Just when it seemed the worst might be over for the state’s budget, the financial hole appears to be deeper.
Two hundred and forty million dollars deeper.
That’s how much less revenue the state expects to receive this current fiscal year, according to the latest estimates. That means the governor and legislature need to cut an extra $240 million this year, unless they raise revenue or raid reserve funds.
It’s a dismal time for Colorado.
With a general fund budget of about $7 billion, $240 million might not seem like a lot. But when you consider the hundreds of millions that have been pared from a budget with little discretionary spending, and the cost of the core services the state must provide, it truly is a daunting task.
We expect Gov. Bill Ritter will have to make more unpalatable decisions, including more employee layoffs and furloughs, taking money out of the state’s already meager reserves and possibly approving some tax exemptions.
When the legislature comes back in January, they’ll have to take part in these difficult decisions as well since some of the likely measures will require their approval.
The easier cuts were made long ago, and what’s left are decisions that are bound to be unpopular with large segments of the population.
Layoffs surely will reduce the budget, but there are some staff cuts that make less sense than others.
For instance, some employee salaries are paid with federal money or with user fees or dedicated taxes. Cutting them won’t take any pressure off the general fund. And some core employees, such as prison guards, cannot be reduced without great peril.
But surely some layoffs can be made. We aren’t hard-hearted about the hardships that such staff reductions will cause. Families will lose a paycheck, and more unemployment could put a greater strain on state assistance resources as well as further reduce state revenues.
However, there comes a point when layoffs must be a greater part of the budget solution, especially when the state has added jobs in recent years.
Sen. Moe Keller, chair of the legislature’s Joint Budget Committee, said lawmakers will look at the tax exemptions allowed in enterprise zones.
Keller told us enterprise zones make up significant swaths of Colorado, and she has heard conflicting opinions as to the value of tax exemptions in generating business expansion.
All potential cuts ought to be considered, but we also believe state legislators must have solid research about the efficacy of enterprise zone exemptions before eliminating them.
It would make no sense at all to cut out tax exemptions if such a move would cripple the businesses that are the state’s economic engine.
It’s a difficult time, and balancing the budget will involve consideration of what are, frankly, a lot of bad alternatives.
