Governor calls for $286M in budget cuts
By Ed Sealover
Denver Business Journal
Oct. 28, 2009
Medicaid providers will take another hit in the latest round of budget cuts unveiled by Gov. Bill Ritter Wednesday, but business leaders who have been asking him not to cut tax exemptions and credits can breathe a sigh of relief for now.
Ritter announced $286.2 million in additional budget reductions to close a shortfall that is the result of lower-than-expected tax revenues during the recession. Legislative Democrats praised the governor for not making further cuts to state services following $320 million in reductions announced in August, while Republican leaders criticized the proposal as being full of "gimmicks."
The biggest measure in the plan - a $145 million cut to higher-education funding - will not be felt this year as American Recovery and Reinvestment Act dollars will backfill the reduction 100 percent. But that spending means $145 million less is available for public colleges and universities next year, and Ritter's budget director, Todd Saliman, warned that schools will face cuts in the budget for the fiscal year that begins July 1.
Ritter said that while he is happy he did not have to make major cuts in the current budget, everything from ending tax credits to doing layoffs are on the table for the 2010-11 plan he'll deliver to the Joint Budget Committee on Nov. 6.
"We're all making sacrifices. That's one of the most important points of this discussion," the Democratic governor said. "We're making these tough choices with limited options."
In addition to the backfilled higher-education cuts, Ritter will use $45.1 million in stimulus funds to replace an equal amount of money he is cutting from the Department of Corrections. He also will eliminate severance tax grants to local governments and cut $14.2 million in Clean Energy Fund grant money for state residents to add alternative-energy or energy-efficiency devices to their homes, among other cuts.
One of those cuts is a 1 percent reduction to the Medicaid reimbursement rate for doctors and managed-care providers, effective Dec. 1. Following a 1.5 percent rate cut handed down during the crafting of this year's budget and a 2 percent reduction in the August budget-balancing plan, Medicaid providers are receiving 4.5 percent less than they did before July 1.
The cuts come even as Saliman predicted that the Medicaid caseload in Colorado will jump 45 percent from 2008 to 2011 due to the recession. As part of Wednesday's proposal, the state had to add another $28 million to the budget to cover Medicaid spending for the rest of the year.
Ritter said that state officials spoke to doctors before the cuts were announced and are confident that they understand Colorado's dire financial situation and will not drop patients because of the rate reduction.
"Our conversations to date with the providers have given us a comfort level that we're still OK," Ritter said. "This is not an easy conversation for us or them."
But Kathy White, program director for the Colorado Fiscal Policy Institute, warned the state is close to reaching the point where doctors dump Medicaid patients at a time when new patients already are having a hard time finding physicians to take them.
"I think we're getting close to the point where we're going to have problems with access," added Rep. Mark Ferrandino, D-Denver. "I don't think we're there yet but it definitely worries me."
Despite calls from organizations like the Bell Policy Center to consider cutting tax credits and exemptions to raise revenue, Ritter once again held off on doing that. Those cuts would not produce the kind of money that would make a significant difference in this year's budget, he said.
But the governor acknowledged that he has asked Saliman to examine each of the exemptions and determine whether the revenue a cut could bring the state would outweigh the current benefits of the tax breaks. He will announce his decision when he unveils the 2010-11 budget next week, he said.
"Our core value in this whole thing is to ensure we don't do anything that would make it difficult for us to grow out of this [recession]," Ritter said. "Certainly, tax credits and tax exemptions will be on the table for 2010-11."
The budget proposal, most of which will be enacted in the coming weeks by executive order and executive action, brought mixed reactions from legislators.
Democratic Joint Budget Committee members Sen. Abel Tapia of Pueblo and Rep. Jack Pommer of Boulder thanked the governor for not cutting more services at a time when people need them the most.
"I think you've done a great job of protecting human services and the safety net here," Pommer told Ritter at the JBC meeting.
But Senate Minority Leader Josh Penry, R-Grand Junction, criticized Ritter for using budget-balancing tricks rather than removing permanent expenses from the budget, especially with massive cuts expected in the next week-and-a-half. Among the things Penry said Ritter should have considered: eliminating the Department of Local Affairs, abolishing "silos of patronage" like the Governor's Energy Office, cutting non-essential jobs, and selling off state buildings and assets.
"While some of these reductions are overdue, most are gimmicks, half-measures or short-term fixes that only kick the can down the road," Penry, who is running to unseat Ritter, said in a news release.