While Colorado is no stranger to tight budgets, thanks to TABOR, the September revenue forecast shows an increasingly constrained fiscal situation for the state. This coming year, lawmakers will be forced to make difficult choices in order to account for a $921 million dollar difference between projected expenses and allowable revenue. 

This already challenging fiscal situation, however, could soon become worse. Multiple measures on this year’s ballot have a fiscal impact, and their passage would grow our pending fiscal deficit. 

The implications of Colorado’s budget crisis are not abstract. Lawmakers will have to decide which programs to cut in order to balance the state’s budget. For Coloradans, these choices will impact our ability to receive essential services – like higher education, health care, K-12 education, and more.

What did the revenue forecast say?

The September revenue forecast showed a dangerously strained state budget. According to nonpartisan legislative staff, when budgeting to current law for the coming fiscal year, lawmakers are starting at a $921 million deficit. Functionally, this means that policymakers will have to make $921 million in cuts, based on the  projected cost of obligations.

Moreover, the forecast suggests this budget crisis won’t be transitory. Notably, there is projected growth in the two largest departments, Education and Health Care Policy & Financing. These higher, long-term costs are due to rising Medicaid expenses and utilization, driven in part by an aging population, a new K-12 funding formula, and reduced property tax collections.

What are the implications of a strained budget?

A much tighter budget has real consequences for Coloradans, who will experience this fiscal crisis in the form of reduced state services. 

With less revenue, the state will have challenges:

• Meeting the needs of older Coloradans who rely upon the Area Agencies on Aging (AAA) for critical services, like home-delivered meals. Despite a small increase in funding last year, the AAAs have documented an additional need for more than $25 million to maintain current service levels.
• Providing child care for families. Colorado continues to be one of the most expensive states in the country for child care. These costs are most burdensome for families with lower incomes. However, due to limited funds, the state of Colorado can only support 10 percent of all children eligible for reduced-cost child care through the Colorado Child Care Assistance Program (CCCAP).
• Adequately reimbursing medical providers for their services. It is well-recognized that medicaid reimbursement rates in Colorado are problematically low. As a result, our state is plagued by provider shortages, which in turn is connected to lower quality medical care for Coloradans.

More than simply preventing greater support for needed services, however, our budget limitations threaten the pivotal investments made in prior years. For example, last legislative session, state lawmakers made historic investments in higher education – a critical driver of economic mobility. Questions now exist about the state’s ability to maintain this support moving forward.

Ballot measures compound an existing crisis

Bad as the current budget crisis is, it could soon be worse, depending upon the outcome of this November’s election. Of Colorado’s 14 ballot measures, several have significanta General Fund fiscal impacts.

• Proposition 128: Mandates that certain individuals serve at least 85 percent of their sentence before becoming eligible for parole or leave time. Legislative Council Staff estimates that in the coming years, this will cost the state an extra $12-$28 million a year.
• Proposition 130: Requires the state to spend an additional $350 million to help local governments recruit, train, and retain city and county law enforcement officers.
• Proposition 131: Changes how voting for certain elections is conducted in Colorado. If these new voting systems are implemented, Legislative Council Staff estimates annual, ongoing costs to the state of $6 million.
• Amendment 80: Creates a constitutional right to school choice for K-12 students. This includes the right to enroll in private and home schools. In the future, this amendment could lead to the use of vouchers for private schools – a move which has cost other states hundreds of millions of dollars.

Collectively, these ballot measures have the potential to impact our state budget in both the short- and long-term, costing our state millions of dollars, and exacerbating the already difficult choices in front of us.

Takeaways

Colorado is facing a long-term fiscal crisis with no easy solutions. This crisis will not only limit new funding for needed services, it will also jeopardize hard won gains.

Dire as our budget situation is, it could worsen. Several ballot measures have the potential to further constrain the state’s budget. These measures could reduce investments in critical areas of the state’s budget by hundreds of millions of dollars. 

Our ongoing fiscal crisis will have real consequences for Coloradans. It will impact whether older adults receive home-delivered meals, families can afford child care, and if students have the ability to pursue higher education. This is the reality Coloradans must grapple with – both as we look for long-term solutions to our ongoing funding crisis, but also as we go to the ballot this coming November.