DENVER DAILY NEWS
Gov. Bill Ritter yesterday announced a new plan to re-balance the state’s current budget and close a nearly $60 million revenue shortfall through revenues from medical marijuana applications and cuts to the Department of Corrections.
Higher-than-anticipated June revenue and additional Medicaid funding from the federal government kept the budget gap from being significantly wider, the governor’s office said yesterday.
“Today’s balancing plan continues the same strategies we’ve utilized throughout the downturn,” Ritter said in a statement. “We are preserving essential services, protecting the safety net, minimizing pain and requiring shared sacrifices and shared solutions from everyone. This is a responsible plan that continues to position Colorado for a healthy and sustainable recovery.”
Over the past three fiscal years, Ritter and lawmakers have closed recession-induced shortfalls of $4.3 billion.
The primary components of Ritter’s latest budget-balancing plan include:
Ą Cutting $1.3 million from the Department of Corrections and imposing a $4.9 million, or 1 percent, across-the-board reduction in personnel costs by keeping positions vacant and delaying hiring; and
Ą Transferring $53 million from other accounts into the state’s general fund to cover operating expenses. The transfers will come from $9 million from the Medical Marijuana Program Fund and $20 million from accounts that support local communities with discretionary grants funded by severance tax and federal mineral lease revenues, along with $11.4 million from a grant reserve fund.
Ritter’s office points out that it makes sense to go after medical marijuana revenues given the huge spike in applications over the last year. The state anticipates ending the year with 150,000 applicants for medical marijuana cards Ń up from 41,000 in 2009, according to the governor’s office. A marijuana card costs $90 per year.
The governor’s plan allows the state to maintain a 2.1 percent, or $150 million, general fund reserve in case of worsening revenue conditions, according to Ritter’s office. The next revenue forecast is due Sept. 20.
Republicans yesterday blamed Democrats for a tax-and-spend agenda that they say is adding to the state’s budget deficit.
“The Democrats’ partnership with Washington is not working for Colorado taxpayers,” Senate Republican Leader Mike Kopp, R-Littleton, said in a statement. “Colorado businesses and families cannot afford any more financial burdens because Democrats in the state Legislature and Gov. Ritter speculated on federal funding and guessed wrong.”
Republicans say Ritter and Democrats expanded Medicaid eligibility, adding hundreds of thousands of people to its rolls while increasing the state’s caseload, which has widened the budget gap. The GOP points out that in 2001 Colorado’s Medicaid caseload was around 275,000, while during last year’s budget it grew to over 476,000. One estimate projects Colorado’s Medicaid/CHIP enrollment to grow by 44 percent over the next four years to 897,000, say Republicans.
“The promise of increased federal Medicaid funding was one of the arguments used to sell Obamacare,” said Kopp. “Under the expanded eligibility rules in Obamacare, Colorado taxpayers will be forced to bear the financial burden of the Democrats’ out of control entitlement spending.”
“We cannot afford this unsustainable partnership with Washington any longer,” Kopp continued. “It is time we created real priorities in the state budget and stopped the budgeting gimmicks that have plagued the budget setting of the majority party.”
Ritter, however, said $76.8 million in higher-than-estimated individual and corporate income tax revenue, and $144 million from a six-month extension of the Federal Medical Assistance Percentage, helped ease this latest round of budget balancing. Unlike his foes in the Republican Party, Ritter praised Washington for helping Colorado by providing schools with additional education funding, including $160 million for local districts in Colorado.
The governor acknowledges that further cuts may be necessary following the September forecast. Ritter said he is preparing for the possibility of additional cuts, and has placed a hold on $40 million in local grants funded by severance tax and federal mineral lease revenue.
The September forecast will also be used to help shape Ritter’s Fiscal Year 2011-12 budget proposal, which will be submitted to the Legislature’s Joint Budget Committee on Nov. 1. Previous forecasts have indicated a $500 million to $1 billion shortfall in FY11-12, meaning more tough decisions will be made.
“While Colorado’s economy is showing signs of stability and encouragement in areas like the New Energy Economy, tourism and health care, we face more struggles and more difficult choices in the months ahead,” Ritter said. “All options must be on the table in order for us to keep our budget balanced.”