Ritter trapped in rerun of state budget horror show

By Jason Kosena

The new numbers are in, and they aren’t good.

One month after he searched the budget in a quest to cut an additional $320 million to balance Colorado’s 2009-’10 budget, Gov. Bill Ritter is being forced to pick up the axe again. On Monday, Legislative Council released the September budget estimate, indicating the state will fall another $240 million short in the current budget year, which began on July 1.

The total predicted shortfall for this fiscal year now tops $560 million.

“We need to be realistic,” Ritter said during a Monday evening press conference in his office. “Every cut we make will cause some pain. Every cut that we have to make will hurt.”

The pain is deeply felt. Since the current recession first hit state coffers last year, lawmakers have cut 10.4 percent of the state’s budget — more than $1.8 billion. The $560 million shortfall in the 2009-’10 fiscal year could increase in coming months if state revenue does not start to rise, leading to further cuts. Legislative Council said Monday the state has lost 110,700 jobs since May 2008, a 4.7 percent decline, and that tax collection has continued to slow.

And the storm promises to continue to rage. Legislative Council also reported on Monday that it expects the state to fall yet another $189 million short in the 2010-’11 budget, which the Joint Budget Committee will begin constructing on Nov. 1.

“While the recession is forcing us to make some very difficult decisions, I want to be clear that the budget will be balanced, just like we have done in years past,” Ritter said.

But it won’t be easy.

When the June budget estimates were released, showing the need to fill an estimated $384 million shortfall, Ritter asked each state agency to cut 10 percent from its budget. After months of review, in August Ritter issued an executive order that used the list produced by those agencies to “surgically” cut enough programs to meet what ended up being a $320 million shortfall.

The cuts affected nearly every state agency and department. It included plans to eliminate 266 state positions as well as large-scale cuts in the Departments of Corrections and Human Services. Those trims include the elimination of 34 employees who provide education and vocational training services for inmates, a reduction in the number of drug and alcohol treatment programs in the state’s prison system, and the shortening of parole terms for prison inmates who are early in meeting certain milestones.

The Human Services Department also suffered. Hospital provider rates were cut by 1.5 percent, which topped last year’s 2 percent cut to provider rates. Pharmacy rates were cut by $1.7 million, and 59 beds at the Colorado Mental Health Institute at Fort Logan and 32 beds at the Grand Junction Regional Center are to be eliminated, with the patients being placed elsewhere. Furthermore, the state no longer offers $200 monthly checks to residents who have applied for Supplemental Security Income, and the state’s Medicaid program saw an $18.5 million cut.

On Monday, Ritter declined to speculate on where he will find another $240 million, noting that he’ll announce the new cuts in the second half of October. Ritter did say he would take a “surgical” approach to the next round of cuts, too.

“As we make these difficult choices, we will look for new opportunities to be more efficient, more innovative, more modern and more entrepreneurial,” he said. “We aren’t going back to the old ways of doing business. We can’t. So we need to do things better and be more nimble going forward.”

Not surprisingly, Republicans were quick to criticize Ritter on Monday for not cutting more from the budget sooner and for delaying making appropriate additional cuts in light of the new estimates.

“It is regrettable that the Governor’s Office has indicated that they have no intention to cut spending to reflect the current budget reality,” said House Minority Leader Mike May, R-Parker. “The responsible course would be to budget to the most conservative revenue estimates.”

Rep. Frank McNulty, R-Highlands Ranch, agreed, adding that Ritter’s decision to wait until the middle or end of October before making additional cuts shows a lack of foresight and strong leadership.

“I am surprised that he didn’t have a contingency plan,” McNulty said. “We have seen this time and time again, and it comes back to the governor’s ability to lead. Even if he had hoped, as we all did, that things weren’t going to get worse, we still needed a plan in place to deal with the worst-case scenario. Time and time again, the governor has been left with no answers, and that is a problem.”

Nor did criticism of Ritter stop with the GOP. The Colorado Fiscal Policy Institute used the new budget forecast as ammunition to continue its push for a special session of the Legislature this year.

The COFPI — an independent nonprofit agency that advocates on behalf of low- and moderate-income Coloradans — has said Ritter’s first budget cuts disproportionately affected the state’s most needy residents. The group asked the state to find ways to increase revenue in order to fill the gap. Suggestions include disallowing corporations to write off the previous year’s losses on current profitable year’s income statements, reducing manufacturer tax breaks, creating a sales tax for purchases made over the Internet and closing certain tax loopholes, among others. All of the ideas floated by the COFPI include raising taxes, a move ruled out by lawmakers on both sides of the aisle, who note that a tax increase is particularly inappropriate during a severe economic recession.

“Colorado’s fiscal situation continues to deteriorate, and that deterioration increases the urgency for a new approach to our unique fiscal challenges,” said Carol Hedges, a senior fiscal policy analyst for COFPI.

“Colorado can’t cut its way back to prosperity,” Hedges continued. “Now is the time for all options to be on the table, and that means looking at revenue. Colorado families can’t afford more cuts, and neither can our economy.”

When asked if he believed a special session is necessary, McNulty said that only one thing could come from such a meeting of lawmakers — tax increases.

“It doesn’t surprise me one bit that a liberal think tank (like COPFI) would beat the drum for a special session so they can pursue their agenda of increasing taxes on working families,” McNulty said. “What does surprise me is that some people think we can raise taxes to get out of this economic recession.”