Faced with a $1 billion deficit over the next 18 months, Gov. Bill Ritter Tuesday proposed closing two prisons, slashing spending on education and furloughing state workers, who also wouldn't get a pay increase next year.
And the state would eliminate a property tax break for seniors for the next three years.
Ritter presented all those ideas for balancing the state budget in the next fiscal year, which begins in July.
"These reductions, along with the latest unemployment figures released this morning, should leave no doubt in anyone's mind about the seriousness of the problems we face and of the collective effort it will take to chart a Colorado way forward," Ritter said in a statement.
But the governor's proposed cuts might not have to be so deep. A federal economic stimulus package making its way through Congress could send as much as $1 billion to Colorado over the next two years just to help relieve pressure on the budget. Another $1.9 billion or so could help rebuild the state's highways, electric grid and railways, among other projects.
Ritter’s proposed cuts still must be approved by lawmakers, who may have different ideas about how to balance the budget. And all the cuts may have to be rethought after a March economic forecast that could show that the budget hole has grown larger.
"It's a dramatic situation that we're faced with. The question mark," said Todd Saliman, Ritter's budget director, "is whether some of these proposals can be modified once we know what the federal stimulus package looks like."
The state faces a more than $600 million shortfall in the current budget year that ends in June and a $385 million hole the next year. Ritter's plan for the current's year's shortfall involves cutting expenses, using cash funds and reserves and trying to push as much of the hole as possible into the next year.
But the cuts for the year beginning in July would be far more draconian.
"There will be pain, and it will be felt by many citizens in the state who rely on state services," Saliman said in a briefing before the legislature's Joint Budget Committee.
The plan calls for closing the 192-bed Rifle Correctional Center in Garfield County and the 210-bed Colorado Women's Correctional Center in Canon City, saving the state $11.2 million. In addition, the state would sell a 1,000-acre ranch owned by the corrections department, netting about $2.7 million.
Inmates from the closed facilities would be absorbed into other prisons, officials said.
And the state would delay the opening of the Colorado State Penententiary II in Canon City for four months, saving $14.6 million. Meanwhile, an expansion of the Denver Reception Diagnostic Center would be delayed for a year, saving $2.7 million. The ax would fall on services for the mentally disabled as well, with a 20-bed hospital at the Colorado Mental Health Institute at Pueblo being shuttered in November, saving $4.8 million.
The 20-bed Therapeutic Child Care Facility in Fort Logan also would be closed in July, saving $2.1 million. Officials said that patients from Pueblo would go to area hospitals, while patients at Fort Morgan would be placed in community therapeutic treatment programs.
While some 500 state workers would be affected by the closures of facilities and other cuts, officials said they were hopeful all of the employees could fill positions elsewhere.
Cutting the senior homestead exemption, which offers a property tax break to Coloradans 65 and over, would save the state close to $300 million over the next three years.
Ritter’s plan also calls for furloughing state workers for five days next year, saving the state $15 million total, about $7.6 million from the general fund. The governor also called for furloughing employees for up to three days in the current year, if needed.
Meanwhile, state workers would get neither performance nor cost-of-living pay increased, saving nearly $63.1 million, including $34.3 million from the general fund.
Other cuts include:
- A $126 million bite out of public school funding, which would mean reducing charter school construction projects and full-day kindergarten expansions.
- Reducing spending for colleges and universities by another $70 million on top of the $30 million decrease in the current year.
- These combined reductions would would lower spending on higher education to 2007 levels of about $750 million.
- Cutting planned increases in fees paid to doctors and hospitals who take Medicaid patients, saving the state some $150 million, $70 million of which would come from the state's general fund.
- Suspending outreach efforts to enroll more kids in the Children's Basic Health Plan, or CHP+, saving $19.3 million, of which $3.1 million comes from the general fund.
Saliman said Ritter's office crafted its budget cuts assuming that the state would get at least $151 million more from the federal government for Medicaid costs. The state pays half the cost of Medicaid, while the federal government pays the other half.
But as in the last recession during the early part of the decade, Congress is proposing to increase the federal government's share of the Medicaid burden, at least for a few years. Doing so would take pressure off the state's general fund.
Sen. Abel Tapia, D-Pueblo, like some of his colleagues, said he was wary of hoping the federal government would bail out the state from its financial troubles.
"I'm going to wait until the check comes until I get real excited," Tapia said.
The governor's plan also has one money-generating proposal: a $10 to $15 fee for background checks on would-be gun owners. Officials said there had been a fee in previous years for the checks, but it had been eliminated.
Republicans responded to Ritter's proposals by suggesting that it was the free-wheeling spending of Demcorats the last two years that had put the state in the red.
"The budget news from the governor was sobering, but it was not a surprise," Senate Minority Leader Josh Penry, R-Grand Junction, said. "The dark clouds of recession have been gathering for more than a year, and the leaders of this state have done very little to position us to weather the storm.”
Sen. Ted Harvey, R-Highlands Ranch, said that despite Democratic bashing of the Taxpayers' Bill of Rights, the constitutional provision that limits state spending and growth, TABOR had kept thebudget shortfall from being worse. Without it, he said, Colorado would have spent itself into a much worse situation.
"Because of TABOR, we had to hold ourselves back," Harvey said."I just want to say, I think TABOR has been a good thing."
But that comment prompted a response from Sen. Moe Keller, D-Wheat Ridge, the chairwoman of the Joint Budget Committee, who said TABOR had been far too restrictive.
"We don't have the money to open a prison," Keller said, referring to the delayed prison in Canon City. "That's pretty serious stuff."