Dems stunned by extent of cuts

By Jason Kosena

The budget pain is only going to get worse.

That was the message from Gov. Bill Ritter Tuesday night to Democratic lawmakers during a budget briefing held at the Governor’s Mansion.

Ritter said the state will have to take a “surgical” approach to cutting the budget in coming months with the state facing a $387 million shortfall in the fiscal year that began on July 1. When the Legislature reconvenes next year, the Joint Budget Committee will be faced with the task of trimming an additional $600 million.

Gov. Ritter tells Democratic lawmakers that the budget crisis is worsening.
Photo by Jason Kosena/The Colorado Statesman

“I do have a request in with the Republicans to see if the caucus wants to meet, but we will be meeting with Democratic and Republican leadership as a part of this,” Ritter said.

“What I really want people to understand is that there is not an ability on our part to do what we need to do both in this year and in the next year without considering very serious cuts,” he continued. “The cuts that we make this year — that are necessary this year — will also be necessary to carry into fiscal year ’10-’11.”

Last month, Ritter asked all state departments to draft proposals to cut 10 percent from their operating budgets to help mitigate the shortfall. On Tuesday, he said he would send a final list of proposed cuts to the Joint Budget Committee on Aug. 24, but warned lawmakers that not all departments will be cut equally.

We asked for 10 percent across the board, but we’re going to do as much as we can to be very surgical,” Ritter said, adding the cuts will not be painless.

“What I ask of you is that since this is the environment that we find ourselves in ... that you (defend) the case of the state and of what we must do,” Ritter continued. “We’re going to be in a position of defending those impacts because they are required both by the economic impact on the state and because they are required by the Constitution (to balance the budget).”

The state faced a difficult budget this year while the JBC scrambled to balance the economic shortfall, but will face an even more difficult challenge next year, JBC members said Tuesday.

Because the state used its reserve and drained cash funds to balance the budget this year — and because it can’t rely on hundreds of millions in federal stimulus dollars, as it did last session — the budget cuts are going to go deep.

House Speaker Terrance Carroll, left, listens to Gov. Bill Ritter talk about the budget at the Governor’s Mansion on Tuesday. Senate President Brandon Shaffer sits in the row next to Carroll.
Photo by Jason Kosena/The Colorado Statesman

“In the 2008 budget we used a lot of cash transfers ... and we used the reserve. Those are gone,” said JBC Chair Sen. Mo Keller, D-Wheat Ridge.

“We don’t have anymore accounting mechanisms. We don’t have anymore transfers we can use to buffer,” she continued. “So when we look at the figures in terms of the ’09-’10 budget and the ’10-’11 budget, that is why this is so sobering. We have to look at whole programs. We have to look at buildings. We have to look at everything. It will be big.”

Keller then warned her Democratic colleagues, who often defend state spending for programs outside of education, prisons and Medicaid, that the cuts will be hard to take.

“We are not going to nickel and dime our way out of this,” Keller continued in a sobering tone.

“So the usual budget process that we go through — where we all sit down and say, ‘Well, I will take a $100,000 out this,’ or ‘I will take $50,000 from here,’ — that is gone,” Keller said. “We are not going to be able to nickel and dime our way up to $900 million. Because the cuts are going to be big, you’re going to hate them. Everyone in this room is going to detest what we’re going to be doing. But we don’t have anywhere else to go.”

Keller’s words were echoed by Rep. Mark Ferrandino, D-Denver, another JBC member.

“We are going to face a tough time. We thought last year was tough. This year and next year are going to be just as tough,” Ferrandino said. “Remember that everything is on the table. With the numbers that we are already looking at, and with what we have already cut, there are no sacred cows. We are cutting into bone marrow.”

As the Democratic leaders warned lawmakers to prepare for large budget cuts in coming months, some wanted to know if additional revenue could be generated by repealing state tax exemptions that keep $2.1 billion from going into the state’s coffers.

“Are there any avenues to increase revenue, such as the tax breaks that have been given out, (to see) if they are actually doing what they are supposed to be doing?” asked Rep. John Soper, D-Thornton, after reviewing numbers showing how much must be cut from the next year’s budget. “Is there any way that we can review that, so that the harm is felt by everybody, and not just the working class of Colorado?”

Ritter said that although his office is reviewing all the state’s tax credits, a bulk of the sales tax and use exemption is found in a credit for manufacturers that is pivotal in helping the state attract and retain business.

The other exemptions are so small that — even if the state cuts some of them from the books — the massive budget shortfall won’t be much smaller.