Colorado state budget researcher: ‘We’re headed off a cliff’

There is nowhere near enough money for Colorado to continue to do the business of the state as things stand, according to an influential team of researchers at the University of Denver. State lawmakers will either have to raise more money or cut away the kind of programs and services most Americans view as measures of the baseline quality of life achieved over centuries in the world’s wealthiest nation.

“We’re hoping this information can get out to build awareness of the cliff we’re speeding toward,” said Charlie Brown, director of the Center for Colorado’s Economic Future at DU on Wednesday.

Targeting education

In a roughly 45 minute Power Point presentation, Brown and his colleagues detailed the dire straits the state is sailing into as the slew of constitutional tax-limits in place here led by the Taxpayer Bill of Rights slowly strangle the government, even as the recession releases its grip and revenues begin again to climb.

A little more than a decade from now, Brown said, the state will face a $3.6 billion shortfall. The state will have only enough money to pay for three big ticket services: education, health care and incarceration.

“There will be no tax revenue for public colleges and universities, no money for the state court system, nothing for child protection services, nothing for youth corrections, nothing for state crime labs and nothing for other core services…”

Brown said that education funding will suffer most. The state will see successive governors repeating variations of the kind of speeches Governor John Hickenlooper gave this year, when he proposed a $375 million slash in the education budget, explaining that “that’s where the money is.” Brown said K-12 education funding will be picked over and parceled out and repeatedly thinned. He said pressure will mount for higher education in the state to be privatized.

Hard sell

The Center has so far only released a summary of its “phase two” study of Colorado’s budget prospects. The full report will likely become available in the next two months or so and will be posted online. The first phase of the study was released earlier in the year. The Center was tapped in 2010 by state lawmakers staring at ledgers soaked in recession red after a year of dramatic cuts in program funding. The Center’s phase one work, which was by design only descriptive, has been lauded as clear-eyed, nonpartisan and comprehensive.

Phase two of the research offers strategies to address the budget crisis and so is sure to be more controversial. Yet the Center has tried mightily to avoid partisan pitfalls by offering two scenarios to balance the books. The first outlines the cuts in programs it would take to close the yawning shortfalls that will increasingly plague the state in coming years. The second scenario presents a program of tax increases to bridge the gap.

“It’s a hard sell,” Brown soberly told the smattering of state reporters gathered in a DU lecture room. “It’s very tough. There’s no magic pill…. You have to dramatically cut services or increase revenues. You could do a combination but, I can tell you, it’s one thing to say ‘We’re cutting services.’ It’s another thing to say ‘We’re increasing taxes.’ No one wants to get up and say ‘We’re going to raise your taxes and provide you less services.’

Cuts would be centered on education but would also come to eliminate programs or whole departments. On the chopping block mainly would be the departments of agriculture, higher education, local affairs, military and veterans affairs, natural resources, personnel and administration, public health, public safety, regulatory agencies and revenue.

The coming budget gaps cannot be addressed “by mere belt tightening,” the researchers wrote in their summary of findings. “If state government were a tree, it would mean lopping off entire branches.

“[A] wholesale rethinking of government would be necessary. Should tax dollars continue to subsidize in-state tuition at state colleges and universities? Can we still afford to supervise and rehabilitate youthful offenders? What about the state psychiatric hospital[s]…? What about state enforcement of disease control and clean water regulations?”

Cutting or taxing

The scenario presented by the researchers to increase revenue hinged mostly on a new graduated income tax, extending sales taxes to personal services outside of health care like those provided by divorce attorneys, and rebalancing the local-state school funding structure by placing a greater share on local districts and instituting a statewide uniform mill levy.

Brown said the proposed tax increases, although substantial, are sufficiently restrained as to keep Colorado “competitive” with the tax regimes in place in surrounding states.

He conceded, however, that the tax increases are illegal as long as the Taxpayer Bill of Rights remains in place or unmodified, which is a serious impediment to raising revenue.

It’s difficult enough, of course, to find a politician anywhere in the country willing to make the case for tax hikes. In Colorado that argument is hobbled by the need to alter the constitution or submit ballot referendums for each of the tax increases or modifications proposed by the Center researchers.

The Center’s Steve Fisher said that bringing the public into the discussion is essential.

“Our educational role is big. We’re not advocating one way or the other. We plan to do a lot of public education.”

Brown said he alone gave more than 30 presentations on the Center’s phase one findings and expects to do the same kind of tour for phase two. The Center’s website will include the narrated Power Point presentation given to reporters Wednesday. It also includes an interactive “Bridge the Gap” feature where readers can try to balance the budget themselves.

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