Gov. Ritter lays out plan to balance the budget

Gov. Bill Ritter presented his plan to balance the fiscal year 2009-10 budget today before a packed house at a meeting of the Joint Budget Committee. The overall plan totals $320 million and includes $261.2 million in cuts to the General Fund, $39.8 million in transfers from cash funds and $19 million in other revenues and reserve changes.

In developing his plan, Gov. Ritter said he tried to shield the most vulnerable Coloradans and safety-net services. He acknowledged that the magnitude of the budget gap forced him to make cuts that he didn't like and that would cause pain for some people.

"We commend Gov. Ritter for taking a thoughtful and strategic approach to balancing the budget," said Wade Buchanan, president of the Bell Policy Center. "When you consider the size of the budget gap and the services that were protected, I think this is a very solid plan."

The Bell Policy Center released a set of Budget Principles earlier this month that called on state policymakers to minimize the effects of cutbacks on the neediest among us, do the least harm to long-term reforms in health care, education and prison recidivism and maintain investments that expand opportunities for kids and working families. To a large extent this plan is consistent with our principles.

The governor's plan includes cutting $81 million from higher education but replacing it with federal stimulus funds, provided Colorado receives the necessary waiver from the federal government. The state will also cut $115 million from the health care budget but will offset that with $52.5 million in federal Medicaid matching funds.

There are $25 million in cuts to the corrections budget, with most savings coming through an effort to accelerate parole for eligible offenders and move more eligible offenders from prison into supervised parole. The governor's plan protected funding for efforts to reduce recidivism, which over the long term will constrain the growth in corrections spending.

Because of the constitutional requirements under Amendment 23, the K-12 education budget was not reduced. However, $110 million that was budgeted during the session for K-12 from the State Education Fund (SEF) is contingent upon having enough revenue in January 2010. It is likely to be returned to the SEF.

Enrollment in the CHP+ was not frozen, and child welfare, mental health and services for the developmentally disabled services were mostly protected. In addition, funding for counties to process food stamps, TANF and Medicaid was protected.

However, there are a number cuts that could limit opportunity for low-income Coloradans. The health care budget includes a 1.5 percent cut in provider rates under Medicaid. When combined with the 2.0 percent cut approved during the session, that results in a 3.5 percent reduction. There are also cuts in provider pharmacy reimbursement rates, as well as reimbursements for private hospitals for uncompensated care under the Colorado Indigent Care Program (CICP).

Without adequate reimbursements, many Medicaid patients may not find health care providers willing to serve them.

There is a 2.5 percent cut in provider rates for Medicaid Developmental Disabilities Waiver programs that could make it more difficult for people to get services. The state plans to cut 59 beds at the Colorado Mental Health Institute at Fort Logan and 32 beds at the nursing facility at Grand Junction Regional Center, with the goal of finding appropriate places for those people in their communities.

The Aid to Needy and Disabled, State Only Program will be suspended, eliminating interim financial assistance to people who are waiting to see if they are eligible to receive federal Supplemental Security Income (SSI) benefits. These are some of the poorest Coloradans who are either elderly or disabled.

While today's plan dealt only with budget cuts, there is a need to examine state revenues as well. In addressing the FY 2010-11 budget, Gov. Ritter said that "everything is on the table" and that options other than budget reductions will be considered.

We need to take a balanced approach to balancing our budget. Over the short term the legislature and governor should thoroughly review the costs and benefits of current tax exemptions and credits. We cannot afford to spend money on tax credits that do not produce results or benefit only narrow special interests.

Long term, the lack of revenue is the primary factor constraining state services. Even after the economy recovers, state General Fund revenues as a percent of Colorado's economy are projected to drop to levels not seen in recent history.

We need to thoroughly assess our current revenue system and ensure that our financial resources are sufficient to meet the needs of a 21st century state.