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From Governing’s Colorado
Colorado has taken the national enthusiasm for reduced government and moved further with it than any state in the country. The Taxpayer Bill of Rights (TABOR), a constitutional amendment enacted by voters in 1992, severely limits the amount of general revenue the state can collect even in good times; for fiscal year 2006, it will be limited to spending $111.3 million more than this year, even though the legislature’s Joint Budget Committee estimates that an increase of $330 million would be needed just to meet what it calls “basic bare essential” needs. 
Unfortunately, Colorado’s enthusiasms are not backed up by consistency. While TABOR places most of state government in a straitjacket, a separate constitutional amendment, also passed by voters, is mandating steady increases in education spending each year — for 2006 alone, $144 million. TABOR’s backers can boast accurately that Colorado’s tax burden has dropped from 25th in the country in 1990 to 40th. But the law prevented the state from rebounding from a dramatic drop in revenues a few years ago. This problem has generated a decline in capital infrastructure, an increase in long-term debt obligations, a demoralized workforce and a budget that can be balanced each year only through a plethora of one-time measures. “We took cash funds, we changed accounting methods, we pushed payments out into the future, we delayed payment dates,” says Brad Young, former Republican chairman of the Joint Budget Committee.
One solid barometer of the state’s fiscal woes is in its pension plans for public employees and school teachers. Not long ago, these were in surplus. By early 2004, they were only 75 percent funded. Part of the problem, of course, is related to the decline in the stock market, but Colorado exacerbated the issue by contributing less to the fund than it should have. Meanwhile, the state allows employees to hasten their retirement by “buying” years of service for cash. This is fairly common, but until recently, the state was selling those years at bargain prices and had few controls on how many years an employee could buy. It saved the state a few more dollars in the short run by getting employees off the payroll, but at the high price of much greater future liabilities. The legislature has curtailed this practice but now must deal with actuarial demands to increase pension funding. This just puts more pressure on a budget already so strained that funding has been slashed even for such universally popular programs as childhood immunization. Some managers say the budget pressures have compelled legislators and budgeters to pay more attention to performance information and have led to a necessary prioritization process. That’s good, but lack of buy-in on the new priorities has led to other headaches, including lawsuits over mental health, school construction and Medicaid funding. The transfer of substantial amounts of money into the general fund from other earmarked funds is also the subject of a major lawsuit that remains to be resolved. With a variety of needy groups clamoring for more money, it’s no surprise that the easiest area for budget writers to cut has been the state’s capital program. In the mid- to late 1990s, Colorado routinely spent $200 million to $300 million a year on non-transportation infrastructure, such as maintenance of public buildings. In the current budget, the total allotted from the general fund for this purpose is $9 million. The transportation department is actually a rather well-run agency, but it is dealing with demands that are impossible given the reduced funding. The agency’s resources have declined by 20 percent since 2000, while Colorado’s population increased by 250,000 between 2000 and 2003, and the number of lane-miles traveled daily on state highways shot up by 3 million. Managers continue to do a good job in assessing the condition of their assets but have had to pull back dramatically on other goals. While most states strive to reduce the percentage of roads in poor condition to 10 or 15 percent, Colorado’s goal is that no more than 40 percent of roads be labeled as poor. Last year, legislative leaders considered dozens of proposals for getting Colorado back onto a firmer fiscal footing. But when they left town in October, there was no hope in sight. Will they have more luck in the current session? Coloradans who can see the inevitable long-term consequences of the status quo certainly hope so.
Copyright © 2005, Congressional Quarterly, Inc. Reproduction in any form without the written permission of the publisher is prohibited. Governing, City & State and Governing.com are registered trademarks of Congressional Quarterly, Inc. |
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