Date: 01/19/2006
Final
Presentatoin by Legislative Council Staff
COMMITTEE ON JOINT FINANCE
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09:37 AM -- Presentation by Legislative Council Staff
Mr. Mike Mauer, Chief Economist, Legislative Council Staff, distributed a General Fund table (Attachment A) and gave the committee a brief overview of the revenue forecast. Mr. Mauer pointed out that with the passage of Referendum C, the overview categorizes nonexempt revenue and exempt revenue (lines 2 and 3). Exempt revenue under Referendum C is the TABOR surplus that the state is allowed to retain that otherwise would be refunded to taxpayers. Also, the table shows a full-year SB 97-1 diversion to the Highway Users Tax Fund as opposed to a 7-month diversion. Mr. Mauer pointed out that under Referendum C line 12 shows that the General Assembly can appropriate up to the 6 percent limit. The $114.4 million is available for new programs under Referendum C for the current fiscal year. It is important to note that the General Assembly can only spend a quarter of the $114.4 million in new programs for the remainder of the fiscal year. (The General Assembly would need to have four times the amount ($114.4 million) to fund these new programs for a full fiscal year.)
Mr. Mauer and Representative McCluskey commented on the SB 97-1 transfers and the timing of the transfers to the Highway Users Tax Fund by the State Treasurer. Mr. Mauer pointed out that the State Treasurer has already made a six-month distribution to the fund for the current fiscal year.
Mr. Mauer and the committee continued to discuss the money available under Referendum C for new programs. Mr. Mauer commented that the $114.1 million is one-time money that can grow by the 6 percent limit each year. The committee discussed the paybacks to other funds on line 5.
Mr. Mauer continued by discussing the new revenue cap under Referendum C. Under Referendum C, the state will be able to adjust its spending base to the largest amount of revenues collected by the state over the next five years. After five years, this new spending base will be allowed to grow by population and inflation each year.
The committee continued to discuss the revenue the state can retain under Referendum C. Mr. Mauer reiterated that the money ($114.4 million) includes any revenue that the General Assembly uses to restore programs. Changes in Cash Fund Revenue changes the mix of General Fund Revenue between exempt and non exempt.
Mr. Mauer continued by explaining the interaction between current laws that earmark exempt revenue under Referendum C. The committee discussed appropriations under the 6 percent limit and allowable programs under Referendum C. Mr. Mauer clarified that the senior homestead exemption is an expenditure above the 6 percent limit.
Mr. Mauer discussed two graphs that were distributed with the General Fund Overview and discussed the TABOR and statutory reserves. TABOR requires the state to have a 3-percent reserve based on TABOR revenue. This reserve is generally made up of various Cash Funds and non-cash assets such as state-owned buildings. The statutory reserve is equal to 4 percent of appropriations and is made up of liquid funds. After the passage of Referendum C, Mr. Mauer pointed out that the state has more of an incentive to create a rainy day fund.
Mr. Mauer and the committee closed the discussion by talking about allowable spending under Referendum C.