Buchanan testifies against reinstatement of 6% limit

Wade Buchanan, president of the Bell, submitted testimony against a proposal to reinstate a 6 percent annual growth limit on General Fund appropriations.

Buchanan's central message against House Bill 1075 was that budgeting by formula does not work, and he pointed to almost 20 years of evidence of that with the Arveschoug-Bird formula, which was discarded in 2009.

His testimony said, in part:

"We have the unusual benefit of knowing exactly how this formula will work, because it was law in Colorado from 1991 through 2009, when the legislature repealed it. It was known as the Arveschoug-Bird formula, and our experience with it over nearly two decades provides ample evidence that this bill is a very bad idea.

"Over those years we went through several complete economic cycles, and in our judgment this rigid formula resulted in worse public policy outcomes at every stage of the cycle than would otherwise have been the case.

"In recessions and periods of slow growth, when state revenues lagged, it permanently ratcheted down spending on schools, colleges, health care and the other critical public systems. It did this because the growth formula was based on the previous year's spending, and if that spending didn't increase by the full 6 percent in a given year, the limit in all future years was permanently ratcheted downward by the difference.

"In periods of recovery, when revenues often showed their greatest growth, the formula placed an arbitrary brake on the ability of our public systems to recover to pre-recession levels. Again, we are talking about our schools and colleges and health care and courts, whose recovery therefore lagged significantly behind the rest of the economy. This was the case particularly in 2005-08, despite Referendum C, precisely because of this formula."

Click here to see full testimony.