Time:09:04 AM to 04:52 PM
Place:HCR 0112
This Meeting was called to order by
Senator Heath
This Report was prepared by
Leora Starr
X = Present, E = Excused, A = Absent, * = Present after roll call
Bills Addressed: Action Taken:
Presentation by State Treasurer Cary Kennedy
Presentation by Senator Moe Keller
Presentation by Metro Denver Corporation
Presentation by Colorado Strategies
Presentation by Colorado Fiscal Policy Institute
Local Government Panel
Think Tank Presentations
Closing Comments and Adjournment

All materials referred to in this summary are available on the web at Legislative Council Staff's website for the Long-Term Fiscal Stability Commission.

09:04 AM -- Department of Treasury - Cary Kennedy

The meeting was called to order by the Chair Senator Rollie Heath.

Ms. Cary Kennedy, State Treasurer, began her discussion. Members of the commission received a copy of her slides (Attachment A), the Standard & Poors Ratings rating of Colorado entitled "Colorado; Appropriations; General Obligation" (Attachment B), and the State Taxpayer Accountability Report (STAR) for Fiscal Year 2006-07 (Attachment C).

0709AttachmentA.pdf 0709AttachmentB.pdf


Ms. Kennedy began with a history of U.S. gross domestic product (GDP) to provide the big picture of economic growth. Ms. Kennedy explained the Treasury update that followed, including a summary of the state's investments, which she noted are also included in the appendix in Attachment A as well as on the agency's website. A summary of the state's financial affairs concluded the state's credit rating (AA) was upheld this week, accompanied with investments that show positive earnings and no losses in the state pool. Ms. Kennedy explained that due to the positive outlook in Colorado, the state obtained a lower interest rate. Examples of some of the projects include the new history museum, Justice Center, and qualified school construction bonds with all interest costs paid by the federal government. The treasury has not issued variable rate debt and opposed proposals to issue variable rate Certificates of Participation.

09:13 AM

Ms. Kennedy further explained that long term financial stability was viable since the state showed strong economic performance and below average debt levels. She explained that in regard to the components of a healthy economy, Colorado ranked 4th in GDP nationally and unemployment is lower than the national average. Ms. Kennedy discussed the stability of home prices in the state and suggested Colorado would rebound quicker than other states due to its diverse economy. She further noted the state has a 4 percent uncommitted statutory general fund reserve which is low. Also, Senate Bill 09-228 created a new statutory requirement to increase state General Fund reserves by 0.5 percent each year for five years. Ms. Kennedy explained Colorado has below average Debt/Certificate of Participation (COP) levels and the state continues to pay all of its bills.

09:18 AM

Senator Heath asked for a definition of COPs, and Ms. Kennedy explained that they were Certificates of Participation, which allow the state to enter into obligations. Since a COP is a lease-purchase, she said, there is no legal obligation.

Ms. Kennedy provided information to the commission about the assets of the Public Employees' Retirement Association (PERA). She also said that Colorado does not do asset liability studies, which Ms. Kennedy suggested the commission should consider every five years. Due to term limits, she stated that having this type of information available would be helpful.

09:22 AM

Senator Heath asked about PERA and what it would take to get PERA back to a better funding ratio. Ms. Kennedy did not have the calculated numbers but will provide those numbers.

09:23 AM

Ms. Kennedy presented a picture of tax revenues nationwide which showed Colorado and California are both states heavily reliant on personal income taxes and high ratios of capital gains as a percent of adjusted gross income, leaving tax revenues volatile. Ms. Kennedy recommended a comprehensive study of Colorado's tax structure.

09:26 AM

The commission discussed the cost of conducting such comprehensive studies. Ms. Kennedy explained in prior years, resources were not available and legislators recommended a private company conduct this. Colorado University (CU) and the University of Denver combined had done a similar study. Ms. Natalie Mullis, Legislative Council Staff (LCS), came to the table to respond to the commission's questions, noting that staff would investigate how the 1959 report was funded. The presentation continued by moving to areas where the state was underperforming. Ms. Kennedy explained institutional financial flexibility is the area where Colorado is not doing well. The state requires voter approval for tax rate increases, and the state Constitution does not allow revenue or spending to rise and fall with economic and demographic growth or decline. She further noted additional shifts in burden between state and local levels of government create challenges.

09:32 AM

The commission asked about the limits imposed by TABOR. Ms. Kennedy suggested this could be maintained but that the limit should not be tied to inflation or population growth, that statewide personal income or other measures that better reflect economic growth (or economic expansions and contractions) should be used. The commission also asked about any studies that might have been modeled to show different scenarios. Ms. Kennedy suggested that Legislative Council Staff could do such a study. The commission asked about the impact inflation would have on fiscal stability, and areas such as K-12, requesting Ms. Kennedy's opinion. Ms. Kennedy discussed Amendment 23 and its effect in addressing K-12 funds that had diminished over the last 10 years, but that Colorado is still well below the national average as far as funding per student. She further explained the state's constitution prevents the state from making such investments when the economy is strong. The commission requested a representative from PERA be scheduled to provide information.

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.

09:50 AM

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.

09:52 AM

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.

09:55 AM

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.

10:05 AM

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.

10:14 AM -- Metro Denver Economic Development Corp

Mr. Tom Clark, representing the Metro Denver Economic Development Corporation, began his discussion. The commission received a copy of the slide presentation (Attachment D).


Mr. Clark explained Colorado has clusters of industries that thrive and grow together. These 11 industries include aerospace, bioscience, software/IT, energy, financial services, tourism, agriculture, aviation, beverages, hardware/IT, and broadcast/telecommunications. Mr. Clark further explained wind and solar are important for Colorado, as is tourism and beer production. He further noted that, compared to the rest of the nation, Colorado ranks 10th highest for per capita personal income, 9th highest in employment growth rankings, and 7th highest with overall economic competitiveness.

10:20 AM

Mr. Clark explained that Colorado is typically among the top five states regarding innovation and the number of new companies due to the highly educated nature of the workforce. He noted that Colorado ranks 4th in venture capital investments per capita, and that other surrounding states have higher income tax rates with Colorado rates the 6th lowest. Mr. Clark added Colorado has the 2nd lowest property tax rate. In regard to education, the state ranked 20th in K-12 education and 17th highest on average 8th grade reading scores. The commission asked if there are statistics on expenditures per student to pair with the rankings.

Mr. Clark suggested there is a Colorado paradox. On one hand, Colorado ranks highest in SAT, 3rd highest in bachelor's degrees, and lowest in obesity prevalence among adults (and consequently, higher productivity). He added there are fewer cancer deaths and diabetes, fewer strokes and less heart disease than in many other states. Mr. Clark presented the challenges to be in public K-12 spending, where Colorado ranks 29th. The public high school graduation rate rated the 29th lowest in the nation. He noted Utah has high graduation rates. The commission asked how they accomplished this. It was noted that Arizona also has very high graduation rates. Mr. Clark noted Colorado has the 9th worst student to teacher ratio. Students enrolled in kindergarten through fourth grade should have small class sizes. In higher education funding, Colorado is the 3rd lowest, he said.

10:30 AM

Mr. Clark addressed issues with highways suggesting Senate Bill 09-108, also known as the FASTER bill, helped but is not a long term answer. He added Colorado is the 23rd highest in electricity generated through renewable energy. Mr. Clark explained the reasons this study was done was to create a document of statistics to see areas where Colorado fares well and where Colorado is failing and in need of improvement.

Senator Heath asked Mr. Clark what advice he might give. Mr. Clark suggested revisiting Amendment 23, or coming up with another formula that would allow higher education to receive more funding. He added many tax credits can be sacrificed, noting that some are unusual tax credits and questioned whether or not they are still beneficial. He emphasized that enterprise zone tax exemptions are seldom deal makers. The commission asked about clusters, questioning which ones have the most promise for Colorado. Mr. Clark suggested energy and the manufacturing of energy components. He also noted that aerospace fosters high paying jobs. Mr. Clark said many of the industries intertwine.

The commission asked about the manufacturing jobs that still exist and are growing in Colorado and how that factors with higher education and trade skills. Mr. Clark noted the Workforce Innovation in Regional Economic Development (WIRED) program with the Colorado Department of Labor and Employment that addresses a young person's education from high school to a community college with a trade or skill. He suggested employees with trade skills can earn high incomes. All classes of higher education from trade to doctorate should be factored into consideration in long term fiscal stability.

10:41 AM

Final questions from the commission to Mr. Clark included a discussion that higher education is the first institution to get cut when the state has budget problems. Mr. Clark suggested looking at ways that higher education could be funded rather than cutting it. Mr. Clark suggested the corporate income tax rate has never been an issue in relocation, suggesting the corporate tax rate could be raised for the purpose of higher education funding. Mr. Clark suggested this issue should be raised as well as with Gallagher, in that there is no correlation in what you pay and what you get to fund K-12. He noted from an equity standpoint, the state should look at what it is paying for and what it is getting and overall, how it is being subsidized. Finally, members of the commission commented that the research institutions have done well and that the commission needs to look at this aspect of education.

10:48 AM

Mr. Clark closed with his thoughts about Colorado's fiscal challenges.

10:49 AM

The commission recessed.

11:06 AM -- Colorado Strategies - Henry Sobanet

The commission reconvened.

Mr. Henry Sobanet, representing Colorado Strategies, began his discussion about the economy. Members of the commission received a copy of his presentation (Attachment E). The presentation began with Colorado statistics showing that rapid growth in the 1990s was followed with much slower growth this decade. Mr. Sobanet explained personal income has not slowed, while the annual change in general fund revenue growth has been almost flat, while K-12 and Medicaid (the bulk of state spending) is growing. He further explained that, relative to revenues, these programs have grown nine times faster than revenue growth. Mr. Sobanet suggested a fair, broad-based tax structure should be implemented, and advised that the state should focus on the schools, and in doing so, other problems would be addressed. He suggested the state's tax base should cover more services.


11:15 AM

The presentation continued by focusing on state stability. Mr. Sobanet noted that the state should be able to keep the revenue it has, and that a potential fix would be to extend Referendum C. He explained for the recovery to be beneficial, the state needs to keep the money it currently collects and limit or avoid fee increases. He further suggested K-12 spending be reduced. Mr. Sobanet concluded the state needs to increase reserves to prepare for the next downturn. He suggested the state review its tax policy and determine if the state has a tax base that is efficient, fair and, broad-based. He further explained the state should determine how to fund K-12 and transportation expansion. Mr. Sobanet suggested the state needs to review taxes that can be redirected and determine otherwise how to be more competitive.

11:21 AM

Mr. Sobanet concluded with suggestions to end "auto-pilot" spending. He stated the current fiscal structure is not very flexible, but long term changes can be addressed. He noted Medicaid costs and baby-boomers will be increasing throughout the long term. The commission asked about the level of spending that would be required to maintain reserves. Also, a member of the commission asked about the level of spending in Medicaid and K-12 spending. Mr. Sobanet suggested looking at the big picture, and compare Colorado's rankings to other states and question whether or not the rankings will change. Discussion ensued regarding the potential fix for the state. Mr. Sobanet stated the problem is not a matter of limiting or reducing government, rather, the fix is an issue of regaining control of revenues. The commission also discussed the Medicaid hospital provider fee that recently became law.

11:35 AM

Commission members received two memoranda prepared by Legislative Council Staff. The first memorandum was the 1959 McNichols Tax Study Recommendation (Attachment F). This memorandum answered a question posed earlier in the day by the commission about who funded the 1959 tax study. The study, which cost $1.9 million, was funded by the state. The second memorandum is Colorado Lottery Distributions, Revenues, and Expenditures (Attachment G).

0709AttachmentF.pdf 0709AttachmentG.pdf

11:36 AM -- Colorado Fiscal Policy Institute - Carol Hedges

Ms. Carol Hedges, representing the Colorado Fiscal Policy Institute, began her presentation. She provided the members with a handout that included several tables (Attachment H).


Ms. Hedges summarized the current state of the government's expenditures relative to state personal income and provided benchmark expenditures on topics such as K-12 education, Medicaid, higher education, and highways. She further suggested the current crisis is short term but limited funds would result in continual budget problems. Ms. Hedges further explained government spending, as it relates to economic expansions, has shrunk and that the current revenue policy lends to the revenue drain, and that tax rate reductions and declining property assessments have led to decreasing revenues. She added other tax exemptions have also contributed to falling revenues. Ms. Hedges stated Colorado can no longer cut its way out of the budget problems. Ms. Hedges suggested the state consider the way it works with the public and that the current approach to revenue requires evaluation.

11:44 AM

The presentation moved to tax policy and budget decisions. Ms. Hedges referred to a table prepared by the National Conference of State Legislatures (NCSL). She stated the income tax computer system is old and needs modernization. She explained tax exemptions give away revenue and that part of the reason was Colorado lacks information on the revenue system. Ms. Hedges believes there is limited authority of the legislature and a lack of knowledge of the revenue system. She suggested the state review the objectives of taxes, both personal and corporate, to see if the tax cuts are accomplishing the intended objectives.

11:50 AM

Ms. Hedges continued in more detail on sales and excise taxes, property taxes, and personal income taxes, noting charts 5 and 6 in the attachment regarding personal income taxes. She suggested more scrutiny on the tax burden among differing groups of people so a better definition of equitable could be defined. She suggested some alternative tax policies such as a flat tax rate or a tax rate. Ms. Hedges emphasized upgrading the collection practices, making sure everyone who owes taxes, pays those taxes. She discussed the Department of Revenue's level of staffing and computer system. She said the department is now charged with cutting 10 percent, making collecting these payments difficult. She warned the commission that current fixes for the budget that include increasing fees and taxes will push the economy back further. The commission raised questions about statistics regarding investments in K-12 and subsequent rankings among other states. Also, the commission asked for input on what would be a good size of government. There was discussion that not enough government is as bad as too much government. There was further discussion that the tax systems should be adjusted to tax goods as well as tangible services. The commission also suggested that the effects of tax rate increases on individuals and businesses must be considered.

In addition, commission members received several tables from Legislative Council Staff about income taxes (Attachment I). The members also received information about Colorado Capital Gains as a percent of adjusted gross income, which is included as Attachment J.

0709AttachmentI.pdf 0709AttachmentJ.pdf

12:06 PM

The commission recessed until 1:30 p.m.

01:34 PM -- Local Government Panel

The commission reconvened.

Senator Heath recognized Ms. Carol Boigon, a member of the commission who joined the meeting. Ms. Boigon currently serves on the Denver City Council. Commission members also received a copy of a Wall Street Journal article from Commissioner Marty Neilson entitled "Golden State Opportunity," which is included as Attachment K.


01:35 PM

Mr. Sam Mamet, representing the Colorado Municipal League, distributed a handout from the organization with information about cities in Colorado, including a report about the future of municipal financing and a February 2009 report on the state of Colorado's cities and towns. This information is included as Attachment L, and the reports are also posted on the commission's website. Mr. Mamet stated that local governments would like to work with the commission about fiscal issues.


Mr. Mamet highlighted the report that the Colorado Municipal League conducted about the state of cities and counties in Colorado. The report focuses on four areas, he explained, including energy, economic development, transportation, and water and wastewater. He shared his thoughts about the long-term situation for cities and counties.

01:41 PM

Ms. Mary Zuchegno, representing the Special District Association of Colorado, provided information about these districts. She distributed a handout entitled "Legislator's Guide to Special Districts" (Attachment M). She shared her thoughts on tax collections for small businesses and individuals. Ms. Zuchegno also stated that the Special Districts Association is here to help the commission and provide information when it is needed.


01:43 PM

Mr. Chip Taylor, representing Colorado Counties, Inc. (CCI), explained that county governments are a unified voice with the other local government organizations. Mr. Taylor stated that local governments are facing challenging fiscal issues. He shared his thoughts on the county-state relationship. There are things that make counties distinct, he explained, and counties do not have the plenary power of the state, which means they must often have to look for specific statutory authorization for certain actions. Eminent domain is an example of this for counties, he stated.

Mr. Taylor explained that counties are also administrative arms of government, and serve local and urban locations. Counties are as diverse as the rest of the state with respect to revenue, population, and other issues. Mr. Taylor provided examples of functions of county governments, including property tax assessments, the administration of driver's licenses, and the collection of specific ownership taxes. Mr. Taylor also discussed other services that county governments provide.

01:51 PM

Mr. Taylor continued his presentation by providing background information about revenue sources for county governments. All counties, he explained, levy a property tax and many others levy sales taxes. Property taxes account for 50 percent of the revenue. He discussed Gallagher and the residential property tax assessment ratio. He also explained that county governments are subject to the same constitutional spending limits and that counties are subject to a separate non-constitutional statutory waiver limit on property taxes. Mr. Taylor also discussed the business personal property tax and the sales tax.

01:56 PM

Mr. Taylor continued, explaining that counties are concerned about long-term fiscal stability. He provided background information about property tax assessments and the current economic conditions. He explained that 46 counties have applied for spending limit and revenue limit waivers under TABOR. Waivers do not generate revenues, but instead allow county governments to collect revenue that is already coming in, he stated.

01:58 PM

Mr. Taylor provided background information about a recent session about counties in crisis. Refinancing debt and retirement benefits were among the issues examined at this conference. Mr. Taylor stated that he looks forward to working with the commission.

01:59 PM

The panel responded to questions from commission members about enterprise zones and the effectiveness of these designations.

02:02 PM

Ms. Zuchegno, Special District Association, responded to questions about the growth of special districts. She explained that population growth is increasing the number of special districts. It is difficult for local governments to increase taxes, and special districts are a way to levy a tax to pay for public services. Metro districts will form, she explained, due to phased-out developments, and often local governments consolidate as the areas grow.

02:07 PM

Mr. Mamet, Colorado Municipal League, responded to questions from the commission about revenue sharing. He shared his thoughts about a potential revenue sharing arrangement with the state. Mr. Taylor also shared his thoughts about revenue sharing and local tax issues.

02:10 PM

The panel continued responding to questions about zero-based budgeting. Mr. Taylor, CCI, responded that he did not know how many counties were using zero-based budgeting. Mr. Mamet also responded that county governments are looking at ways to develop indicators about services and government.

02:13 PM

Ms. Zuchegno responded to questions about the process for forming a special district. The panel also responded to questions about what constituents are telling local governments. Mr. Taylor shared his thoughts about how county clerks and other officials are more likely to hear complaints than praise. In addition, these officials hear from the public about car registration fees and other issues. Discussion ensued about the numbers of local government units and the numbers of special districts.

02:20 PM

The panel responded to questions about the costs of collecting sales taxes. Discussion ensued about the loss of revenue from the vendor fee, and the cost that is offset by county governments.

02:22 PM

Mr. Mamet shared his thoughts about increasing registration fees for vehicles. In addition, the panel responded to questions about improving public assistance for human service programs.

02:26 PM

The panel responded to questions about special district services and how these local governments are administered. Ms. Zuchegno provided background information about the organization and revenue collections of special districts. In addition, Ms. Zuchegno responded to questions about special district elections and the cost-effectiveness of administering them.

02:32 PM

The commission recessed until 2:45 p.m.

02:51 PM -- Think Tank Presentations

The commission reconvened.

02:52 PM -- Presentation by the Bell Policy Center

Mr. Wade Buchanan, representing the Bell Policy Center, distributed a presentation about Colorado's fiscal challenge (Attachment N), a report about Enterprise Zones (Attachment O), and an article by the center entitled "The Road to 2009" (Attachment P). He also explained that additional information is located at the Center's web page, located at

0709AttachmentN.pdf 0709AttachmentO.pdf


Mr. Buchanan stated that the objective is the long-term fiscal stability of the state. He provided background about his family's connection to Colorado, including his grandparents and parents. Mr. Buchanan also explained how his family responded to difficult economic times in Lamar, Colorado.

03:03 PM

Mr. Buchanan provided additional history and explained how citizens in Lamar responded to economic calamity in the 1930s. He stated that Lamar created a community college during this time and other public services. Mr. Buchanan explained that Lamar Community College serves 14 school districts and contributes $17 million to the local economy.

03:06 PM

Mr. Buchanan provided information about the big six areas of General Fund appropriations, including K-12 education, health care, higher education, corrections, etc. He also provided information about the four biggest public systems in Colorado. Mr. Buchanan explained the total state appropriations as a percentage of the state economy. Mr. Buchanan also provided information about how Colorado compares to other states in education, Medicaid, higher education, and highways. He also discussed how Colorado compares in revenues and expenditures as a percentage of total state income to other periods in its history.

03:12 PM

Mr. Buchanan shared his views about the future of Colorado. As a state, he said that we should examine how we are preparing the future workforce and how the state ensures basic health services to low-income and disabled citizens. He also shared his thoughts about public safety and transportation.

03:14 PM

Mr. Buchanan then discussed a study that was conducted called "Looking Forward: Colorado's Fiscal Prospects after Referendum C" by the Bell Policy Center, the Colorado Fiscal Policy Institute, and the Colorado Children's Campaign. He discussed the study's findings, TABOR, and future levels of public services. Mr. Buchanan provided information about General Fund revenues from FY 1999-00 to FY 2011-12, which includes projected estimates.

03:20 PM

Mr. Buchanan stated there are three fundamental solutions for the commission to consider, including: modernizing the revenue system; closing public systems, which could total over $1 billion; and muddling through the current fiscal situation. He said the ultimate question is whether current and future revenues allow the state to achieve its aspirations.

03:22 PM -- Presentation by the Independence Institute

Mr. Barry W. Poulson, representing the Independence Institute, began his presentation. He distributed a document that includes an outline and narrative (Attachment Q) and a handout about Constitutional and budget reforms (Attachment R). He stated that Colorado is not experiencing a fiscal crisis, and discussed California's history of tax and spending limits and the state's policy decisions in these policy areas. Mr. Poulson stated that the state's spending and expenditure limits are working in Colorado and the public supports keeping voter approval of tax increases.

0709AttachmentQ.pdf 0709AttachmentR.pdf

03:28 PM

He provided his views about TABOR, spending, and legislative and executive branch decisions. Mr. Poulson stated that Colorado should strengthen the expenditure and spending limits and repeal certain legislation. He also shared his thoughts about limiting fees. Mr. Poulson discussed requiring a supermajority vote of the legislature to propose new taxes, and shared his views about Amendment 23.

03:33 PM

Mr. Poulson discussed a rainy day fund and the constitutional limit on annualization of expenditures. He stated that Colorado should limit its overall debt. He expressed his views about unfunded liabilities and his support for including these liabilities in a total debt measurement. He said fundamental reforms of the Public Employees' Retirement Association (PERA) are needed. Mr. Poulson expressed his views about the General Assembly setting priorities, monitoring government programs, and conducting performance budgeting reviews.

03:40 PM

Mr. Poulson discussed what he described as the fatal flaws of budgeting. He also discussed Medicaid and the need to review possible fraud in the program. Mr. Poulson also expressed his thoughts about tax competition, funding for public schools, school choice, and school performance. He concluded his comments by discussing education.

03:49 PM -- Questions from the Commission

Mr. Buchanan and Mr. Poulson jointly responded to questions from the commission members about fiscal policy and other issues. Mr. Poulson responded to questions about short-term solutions to the fiscal situation. He discussed Medicaid reform and focusing on the long-term.

03:55 PM

Mr. Poulson responded to questions about whether the commission should exist, and he shared his thoughts about potential recommendations from the commission. He discussed formulas and population requirements in TABOR. Mr. Buchanan continued the discussion about the TABOR spending limits and how the limit keeps pace with economic growth. He also expressed his views about Amendment 23.

04:06 PM

The panel discussed state government growth and how it compares to the growth of the economy. Mr. Poulson and Mr. Buchanan shared their views about these issues. Discussion and questions ensued about state revenue growth, tax reform, and revenue stability.

04:13 PM

Commission members discussed the recent passage of a transparency act during the 2009 legislative session. Mr. Poulson responded to questions about transparency and the history of constitutional debt requirements in Colorado. Members of the commission discussed the history of debt provisions in Colorado's Constitution. The panel responded to additional questions about tax and spending limits before and after the passage of TABOR.

04:21 PM

The commission and panel continued with a discussion about income tax policy. Mr. Poulson provided background about his involvement in previous tax policy debates. Mr. Buchanan shared his thoughts about General Fund revenue growth. Discussion continued about the growth of government, as well as the growth of the gross domestic product (GDP) and the private economy. Mr. Buchanan stated that he supports the government growing at the rate of the economy.

04:33 PM

Mr. Buchanan stated that government expenditures have multiplier effects that have economic impacts. Mr. Poulson shared his thoughts about taking money out of the private sector, rainy day funds, and tax reform. Discussion concluded.

04:43 PM -- Closing Comments from Chair

Senator Heath thanked the members of the commission for their work and for being present. The next meeting, he stated, is scheduled for July 28 and 29, 2009. He explained that the agenda is still being finalized. The commission also discussed its August schedule.

04:52 PM

The commission adjourned.