweet 16.”

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