Gov. John Hickenlooper’s proposed spending plan for the upcoming fiscal year is an ugly but honest way of bringing lackluster state revenues in line with surging need.
Unfortunately, the pain will be felt in K-12 classrooms across the state.
If the state legislature adopts anything close to his $7.2 billion budget plan — and it will, since there are precious few options — we don’t see how teacher layoffs can be avoided.
In a step away from his predecessor’s plan, Hickenlooper socks away more money in the state’s savings account, increasing the state’s reserve funds from 2 percent to 4 percent — a still-meager amount.
If that holds, it will save almost $142 million in case of an emergency. Critics, especially those trying to balance local school-district budgets, will question whether that money would be better spent by not cutting education funding as deeply, as Gov. Bill Ritter’s plan suggested. Hickenlooper’s plan pares $332 million out of K-12 spending.
As painful as it is, increasing the reserve is responsible governing. The state’s reserve now accounts for only two weeks of spending — a foolishly small amount.
It’s important to remember that this isn’t the federal budget, where deficit spending is possible and out of control. The state budget is not bloated.
The legislature was able to avoid these steep cuts in recent years only by relying on federal stimulus money and raiding state cash funds.
That’s all gone now. What’s left are difficult spending cuts that Coloradans will not like. To be clear, we don’t want to see teachers lose their jobs either. But when you take a cold, hard look at the state budget and see that some 40 percent of it is already gobbled up by K-12 education, you see it’s difficult to cut elsewhere, especially since Medicaid spending — a fast-growing portion of the budget — is wrapped up in federal requirements and matching grants.
Still, we have to wonder whether laying bare the grim truth of the budget and K-12 spending (rather than using reserve money to avoid some of the pain) is intended as a reality check.
If you cut a popular cause deeply enough, will you force Coloradans to think about tax increases?
The governor told us Tuesday he does not see any appetite for additional taxes, but we have to wonder.
Hickenlooper also emphasized that the state must focus on policies that encourage job creation. Since two- thirds of state revenues come from income tax, an upward spike in employed Coloradans would boost the anemic revenue base.
An unfortunate side effect of cutting education funding — K-12 would lose $497 per student over last year, and higher education would lose $877 per student — is that it hurts the state’s ability to recruit and retain strong businesses. A thriving educational system is one of the first things corporate chiefs consider when looking to relocate. We get that, and the governor gets that too.
However, a state that is failing to budget to reality has to be off-putting as well.
The other counterproductive effect of cutting K-12 education is that some districts, particularly the wealthier ones, might pass higher local taxes. That may allow those districts to keep class sizes reasonable, but it could end up being a higher tax burden for the very businesses Hickenlooper is attempting to encourage.
A property-tax increase could further exacerbate the already-inequitable tax burden that businesses bear by virtue of the Gallagher amendment and its interaction with the Taxpayer’s Bill of Rights. The residential assessment rate is 7.96 percent, while businesses pay taxes on 29 percent of their assessed value.
At some point, Coloradans must be willing to consider structural changes to untangle some of the conflicting mandates that make state budgeting an increasingly difficult task.
We hope the governor’s budget plan is a step toward that day of reckoning.
