Presentation on the State Budget
INTERIM COMMISSION TO STUDY FISCAL STABILITY
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09:09 AM -- Presentation on the State Budget
Senator Heath, Chair, called the committee to order and explained that over the next couple of days the commission would be discussing what kind of a state the commission would like to have. He said the day would begin with a presentation from the Governor's Office of State Planning and Budgeting.
09:15 AM -- Todd Saliman, representing the Governor's Office of State Planning and Budgeting, presented an overview of the Governor's FY 2009-10 Budget Balancing Plan that was released on August 18, 2009. He explained that the latest round of budget cuts stemmed from the June 22 revenue forecast. Following the forecast, on July 20, each state department submitted a budget cut proposal to the Governor and from those, the budget plan was created. Mr. Saliman distributed a copy of his presentation entitled Governor Bill Ritter's FY 2009-10 Budget Balancing Plan (Attachment A).
Mr. Saliman talked about the revenue forecasts and job losses that have occurred in 2009. He pointed out that home values are holding steady in Colorado. Mr. Saliman continued to walk through the handout. He explained that during the 2009 legislative session, a shortfall of $1.454 billion was addressed, however, there is still a $318 million shortfall in FY 2009-10 that will need to be addressed (the shortfall is explained on page 9 of the handout). Mr. Saliman explained the General Fund reductions on page 12 of the handout. Mr. Coors asked for an explanation of the cuts to higher education. Mr. Saliman directed the committee to page 29 of the handout that explains that the higher education budget is being cut by $80.9 million that will be backfilled with federal stimulus funding and are contingent upon approval of Colorado's American Recovery and Reinvestment Act of 2009, State Fiscal Stabilization Fund, Maintenance-of-Effort Waiver for FY 2009-10. There was a discussion about the impact this will have on the FY 2010-11 budget.
Ms. Boigon asked Mr. Saliman to explain his earlier comment regarding property taxes and home values. She talked about a lag in property taxes because they are only calculated every two years. Mr. Saliman continued his presentation and discussed the reductions in cash funds on page 13. He talked about the programs that the Governor tried to protect when creating his proposal that are listed on pages 14 through 18.
Mr. Saliman began talking about the each departments' individual reductions that begin on page 20 of the handout, including the Departments of Agriculture, Corrections, Health Care Policy and Financing, Human Services, Local Affairs, Military and Veterans Affairs, Natural Resources, Personnel and Administration and Statewide Common Policies, Public Health and Environment, and Public Safety. There was a discussion about the Amendment 35 funds that come from tobacco taxes and Senate Bill 09-232 funds. Mr. Saliman concluded his presentation with an explanation of the FY 2010-11 balancing process provided on page 51 of the handout.
Ms. Lynne asked a question regarding the number of elderly that make up the Medicaid Caseload Growth chart on page 7. Mr. Saliman explained that the largest growth is from children and adults while the elderly and the disabled has stayed mostly stable. Mr. Saliman was asked to talk about the furloughs that are built in the budget. He said the state is taking four furlough days in FY 2009-10. However, additional budget measures (not necessarily more furloughs) will be needed to implement the remaining personal services reduction. Representative Gerou said she is concerned about the General Fund Components History chart on page five and the upswing in individual income taxes.
Natalie Mullis, Chief Economist, Legislative Council Staff, responded to her question and explained that Legislative Council does indicate that in FY 2010-11 and FY 2011-12 the individual tax will increase based on capital gains returning within that time period. Representative Gerou talked about the overall FTE changes and how many of them are permanent reductions versus a one-time change. Mr. Saliman stated that all of the changes to FTE are permanent. She also asked about the hiring freeze to which Mr. Saliman explained that they decided to do permanent removal of positions rather than just freezing them. Mr. Saliman explained that there are certain positions that need to be replaced due to public safety and other reasons. Representative Gerou asked about the reimbursement changes to the Colorado Indigent Care Program and whether hospitals will be taking care of that cost.
Ms. Boigon asked about the reductions to the Child Welfare Block on page 31 of the handout. Mr. Saliman explained that in general they attempted to cut programs that were not federally matched so the programs would not lose twice as much money as they would if they were to just cut the general funded programs.
Senator Brophy stated that the commission is charged with the long term fiscal stability of the state and asked what Mr. Saliman thinks should be looked at in regards to long term stability. Mr. Saliman stated that he believes a key is to look at:
- programs that attract new and cutting edge businesses to the state;
- TABOR, since the Referendum C suspension ends in FY 2009-10; and
- overall, what the commission wants the state to look like and what would be needed to achieve that vision.
Senator Brophy expanded on his point regarding TABOR returning and asked if Mr. Saliman saw a way to balance spending limits while keeping the budget balanced. There was a discussion about the balanced budget requirement and the fact that the state cannot incur debt. Ms. Cooke asked what the projected total budget for FY 2009-10 is after the cuts. Mr. Saliman stated that the total budget is about $18.7 billion, of which $6.9 billion are general funds.
Representative Court pointed out the one time money provided by the federal government that will not be there in the long run. She also talked about the Amendment 35 funds that were talked about earlier. Representative Court asked at what point providers will stop offering services to Medicaid patients due to the cuts in provider fees.