Already grim revenue forecasts at the state Capitol grew even darker Friday.
And the really ominous message from the most recent state revenue projections is that the bloodbath is far from over.
Lawmakers will be forced to make additional cuts in areas such as higher education, K-12 education and social services. The way Colorado’s budget is strangled and compelled by fiscal mandates, there just isn’t anywhere else to cut.
Colorado also will be forced to tap its already meager reserves.
The coming weeks will be brutal at the General Assembly as legislators figure out how to make ends meet.
The budget shortfall for the current fiscal year, which ends in June, will increase by nearly $208 million, state legislative economists predicted Friday. That’s on top of the $600 million gap that state lawmakers had been wrestling to cover.
The next budget year, which begins in July, promises to be even more difficult. Revenue is expected to continue dropping, and more tough decisions will need to be made.
Most of the revenue decreases are expected to be in income taxes, particularly individual income taxes. The state economists attributed the income tax revenue decline to the “unprecedented rate” at which the economy contracted, a reaction to the mayhem on Wall Street in recent months.
It’s all about jobs, and the state has been losing them at a fast clip.
Natalie Mullis, chief economist for the Legislative Council, said the state lost 48,000 jobs between August and January.
The economists projected that the Colorado economy will be in recession until sometime in 2010.
In the meantime, it’s clear from the revenue picture that there will be precious little money for transportation, a growing need in the state.
We’re glad the Democrat-controlled legislature managed to pass FASTER, a vehicle registration fee hike that is expected to raise $250 million a year. It takes more out of motorists’ pockets but gives government the cash to fix 125 structurally deficient bridges around Colorado.
The dismal projections also mean there is no rush to pass Senate Bill 228, which would repeal Arveschoug-Bird, a provision limiting general fund growth to no more than 6 percent a year. Looking at these projections, it’s pretty clear the state isn’t going to be getting anywhere near the 6 percent ceiling any time soon.
Rather than take on what will surely be another court battle over whether the 6 percent cap can be repealed by lawmakers, it may be wiser to wait and include the idea in a larger budget reform effort.
We hope lawmakers make an effort to preserve the most important core services and protect the state’s most vulnerable citizens as they cut. It’s an unenviable job.
