State revenues have rebounded slightly, likely eliminating the need for Gov. Bill Ritter to make immediate budget cuts.
But the state still faces a $211 million cliffhanger in the 2010-11 budget year that could be decided Monday in the U.S. Senate.
Ritter, a Democrat, had been planning budget cuts after a June economic forecast showed revenues below expectations, meaning the only way the state would finish the 2009-10 fiscal year with a balanced budget was by dipping into general-fund reserves. That meant the state was starting the 2010-11 fiscal year in July with up to a $72 million deficit.
But tax revenues in June showed the state collected $76 million more than expected in Ritter’s economic forecast. If the collections hold steady through September — when the state’s next revenue forecast is released — Ritter won’t have to implement a plan in August to deal with that deficit.
But the all-clear signal won’t be coming anytime soon.
The state could find itself in a bigger mess later in the year if Congress does not approve an extension of enhanced federal funding for Medicaid.
Congress first gave extra Medicaid money to states through the American Recovery and Reinvestment Act, and the increased federal match money was set to run out in December, the midway point for most states’ fiscal years.
Congress appeared poised to pass an extension of the enhanced Medicaid match through June 2011, the end of the 2010-11 fiscal year. About 30 states, including Colorado, wrote their 2010-11 budgets based on the belief Congress would approve extending the extra Medicaid funds.
Now, in a tough election year for Democrats and amid concern over approving additional deficit spending, the prospect of extending the Medicaid funding has been in doubt.
The Senate is expected to vote Monday on a proposal that would give states a smaller pot of money for Medicaid assistance.
For Colorado, not getting the money would mean a deficit of about $212 million in the state’s general fund, which could mean additional cuts to K-12 and higher education.
The retooled proposal pending in the Senate would give Colorado an estimated $159 million in Medicaid assistance, offsetting much, but not all, of the need for cutting.
But in the absence of action, Ritter’s office is preparing for the worst.
“We are working on our balancing plan,” said Todd Saliman, Ritter’s budget director. “Everything is on the table, as always.”
Tim Hoover: 303-954-1626 or thoover@denverpost.com
