Gov. Bill Ritter said Tuesday that heavy cuts will fall on state agencies in September, cuts he said would be “surgical” but deep.
Ritter made his remarks Tuesday evening at a special budget briefing for Democratic lawmakers at the Governor’s Residence. He did not give information on specific programs that would be cut.
With the state facing a $384 million shortfall in the current fiscal year that began in July, Ritter, a Democrat, recently asked all state departments to submit proposals to cut 10 percent from their budgets. He said Tuesday his office would send those proposed cuts to the legislature’s Joint Budget Committee on Aug. 24.
Most of the cuts would take effect Sept. 1.
“We asked for 10 percent across the board, but we’re going to do as much as we can to be very surgical,” Ritter said, adding that some departments might not be cut 10 percent.
Still, he said, “there are going to be some impacts” from the cuts, adding, “we’re going to be in the position of defending those impacts.”
Ritter has already said most state employees would have four furlough days before the end of 2009, and they could see more in 2010.
Though some lawmakers have suggested the state should eliminate some of the $2 billion in tax credits and exemptions now on the books, Ritter indicated that would have to be done carefully. For example, he said, a sales-tax exemption for components used in manufacturing, which costs the state $500 million a year, mirrors similar exemptions in other states and is necessary for economic development.
“When we compete for job creation, we have to remain attractive,” Ritter said.
Ritter’s budget director, Todd Saliman, laid out a series of sobering statistics.
The state is expected to lose about 85,000 jobs in 2009 and another 8,600 in 2010. The state’s total personal income, which has increased by an annual average of 5.9 percent over the previous 10 years, is expected to decrease by 0.3 percent in 2009.
The only economic bright spot is home values, with Denver metro prices declining by only 9 percent, compared with other major cities that saw an average 23 percent price slide.
The state’s general fund, the pot of money from which most operating needs are funded, decreased nearly 14 percent from fiscal 2007-08 to fiscal 2008-09, a $1.1 billion reduction.
In the previous recession in the early part of the decade, the state balanced the budget by using $1.2 billion of cash funds over several years, cutting $568 million in general-fund spending, Saliman said. This time around, lawmakers have used $638.9 million over two fiscal years and already cut $531.1 million from the general fund, not including another $700 million in planned cuts this year and next.
Sen. Moe Keller, D-Wheat Ridge, the chairwoman of the Joint Budget Committee, pointed out that lawmakers can no longer rely on cash funds — pots of money generated by fees for specific services — to balance the budget. The cash funds now have been too heavily depleted from the two recessions, she said.
“We don’t have any more accounting mechanisms. We don’t have any more (cash) transfers we can buffer with,” Keller said. “We have to look at whole programs. We have to look at buildings.
“Everybody in this room is going to detest what we’re going to be doing.”
Tim Hoover: 303-954-1626 or thoover@denverpost.com
