DENVER—Lawmakers are considering a plan to eliminate a cap on spending as they seek ways to cut $625 million from this year’s state budget.
Increases in state revenue usually require voter approval. But Rep. Don Marostica, a Republican from Loveland who sits on the Joint Budget Committee, says lawmakers believe they have the authority to change the law.
Monday’s proposed change would do little to help lawmakers with their current budget crisis, but it would allow the state to spend more money on top programs when the economy recovers without having to go back to voters as they did in 2005. That year, Referendum C allowed the state to keep tax surplus refunds for five years to help recover from the last economic slump.
The spending limit, known as the Arveschoug-Bird limit from its 1991 sponsors, set a 6 percent cap on increases in general fund spending, the state’s bank account used to pay for big ticket items like higher education, criminal justice, schools, corrections and health care.
Jean Dubofsky, a former member of the state Supreme Court and a board member at the Colorado Fiscal Policy Institute, said legislative legal advisers made a mistake nearly two decades ago when they assumed TABOR and Arveschoug-Bird were both limits on spending. She said the law told lawmakers how to spend the money, but it didn’t set limits.
“By accepting this unnecessary restriction on its authority, the Legislature has allowed its hands to be tied when it comes to fixing Colorado’s fiscal mess,” Dubofsky said.
Scott Downes, the institute’s communications director, said it’s ironic that President Obama is coming to Colorado to sign his stimulus package on Tuesday, the one state in the nation that cannot benefit fully because of spending limits.
Downes said unless the law is changed, the 6 percent limit means general fund dollars cut from the budget during the recession cannot be used to restore program cuts and instead will be available only for capital investments, forcing health care, higher education, K-12 education and safety net program spending to remain at recession levels.
“This is so ironic. They can’t maximize the stimulus package because of these outdated constraints,” Downes said.
Marostica said a bill to end the limits would be filed this week after lawmakers were briefed on a plan to balance the current budget ending July 1.
The money has to be cut as tax collections drop because of the recession.
Jon Caldara, president of the conservative Independence Institute, said lawmakers are risking getting sued. Caldara’s group is already suing the state and Gov. Bill Ritter over a mill levy freeze that prevents automatic decreases in tax rates when property values go up, requiring higher tax payments.
He said lawmakers can’t claim they simply made a mistake following the limits for 17 years. He said taxpayers are still protected by the Taxpayer’s Bill of Rights, which requires voter approval for any tax increases.
“If you want to do it, you have to ask the people,” Caldara said.
The budget committee has recommended balancing this year’s budget by taking $244 million from funds set up to pay for specific programs and withdrawing about $150 million from the state’s reserve fund. They’re also counting on more than $100 million in extra Medicaid funding from the federal stimulus package.
About $90 million of the recommended cuts come directly from state agencies, mainly public schools and higher education.
