By Jason Kosena
THE COLORADO STATESMAN
Another dire forecast hit lawmakers on Monday with the unveiling of the Joint Budget Committee’s recommendation for balancing the 2008-’09 fiscal year budget during a rare joint session of the House and Senate.
The answer? Transfer cash funds and reserves into the General Fund, cut some state programs and hold
off as much pain as possible until next year.
The budget deficit for the 2008-’09 fiscal year, which ends in June, is estimated to be at nearly $625 million, economists told lawmakers Monday, and because the state is already more than half way through the current fiscal year, cutting some budgets in midstream could prove difficult.
So the six-member JBC is instead recommending a $230.9 million transfer of cash funds, using $148.6 million from state reserves and a sixfold increase on fees for drilling of new water wells.
Also in the plan is $124.8 million in cuts from the General Fund in 17 different areas, including $5.8 million from the state’s correctional facilities, $65.3 million less for K-12 education, a $30 million cut from higher education and a $35 million cut from the Treasury.
“It’s a bad year, and this (report) represents that,” said state Rep. Mark Ferrandino, D-Denver, a member of the JBC, adding that some reprieve might be in sight from the federal stimulus dollars signed into law by President Barack Obama this week.
The mood in the House chamber during the presentation was somber.
Colorado Chief Economist Natalie Mullis told lawmakers that the worst of the recession probably has yet to arrive, and that she expects further job losses and revenue reductions throughout 2009.
“Unfortunately for Colorado, we are no more able to escape this global storm than a ship can escape a storm on the seas,” Mullis said, adding that 35,000 Colorado jobs were lost in the fourth quarter of 2008 and that the state expects to see a 23 percent decrease in revenues from income tax and a 26 percent decrease in revenues from capital-gains taxes.
“While we do have a recovery in our forecast, it’s not a very fast recovery,” Mullis said.
Because more than half the money allotted for the 2008-’09 fiscal year has been spent, the JBC recommended pushing much of the deficit into the 2009-’10. That way, the budget committee can start with a clean slate and can avoid cutting programs that are in progress.
“We’re handling ’08-’09 budget now, but ’09-’10 is going to be different,” said JBC member Rep. Don Marostica, R-Loveland. “We don’t know how we are going to handle that yet. I am already on record that I think (the deficit) is going to be more. Based on the business groups I talk to, we are really in poor condition now, and the shortfall could be another $100 million to $200 million more than it’s at today.”
Marostica said the state still has some reserves it can use to balance any remaining shortfalls and some additional cash funds.
“And we have to cut more in the general fund,” he said. “The solution is that we have to balance the budget. We have no choice.”