Center for Colorado's Economic Future
INTERIM COMMISSION TO STUDY FISCAL STABILITY
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04:22 PM -- Center for Colorado's Economic Future
Mr. Charlie Brown, representing the Center for Colorado's Economic Future at the University of Denver, began his presentation. A copy of the center's issue brief entitled "Colorado's State Budget Tsunami" was distributed to members of the commission (Attachment B). It is also located on the commission's website.
Mr. Brown explained that an increasing amount of General Fund money is dedicated to education, Medicaid, and prisons and consequently this has led to a less flexible budget. He explained that the structural imbalance of the budget is an issue of volatility in General Fund revenue. Periods of slow economic growth are seen with huge decreases in General Fund revenue. He further stated that there is a likelihood that the forecast for assessed value may be a little too optimistic for Fiscal Year 2010-11 and that the December 2009 forecast from LCS may show more backfilling as assessed values, and thus property tax revenues decrease. He recommended that remedies go beyond belt-tightening and stated the budget needs restructuring without excessive taxes. He suggested that if the state wants to tax its way out, sales taxes would have to increase by about 40 percent.
Mr. Brown continued by discussing the need for a comprehensive analysis of the state's revenue structure that would identify a fair, productive system over the long run. He suggested the legislature needs to clarify which services to provide and how to fund them without penalizing those that foster stability. He explained that the number of local governments has increased, especially among special districts, and suggested the commission look at provisions that deal with special districts. Mr. Brown suggested the state budget needs a comprehensive review that focuses on both tax and spending sides of state government and stated that at pivotal points in the economy, the state should always do a comprehensive review of its budget and associated policies.
Mr. Brown responded to questions from the commission about Medicaid, stating that Medicaid should be an area to analyze due to the aging baby-boomer population, which could end up being a run-away portion of the future budget. Discussion ensued about Medicaid recipients as well as the future of federal funding of Medicaid. Ms. Mullis, LCS, returned to the table and responded to several questions. She noted that the Joint Budget Committee has information about Medicaid.
Senator Heath announced that the commission will reconvene at 9:00 a.m. on July 9, 2009.
The commission adjourned.