The fiscal picture for Colorado’s state government has somehow gotten even murkier — and potentially much worse.
Lawmakers walked into Thursday’s key economic forecasts pessimistic about what the reports would tell them about the state budget. They walked out of it with one forecast warning they now needed to close a $1.5 billion deficit in the next week or so, an increase over the $1 billion prediction from just a few days earlier. That does not account for some cuts the committee has proposed but not yet finalized.
“We’re doing our best to minimize harm, but the truth is itap impossible to cut hundreds of millions of dollars year after year without impacting the priorities that Coloradans care about and core services for vulnerable people,” Sen. Judy Amabile, a Boulder Democrat on the Joint Budget Committee, said in a statement.
The economic forecasts released Thursday, one from and the other from , are key documents for the Joint Budget Committee as it finalizes the state’s spending plan for the upcoming fiscal year. The forecasts give the committee the dollar figure it must budget to, with the legislators deciding which one to go with. These forecasts have massive divides on how much money the economists expect the state will pull in this current fiscal year and in the upcoming fiscal year.
Both forecasts agree that state revenue remains below the cap set by the Taxpayer’s Bill of Rights this fiscal year, which began in July and ends June 30. But the depth of the hole is an open question. The governor’s economists predict state revenue to fall $229 million below the cap; the legislative economists predict it is $914 million.
They both expect a rebound in the upcoming fiscal year, with state revenue exceeding the cap set by TABOR. The governor’s team expects a $711 million surplus. The legislative economists have it at $276 million. The forecasters noted large amounts of uncertainty from the still-evolving effects of the massive tax package that Congress passed and President Donald Trump signed last summer, particularly its effect on tax collections.
The legislative forecast, which is the only one to account for the committee’s current actions, established the $1.5 billion deficit. The governor’s forecast doesn’t include an estimated budget deficit.
The legislative economists predict the state will have an $18.2 billion general fund next year, while the governor’s office expects an $18.4 billion general fund budget.
“The good news is you’ll know who was right in the June forecast,” Greg Sobetski, chief economists for the legislature, told the budget committee Thursday. “The bad news is you have to write the budget right now.”
The budget deficit comes from the state grappling with rocketing increases in must-spend areas — chiefly Medicaid — eating up an ever larger chunk of the general fund. Lawmakers have expanded the program over the years, seeking to cover more people and give them more robust coverage, while the costs of medical services overall have also outpaced the spending cap formula set by TABOR.
The Joint Budget Committee has been wrestling with where to pare those expansions back, and it has been toiling for months to find some $1 billion in savings.
The forecasts set the stage for the committee’s final push to finalize its budget proposal. The spending plan should be introduced in late March or early April. The budget and its related bills will then go to the full House of Representatives for consideration before repeating the process in the Senate.
Earlier in the day, Speaker Julie McCluskie called the budget forecasts “the most critical moment in the finalizing of our annual budget.”
‘We’ve got some very hefty decisions ahead,” McCluskie, a Democrat, said, listing state priorities in Medicaid, education and human services — all expensive pieces of the budget, and all likely to be trimmed down. “We’re in a very, very tough budget moment.”
The committee will now pick which forecast to budget to for the upcoming fiscal year. And already, members are openly mulling the merits of taking the more pessimistic estimates, and cutting programs unnecessarily, or being too optimistic and digging future legislatures into an even deeper hole.
“If we are balancing to a number that is too low, then we are hurting Coloradans in that we are cutting programs that help people that do not need to be cut,” said Rep. Kyle Brown, a Democrat on the committee.
“But if you balance to the high number, and it’s wrong, it would just exacerbate the structural deficit,” said Sen. Barbara Kirkmeyer, a Republican on the committee.
A surprise push for more prisons
Earlier in the week, Mark Ferrandino, head of the governor’s Office of State Planning and Budgeting, threw another costly request at the budget committee: to consider spending another $150 million to $200 million on another prison.
A drop in early releases for parole and a steady uptick of new prisoners led analysts in December to predict the state would see next fiscal year one of its largest annual increases in the prison population in the past 15 years. Colorado can house 15,077 men across state and privately run prisons. The male population averaged about 15,006 people in November — and was expected to jump to 16,200 in the next fiscal year, and 16,600 the year after.
“Eventually it gets to a breaking point where there’s not capacity, or not a willingness to house the offenders at the county level,” Ferrandino told the budget committee Wednesday.
He proposed that the legislature work on a swap of marijuana tax money against the state reserves and other budgeting maneuvers to start the process to renovate and open a prison in Huerfano County in southern Colorado, a region that already contains a cluster of prisons.
But the request also came at an odd time. Lawmakers are already working to close the budget, and Ferrandino’s request came after new spending requests are typically made.
“No one wanted to be in this conversation,” Ferrandino said, but the new projections spurred the request.
Adding another wrinkle to the request, the Joint Budget Committee had earlier in the year denied a funding request for more prison beds to protest what members characterized as a lack of a plan from the governor’s office to lower the overall prison population. Members have since said they are making progress with the governor’s team on that, along with lingering concerns about what overcrowding means for employee and inmate safety.
Amabile, a Democrat on the committee, immediately criticized the request. She said she’d rather pay for ways to get more people out of prison, such as nursing homes for elderly and ill inmates, and transitional housing. She said there are hundreds of inmates right now who qualify for release, but haven’t been because there’s nowhere for them to go.
“I feel like it would be an obscene misuse of public funds to buy and build out a prison when we have hundreds of people waiting in our jails to get to a hospital, people who are criminal justice involved, when we have families that are relying on Medicaid, who we are cutting their services,” Amabile said. “We have, in (the Department of Corrections) right now, hundreds of people who… have been approved by parole to be released but, because we haven’t been able to find them a place to go or because we haven’t delivered the treatment that they need, they are just sitting in prison.”
