Tuesday, January 27, 2009

Ritter Suggests More Cuts for FY09-10

Gov. Bill Ritter delivered more bad budget news to the legislature today as his budget director told members of the Joint Budget Committee that the state should close two prisons, eliminate $225 million of higher education and public school spending and take away, at least temporarily, property tax breaks for senior citizens.

The proposal, which was offered as a way of closing the $1 billion budget gap expected in the fiscal year that begins July 1, was announced by Todd Saliman.

The cuts, which would not allow the state to close the entire shortfall, would represent an 8.7 percent reduction from the general fund spending for FY 09-10 proposed by Ritter in November.

"Through this package of cuts today, there will be pain," Office of State Planning and Budgeting director Todd Saliman told the committee. "And it will be felt by many citizens who rely on state services."

The two prisons that Ritter wants to close are the Rifle Correctional Facility and the Colorado Women's Correctional Facility in Canon City. Inmates at those penitentiaries would be transferred to other state prisons.

The governor's plan would also delay the opening of the Colorado State Penitentiary II in Canon City by at least three months.

The education funding reductions would be divided up almost equally between the state's universities and colleges and K-12 institutions. Saliman said Ritter wants to cut $125 million from K-12 education and $100 million from higher education.

The K-12 cuts would include suspension of a second enrollment count for military dependents, which could cost school districts as much as $1.8 million per year, a reduction of $2.5 million in charter school construction assistance, and a reduction of $17.9 million in the planned expansion of Colorado's full-day kindergarten program.

The $100 million cut to higher education would include the $30 million cut for this year proposed Dec. 16. If approved, the total reduction would return state funding for colleges and universities to where it was in FY 07-08.

Among other spending cuts proposed by the governor are:

1. Closure of the 20-bed general hospital at the Colorado Mental Health Institute at Pueblo effective Nov. 1, 2009, which would save $4.8 million including $3.1 from the general fund and eliminate 54 full-time equivalent state employees (FTEs);

2. Closure of the 20-bed Therapeutic Child Care Facility at Fort Logan effective July 1, which would save $2.1 million, including $417,000 from the general fund, and eliminate 30 FTEs;

3. Reduction of an earlier request for increased funding for developmental disability services, which would save $3.4 million including $1.7 million from the general fund;

4. Reduction of Medicaid expenditures, health care provider rates and reimbursement obligations, which would save approximately $150 million including about $70 million from the general fund;

5. Suspension of efforts to increase enrollment in, and reduce funding for, the Children's Basic Health Plan Plus (CHP), which would save $19.3 million including $3.1 million from the general fund;

6. Elimination of all funding for the Colorado Student Before and After School Program, which would save $300,000;

7. Imposition of five unpaid furlough days on most of the state's workforce, for a $15 million savings, including $7.6 million from the general fund, and authorization for a maximum of three furlough days in FY08-09;

8. Elimination of 540 state jobs;

9. Suspension of salary increases for 26,000 state employees; and

10. Reduction of state tourism promotion spending by about half.

The proposal would not continue the limited hiring freeze now in effect.

The temporary elimination of the property tax exemption enjoyed by senior citizens would also affect disabled veterans. Only seniors and disabled veterans who have lived in their homes for at least ten years are currently able to take advantage of the state's homestead tax exemption.

Additional revenues would be gained by re-instituting the state's $10-15 user fee for the Colorado Bureau of Investigation's "InstaCheck" background check service, which would add $1.6 million to the general fund each year.

Ritter said his suggestions are aimed at minimizing harm to Colorado residents dependent on state services.

"On Jan. 15, my office began submitting a budget-balancing plan to the Joint Budget Committee, and today we are proposing additional steps that include deep, targeted and strategic cuts," the governor said in a press release. "These reductions, along with the latest unemployment figures released this morning, should leave no doubt in anyone's mind about the seriousness of the problems we face, and of the collective effort it will take to chart a Colorado way forward."

If the legislature adopts Ritter's suggestions, the total spending from the state's general fund in FY 09-10 would be nearly the same as it was in FY 07-08.

The governor's push for a spending plan lower than what he originally asked for Nov. 1 is driven by recent projections indicating that Colorado's sales and income tax revenues will be about $1 billion less in FY 09-10 than budget planners thought last autumn.

Ritter's plan for FY 09-10 assumes that the federal government will direct at least $259 million to Colorado through the proposed American Recovery and Reinvestment Act, which is now under consideration in Congress.

The General Assembly will begin considering Ritter's ideas for the FY 09-10 budget, as well as the cuts in spending and diversions from reserve and cash funds proposed on Jan. 16 for the current fiscal year, sometime in February.