STATE LAWMAKERS FACE BUDGET WOES

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

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.”