Presentation by Senator Moe Keller
INTERIM COMMISSION TO STUDY FISCAL STABILITY
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09:41 AM -- Joint Budget Committee - Sen Moe Keller
Senator Moe Keller, Joint Budget Committee (JBC) Chair, gave an update of where the state stands currently with the FY 2009-10 and FY 2010-11 budget shortfalls. Senator Keller explained Governor Ritter called for a 10 percent cut in all state departments, noting many programs or services will be cut. She further explained that the Department of Health Care Policy and Financing probably will not be able to follow through with a 10 percent cut due to the nature of its mission and state obligations with Medicaid, putting more pressure on other departments. Senator Keller explained that the prison budget is driven by caseload and after the recent closures and cuts to prisons, additional cuts with prisons will be difficult. She explained the state needs to determine who can be released early without compromising public safety. Senator Keller also suggested that cuts to higher education are at the maximum, warning that going below the baseline level may result in federal funding cuts. She suggested K-12 education might be one area to look into for restructuring and suggested this commission meet with the Interim Committee on the Study of the Financing of Public Schools.
Senator Keller explained that the stimulus dollars saved the budget for the current year. She noted the increase in Medicaid caseload, and further explained that as more people lose work, applicants for the Children's Health Insurance Program (CHIP) and Medicaid will increase.
Senator Keller suggested that for long term stability, the state should consider fee increases by making more establishments "enterprises" under TABOR. She gave state parks as an example. By making parks enterprises, fees can increase, the parks can remain open, and they would be out of the General Fund. Senator Keller suggested that the Division of Motor Vehicles might be another establishment that could be an enterprise where fees could be increased to levels that would more adequately pay the cost of providing the service.
The presentation continued focusing on school funding when Senator Keller noted the state share is now 65 percent and local share only 35 percent which is a burden on the General Fund. She added that other states have regional sales tax for school finance and suggested the state review the distribution of responsibilities between the state and local governments. Senator Keller also advised the state look into restructuring who is responsible for child welfare. She noted that the cigarette tax should be scrutinized. She also suggested looking into changing the proceeds of the lottery collections, so that some goes toward education, although she noted taxpayers are very sensitive about this issue. Senator Keller explained the state could look into eliminating the enterprise zone system. In terms of long-term stability, the commission should consider taking tax exemptions away during recessions since a lot of property tax revenue has been lost due to enterprise zones. Senator Keller noted decisions on fiscal stability will require cuts across the board and everyone will be affected.
Representative Marostica clarified some monetary issues. Mr. Conway questioned if waivers on the Medicaid program were being considered. Senator Keller suggested the state already participates in some Medicaid waivers, but she would look into that. Nursing homes in Colorado were successful in pooling dollars to get a waiver from the federal government, and 48 states do this type of waiver. There are also various other waivers within Medicaid. Mr. Hume commented on enterprise zones stating that his business did not locate based on incentives from the enterprise zone tax exemption.