The Independence Institute’s Citizens’ Budget can place Colorado on a path to sustainable government. Colorado can close next year’s billion-dollar budget problem — with no increases in taxes or fees — by following our realistic spending revisions.
Government officials say they cut all the fat out of programs. They insist that taxes must rise even higher. They are doubly wrong.
Colorado faces a systemic problem that has been building for years, a problem worsened by recession. The system is designed to fail, with government programs planned to grow faster than citizens’ ability to fund them. The legislature must change its process, alter its policies, and reform the structure of the budget. Some of the changes will require voter approval.
Shortfalls have been managed though financial manipulations, raiding cash funds, and raising fees. One- time funds were applied to budgeted services without looking ahead to meet the demand in out-year budgets. This past year, real corrective action was deferred yet again as the federal government subsidized the state with “stimulus funds.” It is highly improbable those funds will be authorized again. Colorado must implement policy to change the structural problem.
Higher revenues fail to solve problems about how and how much any state spends. Colorado is just below the national median in per capita spending. The first-, second- and sixth-highest-revenue states are those in greatest crisis: New Jersey, New York and California. We have the opportunity to learn from their mistakes.
The demand for government services always has an explanation for expanding a current program or instituting a new one. Elected leaders and Colorado citizens have not demanded that difficult decisions be made, but instead have expanded services in a futile effort to make taxpayers satiate the insatiable demands of tax consumers.
Families dependent on the private sector for income tightened their budgets, saw colleagues furloughed from businesses, yet watched an increasingly unresponsive government sector continue growing.
The legislature emphasizes the costs, such as number of leased vehicles or employees. They must change to focus on outcomes. Measure and manage the services in terms of benefits received. The Colorado legislature must set up a process to separate spending into “absolutely must-have,” “nice to have” and “lowest priority,” just as families and businesses do.
Our Citizens’ Budget details significant savings, not just trimming around the edges. We found $250 million of savings in K-12 education by adopting common-sense spending on internal business services and by stopping payroll increases that are not tied to improved outcomes. Limited tax credits for families that pay for most of their own education at independent schools would save $53.8 million for local school districts, by reducing the number of students for whom the taxpayers pay the full cost of education. These modifications would relieve some pressure from the Amendment 23 mandate for education spending increases.
Returning Medicaid eligibility to 2007 levels saves another $250 million. It would rebalance the current unsustainable situation in which half of Colorado’s families are paying child care health costs for the other half.
Government pension benefits must be fixed. Currently, every taxpayer owes at least $10,000 in liabilities for a program that cannot fulfill its promises.
Colorado is the only state holding on to a 1930s social welfare program. People can qualify just by moving into Colorado, even if they never paid any state tax. Other elderly direct-assistance programs cover basic needs. Repeal this program to free $105 million per year.
For more on the Citizens’ Budget, go to .
Penn R. Pfiffner is a former legislator and a senior fellow at the Independence Institute.
