More Cuts for Colorado

The Colorado Center on Law and Policy (CCLP) and its project, the Colorado Fiscal Policy Institute (COFPI), released the following statement in response to the proposed $286.2 million budget reductions announced in today’s Joint Budget Committee hearing. The Governor’s proposal includes $145 million in reductions to higher education, which is expected to be completely backfilled with federal recovery dollars. In addition to several one-time measures and cash fund transfers, the Governor’s proposal also includes an additional four days where state services will be unavailable bringing the total to eight days ($27.2 million), an additional one percent Medicaid provider rate cut ($3.1 million), and eliminates county contingency funds for half of a year ($2.8 million) which is assistance from the state to counties to help with high numbers of families trying to access social safety net programs. The bulk of these budget actions are one-time temporary measures, and/or rely on federal recovery dollars to prop up state services.

The following statement is from COFPI Program Director Kathy White:

“The latest round of budget cuts is another stark reminder that Colorado needs a new approach to escape our perpetual budget crisis. We’ve been saying for months that we cannot simply cut our way back to prosperity, nor can we continue relying on one-time measures. That’s as true today as it was a year ago. And unsurprisingly, the state’s fiscal landscape is worse now than it was then.

Why? Because we don’t have a spending problem, we have a revenue problem. There is simply not enough state revenue to support and sustain the vital services that Colorado families and businesses rely on every day.

Today’s announcement included numerous one-time measures, as well as cuts to higher education, health care services, some social services, and various state services—furlough is just a murkier name for cut. To say these reductions and transfers won’t impact families and businesses is to ignore the very real impacts that state services have on the lives of Coloradans. For instance, why is the state continuing to reduce payments to health care providers, which contributes to fewer providers willing to accept Medicaid patients, when the state is seeing a 45 percent increase in Medicaid caseloads? And why has the state made a permanent cumulative provider rate cut of 4.5 percent at a time of astronomical increases in health care costs?

Since so much of this plan relies on temporary measures and federal stimulus dollars, the true impact won’t be realized until we see the Governor’s FY 2010-2011 budget in coming days. And while the cut to higher education is being backfilled this year by federal money, it immediately puts us in a deeper hole for next year.

Who will be affected then? What’s next? Laid off teachers and troopers? More crowded classrooms? Closing down parks and reservoirs? Raising tuition? Shutting down prisons?

Cutting state services by some 10 percent has a substantial cost to families and businesses. Schools and colleges will cost more. Roads and bridges deteriorate. Health care costs rise. And the safety net catches fewer families struggling to make ends meet.

This is not alarmist, this is the reality. Just as in August, today’s news shows that there are simply no more places to cut that won’t have severe consequences. It also shows that federal recovery dollars are indeed a lifeline for our state. Imagine where we’d be right now without that funding.

It’s long past time to consider both short-term revenue options and long-term revenue solutions, so that these sacrifices are not just being made by Colorado families and vulnerable populations. We think all options should be on the table, and that a balanced revenue solution should be part of the equation.

We cannot get out of this crisis by continually cutting vital services or relying on one-time actions. State services help fuel economic growth, business expansion, and job creation, all of which is at risk because of Colorado’s perpetual budget crisis. Until lawmakers address the state’s tax system in a comprehensive way, and work to modernize its broken revenue system, Colorado will continue to face these budget problems and Coloradans will continue suffering the true cost of cuts. A strong 21st Century economy demands a modern tax system that is adequate, equitable, and sustainable.”

Congress Needs a Little Perspective on ACORN

This is one of an occasional series of posts from CCLP's Special Counsel Ed Kahn, on topics ranging from public policy to the economy to politics to the media. Enjoy:

Recently, both the Senate and the House passed legislation to bar ACORN from receiving federal grants. ACORN has received few million dollars in federal funding over some years to counsel homeowners in foreclosure, and for other work considered socially desirable in recent years. Now, because in two offices employees suggested that a supposed pimp and a supposed prostitute could try to evade taxes (after they were rejected in numerous other ACORN offices), ACORN has lost all funding. No tax monies were lost. No one filed a false tax return. No one tried to evade the law in their own behalf.

Compare that to another case where the harm was a bit more severe. UBS, a Swiss owned bank and investment banker, hosted tens of thousands of accounts of US citizens who may have used them to evade taxes. UBS opposed disclosing the names of American accountholders to federal law enforcement authorities and the Internal Revenue Service. Eventually, a settlement has been reached whereby an estimated 6,500 names, out of tens of thousands, will be disclosed to US taxing authorities. Most of those names are of apparently very wealthy people and presumably they used the secret Swiss banks accounts to evade millions and perhaps billions of dollars of taxes over many years.

Have you heard a word out of Congress condemning such tax evasion? Has anyone proposed banning UBS from receiving federal monies or other governmental assistance? Does widespread tax evasion concern any of the so-called populists on the streets or their projections on cable TV?

If not, why not?

--Ed Kahn, CCLP Special Counsel

Issue Brief: September 2009 Revenue Projections

On September 21, the Legislative Council economics staff released their quarterly analysis of the Colorado economy and the revenue projections anticipated for the state. The news was grim yet again. Fiscal year 2009-2010 general fund revenues for the state are projected to be an additional $240.4 million below estimates from June. The FY 2009-2010 general fund budget is now short $560.7 million. This $560.7 million shortfall represents an 8.44% general fund revenue gap from the budget that was adopted and signed into law in May.

Read the complete issue brief here.