By Peter Marcus, DENVER DAILY NEWS
In the midst of learning that the state’s current budget shortfall is actually $39.9 million higher than anticipated, the Colorado Legislative Council on Friday was told the “recession appears to be over.”
State economists reported that the state’s shortfall is actually $600.6 million for the fiscal year ending in June, partly a result of a 6.3 percent decrease in revenue available for spending because several one-time sources of revenue will either be reduced or will be no longer available.
The general fund will be $1.5 billion lower in 2010-2011 than the amount currently budgeted to be spent in 2009-2010.
To make matters more dire, school districts will experience a 5.4 percent decrease in property tax assessed values, while experiencing a 1.4 percent increase in enrollment during 2010-2011.
The spending limit set by the Taxpayer’s Bill of Rights will equal $10.7 billion next year, and revenue subjected to TABOR will be $1.6 billion below the limit, Natalie Mullis, chief economist for Colorado’s Legislative Council, told lawmakers during a presentation Friday.
But in the midst of “even worse” news for lawmakers, the chief economist pointed to a bright spot in Colorado’s economy, stating that the recession in the state appears to be over.
“In Colorado the recession appears to be over and recovery appears to be beginning,” she said. “But the recovery will be long and rocky.”
“Consumers and businesses are paying off debt, banks are shoring up their balance sheets and the construction of homes and buildings has ground nearly to a halt to adjust for excess supply,” states the report issued to Legislative Council.
But credit constraints on consumers will remain for several years to come, said Mullis. Job losses will continue and wage growth will be slow, she said.
Economists say lawmakers this coming session must focus on fiscal policy, examining the long-term impacts of tax credits and incentives, as well as spending mandates and constraints set by TABOR.
Republicans have already vowed to fight any attempt to ease TABOR restrictions, raise taxes and eliminate tax credits.
But Democrats on Friday appeared ready to dig in. Gov. Bill Ritter immediately acknowledged that more cuts will be necessary.
“We have more tough choices to make, choices that may be unpopular, but choices that are necessary to lead us to a strong and sustainable recovery,” said the governor.
Sen. Moe Keller, D-Wheat Ridge, vice-chair of the Joint Budget Committee, agreed that more tough choices lie ahead.
“Tough choices will have to be made to ensure that we are creating a prudent balance between fostering a favorable economy while still maintaining our infrastructure and funding children’s education,” said Keller.
“The results of the economic forecast only reiterate what Coloradans already know: the budget must be top priority in the upcoming legislative session,” said Senate President Brandon Shaffer of Longmont. “We must get citizens back to work and small business back in business. It all starts with a good job.”
House Speaker Terrance Carroll, D-Denver — who quipped on Friday that there were “tissues available at the end of each row” for lawmakers as they heard the sobering report — has repeatedly advised his colleagues that the priority next year should be on fiscal policy, not other controversial issues such as medical marijuana regulation.
The good news for Colorado is that personal income in the state rose half a percentage point in the third quarter of 2009, and the state’s unemployment rate fell to 6.9 percent in November from the revised October estimate of 7 percent, according to labor officials.
But Republicans were fast to criticize Democrats, arguing that their spending practices over the past three years has resulted in the state’s dire budget circumstance. They believe Democrats have outlined a plan to eliminate $131.8 million in various credits.
Republicans are asking Ritter to lead an effort to adjust the state’s retirement plan for state employees, as well as to make cuts to expenses for payroll and departments.
“We’ve been warning Democrats for years to curb their tax and spend approach to government,” said Sen. Kevin Lundberg, R-Loveland. “Ritter still doesn’t get that we need to live within our means and stop pounding people for more dollars while families across Colorado are still struggling to make ends meat.”
Distributed by Colorado Capitol Reporters