Time:10:05 AM to 11:34 AM
Place:LSB A
Gardner C.
This Meeting was called to order by
Representative Carroll T.
Kerr A.
This Report was prepared by
Christie Lee
Carroll T.
X = Present, E = Excused, A = Absent, * = Present after roll call
Bills Addressed: Action Taken:
Revenue Forecasts and TABOR Outlook
School Finance-Related Forecasts
Corrections and Parole Forecasts
School Finance Outlook
Presentation from the Office of State Planning and Budgeting

10:05 AM -- Call to Order

Speaker T. Carroll, vice chair, called the committee to order.

10:05 AM -- Revenue Forecasts and TABOR Outlook

Natalie Mullis, Chief Economist, Legislative Council Staff presented the Colorado Economic and Revenue Forecast dated December 18, 2009 (Attachment A). Ms. Mullis explained that while there have been gains in employment, there are still hard times ahead. She walked the committee through the forecast and pointed out Table 1, line 23, on page 3, which shows the shortfall of about $601 million for FY 2009-10. Ms. Mullis explained that the Governor's plan is not incorporated in this number and that it only includes current law. She stated that this new shortfall now causes the cumulative two-year shortfall to become about $1.5 billion rather than $1.3 billion. Ms. Mullis responded to questions from the committee on whether the number includes the senior property tax exemption that equals roughly $90 million.


10:15 AM

Ms. Mullis continued her presentation and pointed out on page 16 of the forecast that the Unemployment Insurance Trust Fund is expected to go negative in the next few months and that the state will need to borrow from the federal Unemployment Insurance Fund. A number of legislators asked if borrowing money would violate the state constitutional provision TABOR. Ms. Mullis said that she discussed this with the lawyers and they believe that it is allowed since it predates TABOR and is required by federal law.

10:18 AM

Jason Schrock, Legislative Council Staff, explained that he would be discussing severance taxes and federal mineral leasing revenue. He talked about the rebound in severance tax revenue, which increased by $31 million since the September forecast. Representative Balmer asked about the increase in production and other states. Mr. Schrock responded and talked about people moving to Pennsylvania due to the natural gas there. Senator Romer asked a question regarding the tax lag in Colorado and federal mineral leasing revenue. Mr. Schrock directed the committee to Table 9 on page 19 that shows the Federal Mining and Leasing Revenue Distributions. There was a question regarding limited gaming funds and the impact of Amendment 50.

10:29 AM

Ron Kirk, Legislative Council Staff, responded to the question and explained that limited gaming revenue has been rebounding and it is expected to rebound from a 16 percent decline. Representative Lambert asked what the expected amount to community colleges will be. Mr. Kirk explained that it is expected to be about $7 million, up from about $5 million in September. Senator Tapia asked when the community colleges will receive the money. Mr. Kirk said at the end of the fiscal year in 2010.

10:31 AM -- School Finance-Related Forecasts

Jason Schrock, Legislative Council Staff, talked about the assessed value forecast, the purpose of which is to determine property taxes for Colorado's public schools and the amount of state aid provided to schools. He talked about assessed values and explained that it is based on values in the prior year; therefore, 2010 values actually reflect values in 2009. Mr. Schrock explained that 2012 estimated values will still be lower than 2009 actual values. He discussed Table 15, on page 46 of the forecast, which illustrates the residential and nonresidential assessed values from 2007-2012. Mr. Schrock also talked about the map on page 52 that shows the regional assessed value growth and percent change between 2009 and 2010. He said 2011 will see a decline of about 2.5 percent in assessed value due to the decline in home values that began in 2008. Mr. Schrock talked about commercial properties that have also been affected. He stated that property taxes are expected to remain and 7.96 percent through 2012. There was a discussion about a potential second dip in the recession.

10:40 AM

Kate Watkins, Legislative Council Staff, presented the pre-kindergarten enrollment through twelfth grade enrollment forecast. She explained that K-12 enrollment will increase 1.4 percent, or by 11,131 FTE students, in the 2010-11 school year, and that in the following year, 2011-12, there will be an enrollment increase of 1.3 percent, adding an additional 10,060 FTE. She directed the committee to a map on page 41 that showed the regional K-12 school enrollment growth for the school year 2009-10 in Colorado. Senator Tapia said he has not seen the decline in student enrollment in Pueblo that is shown in the forecast. Marc Carey, Legislative Council Staff, explained that the number came out of talks with school representatives in Pueblo regarding their enrollment rates.

10:46 AM -- Corrections and Parole Forecasts

Marc Carey, Legislative Council Staff, presented the adult prison inmate and division of youth corrections population forecasts. He explained that the growth in the adult prison inmate population has slowed, noting that males peaked in population in June 2009 and females in October of 2008. He stated that if this trend continues, it would reflect a five percent overall decline. However, Mr. Carey mentioned that the male prison population has risen for December. Through 2012, the adult inmate population is expected to fall about 2.1 percent annually. He directed the committee to the chart on page 56 comparing the adult inmate population forecasts from December 2008 and 2009. He talked about recent legislation, including House Bill 1351, and the impacts it has had on the inmate population. He said an average of 50 inmates per month have been released that would have not been. Mr. Carey discussed the parole forecast on page 57 and historical trends. He explained that since September, 391 parolees have been released from parole which reflects an overall decrease of 171 parolees when new parolees are taken into account.

10:54 AM

Mr. Carey discussed the youth corrections population. The commitment population will increase slightly from an average daily population of 1,228 in FY 2008-09 to 1,232 in FY 2009-10. By FY 2011-12, the commitment population will fall slightly to 1,222. He explained that the parole population will increase from 435 in FY 2008-09 to 437 in FY 2009-10 before falling to 430 in FY 2011-12. Mr. Carey pointed out the chart on page 63 that compares this year with last year's forecast.

10:55 AM -- School Finance Outlook

Todd Herreid, Legislative Council Staff, distributed a handout titled the Impact of Forecast and Other changes on School Finance Act Funding (Attachment B). He talked about the bar chart on the top of the page and explained that in FY 2009-10 the total program spending increased by about $19 million because the enrollment came in higher than was projected in September by 860 students. He noted that the number of at risk students also increased. He also explained that the assessed value forecast (discussed earlier by economist Jason Schrock) came in higher because of the oil and gas boom. Mr. Herreid discussed the federal ARRA funds that have been redirected to higher education. He explained that in FY 2010 and 2011, overall from current year to next year, funding will go up by $70 million, due to the increase in pupils and the increase in per-pupil funding required under Amendment 23. Amendment 23 requires funding to increase by inflation, which is -0.9 which percent, plus one percent, resulting in a 0.1 percent increase. In 2010, $220 million General Fund is needed to fully fund the School Finance Act.


11:02 AM

Mr. Herreid talked about various scenarios based on different General Fund increases or decreases for the School Finance Act from FY 2009-10 and program reductions in FY 2010-11 from current law. These scenarios are reflected in the chart on the bottom of Attachment B. Representative Lambert asked about increased case load not being reflected in the forecast. Representative Pommer asked why revenues are not increasing with population. Ms. Mullis explained that it is due to employment a lack of employment and wage increases. There was a discussion about population growth in Colorado. Representative Pommer suggested adding caseload, rather than just revenue, to the forecasts. Senator Romer talked about credit availability for small businesses.

11:20 AM -- Governor's Economic Forecast

Todd Saliman, Office of State Planning and Budgeting (OSPB), presented the Governor's December 2009 Revenue Forecast (Attachment C). With the inclusion of Governor Ritter's August 25 and December 1 budget balancing proposals, the forecast reflects that sufficient General Fund is available to support requested spending authority for FY 2009-10. For FY 2010-11, General Fund available for appropriation is anticipated to increase above FY 2009-10 levels and gross General Fund revenues in FY 2009-10 are projected to decrease 0.7 percent, or $49.7 million, from prior year levels. The FY 2009-10 cash fund revenues are forecast to decrease 8.9 percent, or about $212.9 million, from the prior fiscal year. The OSPB forecast also states that TABOR refunds are not anticipated during the forecast period.


11:27 AM

Mr. Saliman talked about personal income growth reflected on page 27 of the forecast. He also referred the committee back to Mr. Herreid's chart and explained that the governor's proposal includes a $200 million General Fund reduction for K-12, leading to a negative balance of $67 million in the State Education Fund.

11:31 AM

Senator Morse asked whether the state is allowed to maintain a negative balance in the State Education Fund. Mr. Saliman said no. Representative Balmer asked whether TABOR is impacting the current budget situation. Mr. Saliman explained that currently it is not, but will in the future.

11:34 AM

The committee adjourned.