Date: 10/14/2009
Final
Commission Discussion - Capital Construction
INTERIM COMMISSION TO STUDY FISCAL STABILITY
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11:59 AM -- Commission Discussion - Capital Construction
Representative Riesberg, Chair of the Capital Development Committee and Kori Donaldson, Legislative Council Staff presented some of the long-term needs for capital construction. Ms. Donaldson testified that the current replacement value of state buildings is $7.6 billion (Attachment E), and that approximately $76 million is required for controlled maintenance, or 1 percent of the replacement value of the state's buildings. In the last fiscal year, the state spent only $24 million, or one third of one percent on controlled maintenance. The annual Certificates of Participation (COP - Lease Purchase) payments are $36 million. These are for a group of buildings on the Anschutz medical campus, the Colorado State Penitentiary II, and for other higher education projects funded from Federal Mineral Lease revenues. A summary of Ms. Donaldson's presentation is included as Attachment F .
Ms. Donaldson shared a 5 year history of appropriations to show that construction projects have been split equally between state departments and higher education.
Senator Morse added that these funding amounts have not really been from the General Fund, rather from the excess General Fund that would have reverted to other places. Representative Court added that no amount of our budgeted General Fund appropriations are provided to capital construction, these appropriations are exclusively for operations.
Ms. Donaldson supplied information comparing the amount requested for construction in FY 2010-11 ($1.28 billion) and the amount provided via appropriations ($4.3 million), leaving a shortfall of $1.24 billion. Ms. Donaldson then shared the four-year estimate of revenue, as compared to the state-funded capital need.
12:15 PM
Larry Friedberg, the State Architect, testified concerning the maintenance needs of the state. He provided the commission with the executive summary of the state Architect's Annual Report (Attachment F) and total gross square feet and current replacement value of state owned buildings as of January 2009 (Attachment G). Mr. Friedberg repeated that the current replacement value of the state's buildings built with General Funds is $7.6 billion. There are also buildings that are cash funded and the maintenance for these buildings is paid for with revenue sources other than the General Fund. The replacement value of these cash-funded buildings is $3.9 billion.
Commissioner Sean Conway asked where the growth has been in the inventory. Mr. Friedberg answered that this growth has occurred across the board, among all state agencies and higher education; however, this growth does not include transportation projects.
Mr. Friedberg continued that a target of 1 percent of replacement value is needed to maintain the current inventory, but that between 1 percent and 3 percent additional funding is desired to improve these buildings and make desired renovations.
12:29 PM
Representative Gerou asked about the emergency fund of $2 million, noting that with less controlled maintenance funds, emergency funds become even more in demand. Mr. Friedberg responded that as money for controlled maintenance dries up, the state ends up with critical emergency needs. The Capital Development Committee (CDC) deals with these issues regularly.
Senator Heath summarized that the state would need to include $112 million in addition to the most recent funding in order to meet current need, and that to provide ideal funding, the state should target $340 million. This amount would optimize maintenance needs and provide money for needed improvements.
Representative Riesberg testified that an additional $13 million is needed to renovate our capitol building dome. This brings the total ideal funding up $353 million.
Mr. Conway asked if there was a recommended stable revenue source to address these needs? Representative Reisberg answered that a General Fund set-aside is one possible recommendation. Mr. Friedberg added that a line item in the budget for controlled maintenance is something other states provide. This kind of base budgeting would go far toward supporting current buildings and enabling new construction.
12:46 PM
Commission Recessed