How the Colorado legislature contributed to the state’s budget crisis ...Middle East

The Colorado legislature is at least partially to blame for the structural deficit forcing lawmakers this year to cut state programs and services to address a roughly $850 million funding shortfall. 

The General Assembly contributed to the deficit through its handling of billions in one-time federal funding that flowed into Colorado during the coronavirus pandemic, nonpartisan staff for the legislature’s powerful Joint Budget Committee told the panel earlier this month. At issue was how some of that money was used to fund line items with ongoing costs.

“That is definitely a part of the problem,” JBC staffer Amanda Bickel told the committee. “I think it’s in some ways as much a symptom as a cause.”

The revelations come as the legislature debates the causes of and solutions to the structural deficit over the next four months. The deficit represents the gap in how much the legislature is allowed to spend under the Taxpayer’s Bill of Rights versus how much it costs to continue providing the same level of government programs and services. 

Democrats generally say TABOR, which caps government growth and spending to the annual change in inflation and population, is liable for the shortfall. Republicans, who are fierce defenders of TABOR, allege mismanagement on the part of the Democratic majority.

“A lot of programs were supposed to be one-time funded, and we continued the funding,” state Sen. Barbara Kirkmeyer, a Brighton Republican who sits on the JBC, said at The Colorado Sun’s legislative session preview event. “We got ourselves into this mess. We’re gonna have to get ourselves out of this mess.”

While there is no single cause of the deficit — TABOR certainly limits how much lawmakers have to spend and the cost of Medicaid has far outpaced how fast the budget has been allowed to increase — a report generated by JBC staff lends credence to Republicans’ argument, albeit with caveats. It also spreads the blame to decisions made by both parties. 

Here’s the key line from the report on how the legislature spent one-time federal funds during the pandemic: “If all one-time revenue had been spent on one-time activities and the state had otherwise managed to keep spending commitments within available revenue, ongoing general fund revenue and spending should have come back into alignment. It did not.”

JBC staff say most of the one-time federal money Colorado received was spent on one-time expenses.

“However, the availability of this revenue may have helped mask the underlying status of the general fund,” Bickel wrote in a memo to lawmakers. “The one-time funds made it easier for both the executive branch and members of the legislature to address longstanding fiscal concerns … without immediately facing the restrictions in general fund revenue.”

Those include things like increasing Medicaid costs, K-12 and higher education funding. The money also let the legislature and Gov. Jared Polis launch new initiatives, like universal preschool.

Bickel said the amount of “one-time money sloshing around in the budget” gave the General Assembly the opportunity to tackle issues they’d punted on for years.

“It’s not one single expansion,” she said of the spending that couldn’t be maintained. “It’s a whole lot of things that you felt more able to do because it looked like there was more money than there was.”

At the height of the one-time federal funds, in fiscal year 2022-23, JBC staff estimates the legislature was spending $829 million more than its ongoing available revenue. That was down to $247 million for last fiscal year, which ended June 30.

Toward the end of her presentation, Bickel provided a list of spending decisions she said were part of what she called the death by a thousand cuts that led to the state’s long-term budget shortfall. It included line items on Medicaid, preschool, higher education and property taxes.

Some specific legislative decisions highlighted by Bickel: 

While Democrats control the legislature, many of the items on the staff’s list passed with bipartisan support. (The decision to expand Medicaid coverage to some people living in the U.S. illegally was passed by Democrats alone.) 

“I’m sorry. This feels like I’m goring everybody’s ox,” Bickel said. “It’s a painful list, but it is, I think, the roots of the problem — or a lot of the roots of the problem.”

“I think a lot of these decisions were the right thing to do,” replied state Sen. Jeff Bridges, a Greenwood Village Democrat on the JBC. “But they have dramatically, and sort of piece by piece, increased our overall budget obligations.”

Bridges pointed out that while Democrats did create some programs and services with the one-time funds, they mostly expanded existing budget line items.

State Sen. Emily Sirota, a Denver Democrat and chair of the JBC, defended the decisions as “largely increases to ensure that people providing state services are able to continue providing them.”

“Which things shouldn’t we have done? Should we not have paid off the (budget stabilization) factor? Or tried to provide for our community providers who are saying they don’t earn enough to continue providing state services?”

The budget stabilization factor was a tool created by the legislature during the Great Recession that allowed lawmakers to give schools less money than what they were owed under the state constitution. It was recently eliminated by the legislature, allowing the state to, as lawmakers put it, fully fund schools.

State Sen. Judy Amabile, a Boulder Democrat, said the legislature used the one-time funding to invest in big projects that they wouldn’t have been able to otherwise, like new and upgraded facilities. Yes, they have ongoing costs, she said, but “I think that was really well spent money.”

At the end of Bickel’s presentation, the JBC’s culpability felt palpable — and bipartisan. 

“The issue was we knew we were supposed to be doing ongoing general fund cuts and we didn’t,” Kirkmeyer, who has been a vocal proponent of increasing Medicaid provider rates, finally chimed in. “We can all try to put it however we want, but that’s how it is. We didn’t do it all by ourselves as a JBC. We had help from the rest of those other 94 people (in the legislature).”

The JBC is working to draft the budget for the state’s next fiscal year, which begins July 1. Its proposal will be debated by the full legislature in the spring.

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