Time:12:05 PM to 01:17 PM
Place:LSB A
This Meeting was called to order by
Representative Judd
This Report was prepared by
Ron Kirk
Kerr A.
King K.
X = Present, E = Excused, A = Absent, * = Present after roll call
Bills Addressed: Action Taken:
Presentation by Treasury
Presentation by OSPB
Oversight Presentation by the Treasury
Oversight Presentation by OSPB

12:05 PM -- Presentation by Ms. Cary Kennedy, Colorado State Treasurer

Representative Judd, Chairman, called the meeting to order and welcomed the State Treasurer to the Joint Hearing of the House and Senate Finance Committees. The Treasurer's Office distributed a department overview (Attachment A) and an in-office General Fund overview (Attachment B) to the committees.

09JointFin0128AttachA.pdf 09JointFin0128AttachB.pdf

12:11 PM -- Ms. Cary Kennedy, State Treasurer, introduced the Treasury staff, described the Treasury Divisions in the Treasury Office, and gave the committee a broad overview of the office's functions. In the Operations Division, investment, accounting, and cash management functions are implemented. The Unclaimed Property Division is cash funded and total collections amounted to $66.9 million in FY 2007-08, up from $51.7 million in the prior year.

Ms. Kennedy commented on the state's investments. The market value of the state's five largest funds currently under management are the following:

T-Cash/T-Pool - $5.7 billion with a 3.4 percent yield;
Public School Fund - $591.3 million with a 5.1 percent yield;
State Education Fund - $474.2 million with a 3.6 percent yield;
Unclaimed Property Tourism Promotion Trust Fund - $67.3 million with a 4.7 percent yield; and
Major Medical Insurance Fund - $124.7 million with a 4.7 percent yield.

Ms. Kennedy reported that the total interest earnings for FY 2007-08 for all funds was $286.0 million. She continued by discussing the state's accounting system. Accounts for all cash received by the state ensures liquidity to meet daily payments. In addition, the state accounted for nearly 493,000 checks that totaled $640.5 million and $20.4 billion in electronic deposits during FY 2007-08. The State Treasury was also responsible for distributing $1.1 billion in Surety and Performance bonds.

12:20 PM -- Ms. Kennedy commented on state distributions to the Highway User Tax Fund (HUTF). For FY 2007-08, the State Treasury made distributions to 62 counties and 270 incorporated municipalities. The distribution to the Colorado Department of Transportation (CDOT) was $840.5 million, down from $914 million in the prior year. The Department of Public Safety received $86.8 million, the Department of Revenue received $13.5 million; counties received $163.7 million; and cities received $106.7 million. Federal mineral lease distributions totaled $153.6 million.

Ms. Kennedy reported that the Cash Division issued series 2008A Revenue Anticipation Notes for a total amount of about $350 million. These notes assist the Treasury in managing cash flows. In regard to this years' note issues, the interest cost was 1.68 percent. The notes received the highest possible ratings, F-1 from Fitch Ratings, and SP-1 from Standard & Poor's.

12:34 PM - Ms. Kennedy continued the presentation by discussing Colorado's homestead exemption and the property tax deferral program. The payments for the senior homestead exemption in FY 2007-08 were $78.9 million and are expected to grow to over $90 million by FY 2009-10. For the Property Tax Deferral Program, there were 379 new applications for FY 2007-08 while the total number of participants is 480. The total amount lent to elderly homeowners in FY 2007-08 was $818,000, up from $545,000 in the prior year. Total loans outstanding as of the close of FY 2007-08 were $4.8 million.

Ms. Kennedy continued by discussing the Interest-Free School Loan Program and the Bond Intercept Program. The Bond Intercept Program ensures full and timely payment of school debt. The number of bond issues is 447 amounting to $7.3 billion.

Ms. Kennedy closed by discussing the State Treasurer's initiatives for 2008. The State Treasury's Transparency program allows a "one-stop" shop website for information on how tax dollars are used. Another initiative, the State Taxpayer Accountability Report (STAR), is a report that presents state revenue and expenditures in an easy to understand format. These initiatives are making state government more transparent for everyone in Colorado.

12:45 PM -- Presentation by Mr. Todd Saliman, Office of State Planning and Budgeting (OSPB)

12:46 PM -- Mr. Todd Saliman, Office of State Planning and Budgeting (OSPB), distributed a handout on the Governor's budget balancing plan (Attachment C) and began by giving the committee a broad overview of the office's functions. Mr. Saliman noted that the primary role of the office is to provide the Governor with timely and complete information and recommendations so that he can make public policy decisions. He continued by saying that the office has eight primary functions:


--- developing reliable revenue estimates;
--- developing a budget;
--- developing proposals for new legislation;
--- tracking legislation and monitoring the legislative budget process;
--- advocating for the Governor's priorities;
--- monitoring budget implementation;
--- providing accurate public information; and
--- operating efficiently as an office.

12:59 PM

Mr. Saliman continued by discussing the handout on Governor Ritter's budget balancing plan for FY 2009-10 and some changes to the current year's budget. The recommendation includes $631.9 million of General Fund reductions, transfers and diversions, and reserve changes. Mr. Saliman continued by saying that the top priority is protecting life-safety and public health for people in the state.

The committee briefly discussed some of the reductions that the legislature enacted during the last economic downturn in 2001 and 2002. Mr. Saliman responded by saying that in this downturn, the Governor would like to protect funding for higher education to the extent possible. However, he noted that the proposed budget reductions will cut deeply into many vital state services.

Mr. Saliman continued by saying that the proposed reductions may also increase the resolve of the legislature to seek common ground on addressing the constitutional constraints that affect the state's budget. He noted that while TABOR reform will not solve the immediate problem, some changes may make it possible for the state to continue providing essential state services as the economy recovers.

Mr. Saliman said that the Governor's plan for FY 2009-10 contains $1,026.7 million in proposals to address next year's General Fund shortfall. He continued by discussing some General Fund expenditure changes saying that statewide furloughs and other adjustments may be included in the mix of reductions. For example, the Governor's plan proposes to implement 5 state employee furlough days in the FY 2009-10 budget that would save the state $7.6 million. In regard to General Fund obligations, the Governor's plan proposes to lower Fire and Police Pension Association (FPPA) payments by $34.8 million in FY 2009-10. Mr. Saliman also touched upon modifications to the senior homestead exemption noting that the impact to the General Fund may exceed $90 million in FY 2009-10. The General Assembly has the ability to change the benefit in this constitutional exemption.

01:15 PM

Mr. Saliman closed by saying that the office and the Governor look forward to working with the legislature on the budget balancing plan.

01:17 PM