On November 1, Gov. Polis took a major step in Colorado’s yearly process of prioritizing our state’s limited budgetary resources. In submitting his proposed budget to the Joint Budget Committee (JBC), Gov. Polis ended a months-long process of agencies prioritizing programs, making cuts to existing budgets, and submitting requests for additional funding. The process now transitions over to JBC, which will spend many more months making difficult choices about what to fund and what not to fund.

The governor’s budget is notable for two major reasons: It reflects the governor’s priorities for the state and is a constant reminder of the limits of prioritization within a budget that has not grown to meet our state’s needs. As anyone who has read the Bell Policy Center’s budget primer knows, we have a long way to go before Colorado fully enacts a budget for Fiscal Year 2020-2021. The governor’s budget is one of the most important steps within the budget process.

What’s in the Governor’s Budget Proposal?

Perhaps unsurprising to people familiar with Gov. Polis, early childhood policy took centerstage, with government savings, transportation, and health care not far behind as state priorities. The amount of General Fund revenue — made up of income taxes, corporate taxes, sales taxes, and some excise taxes — grew over the last year by 2.9 percent, which is slightly higher than the inflation rate of 2.67 percent, but significantly lower than last year’s 6.2 percent increase. This provides little room for additional programs.

One of those new programs is paid family leave for state employees. Gov. Polis plans to provide all state employees with eight weeks of paid family leave. As the Bell has previously noted, paid family leave provides financial security for our families and communities. It has been shown to increase workforce attachment, lower turnover and absenteeism rates, improve health, and decrease reliance on public assistance programs. The governor’s proposal is an important first step, one that can serve as a base for passing a paid family and medical leave program for the thousands of private sector workers in Colorado who do not have it through their employer.

While the governor’s budget included priorities related to air quality and state parks and other crucial state programs, the key areas within the Bell’s focus included:

Early Childhood Education

• $27.6 million to expand the Colorado Preschool Program to expand access to high-quality preschool for 6,000 more children
• New scholarship and loan forgiveness programs for early childhood educators to encourage more individuals to enter the early childhood workforce
• $10 million in new investments to improve child care quality and facilities across the state

K-12 Education

• $40 million to pay down our IOU — known as the budget stabilization factor — on K-12 funding

Higher Education

• $26 million more allocated to higher education, so as not to increase tuition more than 3 percent

Transportation

• $605 million in new funding for transportation

Continued Limits of Prioritization

The governor’s budget lays out very admirable goals: Increased access to early childhood, stabilizing the costs of higher education, fixing our roads, or digging us our of our k-12 funding hole. Unfortunately, even with these strong priorities, the governor’s budget is notable for the limitations current fiscal constraints place on our ability to accomplish these goals.

The governor should be commended for exercising fiscal responsibility and finding more than $283 million in savings from reducing underutilized resources, consolidating or streamlining programs for budget efficiency, and reallocating funding to more appropriate funding sources. Colorado’s needs caused by persistent underfunding and population growth sadly still far outpace these savings.

While not directly stated in the governor’s budget, Gov. Polis’ proposals show the limits of prioritization:

• Early childhood: At a time with child care is one of the largest financial burdens on Colorado families, the Governor’s expansion of the Colorado Preschool Program still leaves half of all eligible families uncovered.

• K-12 funding: The governor’s budget reduces our IOU to our schools, but still leaves Colorado $550 million short of the promise we made to our children with the passage of Amendment 23.

• Higher education: Since Great Recession, Colorado has increased its higher education budget by more than any other state when looking at percentage growth. Unfortunately, Colorado started at such a low baseline that any increase looks dramatic. Data shows that on a per capita basis, as of FY 2019-20, Colorado is 45th in the country in spending on higher education. And while limiting tuition increases to no more than 3 percent is better than the alternative, we should be focused on how to lower tuition so as not to burden new graduates with increasing amounts of student loan debt.

• Transportation: The governor’s $550 million for transportation is a tiny fraction of the over $9 billion in transportation project backlogs. It should also be noted that funding transportation through General Fund revenues has been very inconsistent from year to year, left to the vagaries of the economy. It’s critical our state finds a constant funding stream to improve transportation throughout the state.

The Colorado budget process is one in which many levels of government are asked to do more with less and make difficult choices between different priorities. Too often, even when the right priorities are chosen, the budget is a demonstration of the current limits on our collective ability to address our most important challenges.

The Budget Process: Where Does It Go From Here?

In December, a new economic forecast will be released from both the Office of State Planning and Budgeting (OSPB), an office within the state’s Executive Branch, and Legislative Council, the nonpartisan research arm of the state legislature. These economic forecasts are the basis for determining the amount of money in each section of the budget — General Fund, federal funds, and cash funds. JBC will be tasked with choosing which forecast numbers to use in setting the state’s budget.

The Joint Budget Committee — made up of Democrats and Republicans from both chambers of the legislature — will next take the governor’s proposal, along with the updated economic forecasts, and work to craft a budget that takes into account many different stakeholders. That process begins in mid November with an overview of the governor’s proposal, and will continue into 2020, until a new budget is agreed upon, likely in March or April of 2020.

As a refresher, an overview of the budget process is illustrated in the graphic to the right. Currently, we’re only at the first public step (step 2 in the graphic).

Bottom Line

The governor’s budget is an interesting look at the needs of Colorado and how we should allocate a finite amount of resources towards those different issues. It’s also imperative to know because of constitutional constraints, the governor — and all policymakers — are limited in the types of solutions that can be offered.

In crafting this budget, the governor must lean on prioritization and how to make the resources in front of him go a long way, instead of proposing ways to increase the funding that can come into the government. This is just the beginning of that conversation, and legislators from across the state and political spectrum will still have their say. Stay tuned for that in the coming year.