STAFF SUMMARY OF MEETING
INTERIM COMMISSION TO STUDY FISCAL STABILITY
|Time:||09:16 AM to 05:14 PM|
|This Meeting was called to order by|
|This Report was prepared by|
X = Present, E = Excused, A = Absent, * = Present after roll call
|Bills Addressed: ||Action Taken:|
|Call to Order - Opening Remarks|
Discussion on Legislation
09:16 AM -- Call to Order - Opening Remarks
Esther Van Mourick from the Office of Legislative Legal Services (OLLS) explained the rules and procedures for having legislation drafted from an interim committee. Ms. Van Mourick explained that although ideas for legislation may come from any member of the commission, only legislative members may vote for the final recommendation to the Executive Committee of Legislative Council. She reminded the commission that timing constraints require that bills drafted at the commission's request must receive an up or down vote at the commission's next meeting on November 4, 2009.
Jason Schrock and Natalie Mullis from Legislative Council Staff presented the draft funding table prepared for the commission (Attachment A). Mr. Schrock identified the major components of the table and some of the assumptions made by the departments in providing information. He further clarified that although the departments calculated a total amount of funding necessary to provide an ideal level of services, the sources of revenue for any additional funding is not presumed.
Senator Morse suggested that additional information showing all department budgets, in addition to the big 6, would be a useful number for the commission to consider. He reminded the commission that there are other departments of government that must not be ignored.
Senator Morse asked for some clarification about local and state sources of funding for K12 Education. He suggested removing the local share of funding for K12 from the ideal scenario identified by the Colorado Department of Education. This would help to demonstrate only the state share of this desired funding. Mr. Schrock answered that total additional amount is not broken between sources such as local, federal, or state. Ms. Mullis added that policy decisions would determine how new funding can be raised. For example, the legislature could change property tax laws, thus having an impact on the local share of school finance and adjusting the total necessary from state or federal sources.
09:48 AM -- Commission Discussion
Senator Heath explained that each commissioner will have the opportunity to address the commission for 5 minutes. A list of 14 themes that emerged during commission discussion was provided to commissioners (Attachment B).
Commissioner Carol Boigon thanked the commission and the chair for the good discussions over the course of the meetings. She shared a Hebrew word for "the prepared table," a concept repeated in many cultures and from many sources. She explained that our stewardship as leaders is to create a society in which we prepare the environment for those who follow us. She compared President Eisenhower's efforts to create a nationwide transportation system as an example of a visionary approach: he envisioned a world not yet built and demonstrated the will to invest in that vision.
Commissioner Amy Oliver Cooke remarked that the budget numbers provided to the commissioners are dizzying. She indicated that she does not believe that providing more money is always the answer. A more important criteria is how that money is spent. She also expressed that spending restrictions based on inflation need to be adjusted to give the legislature flexibility. She suggested creating a K12 opportunity fund similar to the College Opportunity Fund.
Commissioner Renny Fagan remarked that Colorado's future economic prosperity is jeopardized by the lack of investment in higher education. Mr. Fagan made several suggestions regarding the state's long term fiscal stability. First, he challenged the commission to think of prioritizing prevention programs. Second, he encouraged government to continue to identify inefficiencies and to perform better. Third, he suggested improved public-private partnerships. Fourth, he praised the importance of rainy day funds. Mr. Fagan concluded that revenue is insufficient and that funding requirements in the constitution must be addressed by the voters.
Commissioner Marty Neilson commented on her concern with the state's economic situation. She noted that in order to improve this situation, the state should consider spending cuts. She praised TABOR, and shared her disappointment with the Legislature's recent repeal of the 6 percent appropriations limit (Arveschoug/Bird). Ms. Neilson discussed her belief in priority-based budgeting and the need for legislative consensus on the core functions of government.
Commissioner Sean Conway remarked that much of our state budget is on autopilot as a result of federal mandates and constitutional requirements. He expressed regret that the commission could not hear testimony from more citizens. Mr. Conway has confidence that some of these issues will be resolved as the economy improves. Mr. Conway made several recommendations to prepare for the next economic downturn, including a rainy day fund, a comprehensive and comparative tax study, and providing more flexibility to higher education.
Commissioner Kirvin Knox praised the models used by the Judicial Branch to identify efficiencies. Dr. Knox also praised the work of the University of Denver, and the report presented to the commission by Charlie Brown in July. He indicated a need for a comprehensive tax study. He also suggested that the state examine its corrections and sentencing system as a way to improve the state's fiscal situation. He reiterated that now is the time to craft a vision and solve these problems. Finally, he suggested eliminating the Colorado Commission on Higher Education and providing more flexibility to higher education.
Commissioner Tim Hume emphasized the need to focus on measuring outcomes as a way to increase efficiencies, save money, and improve services. He identified higher education as one place to increase investments, and that efficiencies alone will not achieve the desired results. He also remarked that Colorado should remain a low-tax state in order to attract business and remain competitive.
10:58 AM -- Commission Discussion (continued)
Representative Gerou thanked the commission members and staff. She detailed a number of core values of government, including individual responsibility and limited government. She shared her concerns about higher education and capital construction funding. She also reiterated the importance of preparing for the future with a rainy day fund.
Representative Court thanked the commission and staff. She warned against being "penny wise and pound foolish". She asserted that the state must be more preventative in its approach to fiscal stability. She also indicated a need to invest today and prioritize prevention in every area of government.
Senator Brophy thanked the volunteer members of the commission. He asked if the current tax structure is sufficient to fund government adequately? He expressed his belief that funding is sufficient and that the state should prepare for the future with a rainy day fund.
Senator Morse indicated that the commission should not only ask what government costs, but should also ask what benefits does government supply? He remarked that government is a source of justice and fairness and artificially limiting spending also limits the benefits that government can supply.
Representative Ferrandino reiterated the comments of Senator Morse. He noted his belief that state agencies operate with good efficiency and accomplish much with limited resources. He indicated that additional efficiencies could be identified through performance-based budgeting.
Senator Heath described Colorado as a state where there is great wealth and natural resources but has the 47th lowest tax burden. Senator Heath shared his frustrations regarding funding of state programs. He described a bill proposing a comprehensive tax study that he plans to ask the commission to approve and recommend. He also asked the commission to recommend a bill to establish a committee to revise the constitution, and a bill that will provide greater flexibility to the higher education institutions.
01:30 PM -- Discussion on Legislation
Senator Heath, Chairman, began the afternoon session by discussing commission legislation. Senator Heath commented that he had asked staff to draft three measures for commission discussion purposes that would be acted upon on November 4, 2009, and November 5, 2009. One measure would refer a question to voters in 2010 to establish a 23-person, nonmember (of the General Assembly) commission that would look at fiscal policies contained in Colorado's Constitution. The commission would be made up of seven Senate appointments, seven House of Representative appointments, seven appointments from the Governor's Office, and two appointments by the judiciary branch of state government. Once recommendations are made by the new commission, voters would decide on the recommendations in the 2012 General Election.
Senator Heath continued by discussing a second measure that would provide more funding options for higher education by making changes to the mix of in-state and international students that attend institutions of higher education in Colorado. The legislation is aimed at providing greater access for international students to institutions of higher education in Colorado while providing more tuition revenue for institutions.
The committee continued the discussion on legislation that would create a constitutional revision commission. Senator Heath discussed the single-subject issue in terms of its application to the commission. He noted that any recommendations from the commission that are sent to voters may contain multiple-subject measures that pertain to changes in fiscal policy.
The discussion shifted to a third measure on a comprehensive tax study (Attachment C). Senator Heath discussed the potential benefits of an independent, nonpartisan study that may offer the state options for funding services and making the tax structure more fair.
After a brief discussion on the a tax study measure, the commission took up "major themes" that were discussed earlier in the morning that could be the subject of additional commission legislation. Senator Heath noted that some of these themes included a rainy day fund, federal waivers, and options for transportation and capital construction funding. The committee also discussed the need for legislation that would stimulate investment with measured outcomes.
The discussion shifted back to the benefits of a comprehensive tax study, the need for a rainy day fund, and a permanent funding source for transportation. Commissioner Knox discussed the importance of a tax study to determine the fairness of Colorado's tax system and make assessments about Colorado's revenue structure. Senator Brophy commented on the ongoing efforts of the General Assembly to establish a rainy day fund. In addition, Representative Gerou noted the need for legislation that would provide a permanent funding source for capital construction and transportation. She continued by stressing the need to maintain state buildings and institutions because they are important state assets and investments.
The committee continued the discussion on the need to define the core provisions of state government. Senator Brophy commented that the state is in a very difficult budget position, but it is not the job of the commission to solve budget problems. He continued by noting that funding for K-12 education is adequate and discussed state-funding for health care. The commission continued the discussion on whether the state has enough to fund state services, including providing excellent services in higher education and access to health care.
The commission discussion changed to the topic of revenue-raising measures. Senator Heath commented that once the recovery begins, a measure that requires a tax study may shed some light on the best way to raise revenue and be fair to all taxpayers. The discussion continued on state expenditures and the provision of state services.
The discussion briefly shifted to TABOR and the growth of total government spending. Senator Morse noted that current state revenue does not keep pace with caseload-driven expenditures. As the discussion ensued, Representative Court commented on the need to focus on preventative state policies that yield long-term savings to the state.
The commission discussion shifted to 2009 legislation that addressed the budget shortfall. Representative Ferrandino commented on the Joint Budget Committee legislation that made transfers from cash funds to the General Fund, legislation that reduced services, and other measures that were enacted to balance the state's budget in FY 2008-09. Commissioner Fagan continued the discussion by commenting on the need for legislation that looked at regulatory reforms to achieve cost savings for the state. He closed by discussing the need for legislation that would enhance public-private partnerships that would look to the nonprofit sector to gain more efficiencies in providing state services and ultimately save the state money.
04:00 PM -- Commission Action on Legislation
The Chairman asked staff to send legislative drafts of the above measures to commission members by the close of business on Monday November 2, 2009.