Referendum C has turned into a $1.7 billion bonanza for Colorado roads – despite promises that the extra money would primarily boost public education and health care programs.
The result confounds many officials who supported the 2005 budget bailout because roads are gobbling up an ever-increasing share of the money.
Road funding will grow by $1.7 billion during Referendum C’s five-year time-out from revenue limits on state government, based on the latest forecasts by the state economist.
“In the end, more Referendum C money will be spent on transportation than will be spent on health care, education or higher education,” said Carol Hedges, a budget expert for the Colorado Fiscal Policy Institute.
Those three program areas will share most of the remaining $4.2 billion the state expects to collect during the Referendum C period, which ends in 2010.
The pitch to voters in 2005 was that most of the Referendum C money would be shared equally: one-third to schools, one-third to higher education and one-third to health care.
But as the state keeps and spends more money, lawmakers are forced to live by the rules that existed before the passage of Referendum C.
And those rules don’t allow the extra money to be divided that way.
House Speaker Andrew Romanoff, D-Denver, said state laws and the constitution steer the money in other directions.
“It flows automatically into roads and bridges and buildings,” Romanoff said.
The chief rule governing where the money goes is the 6 percent growth in spending limit on the state operating budget.
Since most money for schools, colleges and health care programs is part of the state operating budget, the amount officials can spend in those areas is limited.
As a result, money that exceeds the operating budget’s spending limit spills over into a separate budget for construction projects.
And that is prompting cries from prominent supporters of Referendum C.
“With the increase in funding this year, we will still get less money than we did six years ago,” said Hank Brown, president of the University of Colorado.
The 2002 state budget initially provided $764.7 million for higher education, before implementing deep budget cuts because of the recession. This year, the higher education budget is $746.3 million.
Brown said he is concerned that the pre-Referendum C budget formulas are preventing Referendum C dollars from fully helping higher education.
“My hope is that one-third of the new money would be available for higher education and the penalty provision that takes it away would be dropped,” he said.
But changing the 6 percent limit is not so easy – legally or politically.
Legally, some officials consider the limit locked in by the constitution. And politically, the spending cap was part of the compromise brokered with Republican then-Gov. Bill Owens, officials said.
Lisa Weil, co-founder of Great Education Colorado, an advocacy group that promotes funding for public schools, said the auto-pilot provisions in the budget do not reflect the current priorities of voters.
“According to every poll, education is a very high priority,” Weil said. “We need to figure out a way to get out of this Rube Goldberg contraption where decisions are made automatically based on laws that were made 20 years ago.”
In the Medicaid program providing health care for the poor, Referendum C money does not increase funding, said John Bartholomew, budget director for the Colorado Department of Health Care Policy and Financing. Instead, the money replaces other tax dollars that covered the cost of the program.
“It’s just a funding mechanism,” Bartholomew said. “It does not affect spending patterns, benefits or amount of eligible population,” he said.
Even as Referendum C supporters lament that more money is heading toward road projects, they acknowledge that transportation needs help too.
“We all need roads just like we all need schools,” said Deborah Fallin, spokeswoman for the Colorado Education Association, the teachers union that was a major backer of Referendum C.
Heather Copp, chief financial officer for the Colorado Department of Transportation, said the extra funding from Referendum C helps replace money lost during the recession.
“Remember, we went between 2002 and 2006 with no Senate Bill 1 transfer,” she said. “We lost well over $1 billion.”
Senate Bill 1, passed in 1997, is another trigger in the budget that provides some funding for road projects after the operating budget reaches its 6 percent cap.
And the extra $1.7 billion for roads provided by Referendum C pales in comparison with the cost of maintaining them.
Copp said the department’s plan for 2030 estimates that sustaining the existing system will cost $65 billion. Expanding for the growing population would cost another $40 billion.
Staff writer Mark P. Couch can be reached at 303-954-1794 or mcouch@denverpost.com.
