These are interesting times for the SPIB.
SPIB is the acronym Rep. Bernie Buescher, D-Grand Junction, uses to describe state Treasurer Cary Kennedy. It stands for Smartest Person In the Building.
Coming from Buescher, who presides over his own acronym as chairman of the PJBC — the Powerful Joint Budget Committee as the press routinely refers to it — that’s quite a compliment. The Western Slope lawmaker is justly renowned for his own mastery of state fiscal issues.
Buescher and Kennedy have opposite but complementary jobs. Buescher and his fellow budget writers spend your tax dollars. As treasurer, Kennedy oversees the collection of those revenues.
Whether because of their shared passion for fiscal arcana or simply because acronyms attract, the SPIB and the PJBC work intimately together. Next week, this partnership will produce a bill to significantly strengthen Colorado’s reserve funds to help the state weather the inevitable next economic downturn.
Buescher made a similar effort last year and won 64-1 approval in the House for a bill to gradually double the general fund spending reserve from its current inadequate 4 percent to 8 percent. Alas, former Senate President Joan Fitz-Gerald sent the bill to a hostile Senate Finance Committee, where it was killed by members who scorned creating a rainy-day fund in favor of spending every possible dollar immediately on more highways.
Kennedy and Buescher pondered that defeat over the summer and crafted the new bill that won’t change the 4 percent reserve but will make it more useful in practice.
Colorado’s budget picture is contorted by conflicting mandates that have had the unintended consequence of making a bill aimed at providing supplemental funding for highways and other capital construction needs, House Bill 1310 of 2002, into a de facto general fund reserve.
That law requires that after all other budget mandates have been filled, including the 4 percent reserve, anything left over is declared as an “excess reserve” and is divided two- thirds for highways and one-third for other construction needs, including higher education.
The problem is that the 1310 fund is first estimated in the revenue forecast prepared by the state in March and then written into the budget for the fiscal year that begins the following July 1. But the money isn’t actually transferred until after the fiscal year ends June 30 and the books can be audited. That means that in September, Kennedy transfers a sum into the 1310 fund which can be higher or lower than the original guess.
Once that money goes into the Highway Users Tax Fund, it can’t be spent for anything but highway needs if revenue collections then dip sharply. The third that goes to other capital needs can theoretically be recalled and diverted to other uses — but that might mean that the state couldn’t finish building a classroom that it had already poured the foundation for.
In the current 2007-08 budget, $34.1 million was projected to be transferred to highways and $17 million for other construction. But since every extra dollar of state revenue goes into this fund, a modest increase in overall collections last year meant that $166 million was actually transferred to highways and $83 million to other capital needs.
Buescher’s bill would retain the 1310 funding formula but delay the cash transfer for six months, until the March revenue forecast upon which the subsequent budget is built. If that policy had been in effect this year, it would have meant the two construction funds would have received $249 million, not the mere $54.1 million projected. Conversely, if revenue collections had gone south, as they did in the 2001-03 recession, the “excess reserve” wouldn’t be excess and would still be available to cover shortfalls in vital programs like education and health care.
Thus, the combined wisdom of the SPIB and the PJBC amounts to putting into practice the advice of another great mind — your mom.
Wasn’t she the one who always said, “Don’t spend it until you get it”?
Bob Ewegen (bewegen@denverpost.com) is deputy editorial page editor of The Denver Post.
