State budget by JBC hinges on action in DC

Hickenlooper addresses concerns about ‘fiscal cliff’
The Colorado Statesman

Gov. John Hickenlooper was blunt in addressing the Joint Budget Committee on Wednesday during a presentation of his budget for the 2013-14 fiscal year, telling state lawmakers that if Congress does not act on the looming so-called “fiscal cliff,” the result would be unpleasant for Colorado.

“Let’s hope we don’t get there, but certainly… when you look at sequestration, the choices that will be before you are not pleasant, and dwarf the kinds of decisions we’ve had to make in the last two years,” the governor, a Democrat, responded to a question by JBC member Rep. Cheri Gerou, R-Evergreen.

Congress must reach a deficit reduction deal by the end of the year, or else spending cuts and tax increases will automatically trigger. Those widespread cuts would impact federal funding to Colorado.

“Sequestration is upon us… and we could be faced with the problem of trying to backfill, or have the conversation about backfilling, to our counties, and I know we’re in somewhat of a recovery, but it’s a fragile recovery,” Gerou told the governor. “Have you, in your discussion about the budget, have you had conversations about sequestration? Do you have a Plan B in the drawer that you’ll be looking at?”

Major chunks of federal funding — including Medicaid, the Children’s Health Insurance Program and Social Security — would be exempt from the sequester, as the White House has indicated. But Gerou points out that numerous programs, such as Temporary Assistance for Needy Families, or TANF, would be on the table.

“Those dollars that come from the federal government go straight to the counties through us…” she explained.
Hickenlooper recognized the urgency, responding, “It’s a good question to ask, but there is no easy answer, except that I will deliver you recommendations, but you won’t be pleased.”

The governor is optimistic that Congress will reach a deal in the lame duck session, but he admitted the issue could be critical: “I personally can’t believe that sequestration, that they would allow that to happen, however, I didn’t think they’d ever let the debt ceiling debate go as far as it did.”

“We recognize that we can’t take anything for granted, and we are putting together step by step what our suggestions to you would be in the event that sequestration occurred, but it’s very daunting,” he concluded.
Hickenlooper also warned the six-member JBC that uncertainties surrounding the European debt crisis and recessions around the world could impact the state budget.

“Obviously the fiscal situation in Europe has not been resolved in any significant manner… and you go around the world — there is a slowing of China’s growth, and the consequences of the severity of the recession in other parts of the world — I think dramatically underline why we in the United States have to get our financial act together…” the governor told the JBC. “Until we do that, we have to look at these worldwide events as potential risks to a slowing of the economy.”

In the meantime, the governor has proposed a $21.9 billion state budget for the 2013-14 fiscal year that represents a $1.1 billion, or 5.4 percent, increase in total funds. The general fund will grow to $8.1 billion, or about a 5 percent boost over the current budget that ends in June.

A rebound in general fund revenue — including individual income tax revenue growth of 22.7 percent — has allowed for the rosier budget proposal.

As a result, the governor’s office has proposed:

• $201.6 million more for K-12 education;
• $37.5 million more for higher education;
• A 1.5 percent cost-of-living increase for state workers;
• An increase of $174 million for health care policy and financing, including Medicaid;
• $2 million in additional funding for economic development;
• A $1 million boost in incentives for the film and television industry;
• Another $2 million for tourism promotion;
• A $13.1 million increase for services for the developmentally disabled;
• $6.8 million more for food assistance for low-income families;
• $7 million more for the elderly;
• An additional $38.1 million for human services; and
• $44.9 million added to controlled maintenance.

Hickenlooper has also proposed a 5 percent general fund reserve, which currently stands at 4 percent of spending. He is asking the JBC to introduce legislation that would achieve this goal.

“We’ll never have all the resources that all of us want, so how do we create the right compromise going forward?” the governor asked rhetorically.

Lawmakers next year likely won’t have to wrestle too hard over the budget, which will be presented to the full legislature for approval in the spring. With additional money and less of a dire need for cuts, many arguments will be avoided, assuming there is no sequestration. The few questions and comments from JBC members during the only 17-minute budget presentation reflected this likelihood.

Democrats took control of the JBC following the election, in which both the House and Senate fell back into their hands. As a result, the JBC went from a 3-3 split to a 4-2 Democratic advantage.

The committee backed Sen. Pat Steadman, D-Denver, on Wednesday to take over as chairman. Previously, it was co-chaired by Gerou and Sen. Mary Hodge, D-Brighton. Their caucuses last week reappointed them to the powerful committee.

Other returning members include Sen. Kent Lambert, R-Colorado Springs, and Rep. Claire Levy, D-Boulder. Rep. Crisanta Duran, D-Denver, is new to the committee.

Peter@coloradostatesman.com