SB 228 Heads to House

The bill that would repeal the state's general fund growth limit is on the way to the House of Representatives after gaining final approval in the Senate this morning.

SB 228, which would remove the 1991 Arveschoug-Bird law from the state's statute books, was approved 21-14 after senators rejected an effort by Republicans to send the measure to the chamber's Appropriations Committee.

Under current law the state's general fund can increase to the lower of six percent over the previous year or to five percent of the state's personal income. Any tax revenues the state generates in excess of that is dedicated to transportation and capital construction projects. The 1991 statute does not affect the amount of revenue reaching state coffers.

One of the impacts of the law has been a "ratchet-down" of the state's general fund, which pays for K-12 and higher education, human services, corrections, and state agencies, among other things, when economic conditions force state tax receipts down.

GOP critics of the legislation say it violates the 1992 Taxpayers Bill of Rights, which includes a provision specifying that spending limits can be changed only by a vote of the state's electorate.

But Democrats, along with Republican supporters Sen. Al White of Hayden and Rep. Don Marostica of Loveland, point to a legal opinion by former state supreme court justice Jean Dubofsky that says the Arveschoug-Bird law only allocates existing revenues and does not actually limit the total amount of money the state may spend in a given year.

SB 228 must clear the House before heading to the governor's office. Gov. Bill Ritter has not publicly said whether he would sign the measure.

Arveschoug-Bird Limit Repeal May Hit House Roadblock

The controversial bill that would repeal Colorado's annual limit on general fund growth may hit a roadblock in the House.

According to a report in today's Denver Post, House Transportation Committee chair Liane "Buffie" McFadyen, D-Pueblo West, is concerned about completely stripping away a guaranteed source of funds for transportation. The article, by the Post's Tim Hoover, also says that Rep. Joe Rice, D-Littleton, is also unsure whether to support SB 228 in its current form. Rice was the House sponsor of the so-called FASTER bill, which was signed into law by Gov. Bill Ritter Monday.

FASTER would raise motor vehicle registration fees by an average of $41 per person over the next three years, raising more than $200 million per year for transportation improvements and repair statewide.

The Post report also says the Denver Chamber of Commerce has come out against SB 228, which gained preliminary l Senate approval earlier this week after a 10-hour debate that extended into the early hours of the morning.

Under current law, which was enacted in 1991 when the General Assembly was under GOP control, any revenues exceeding a six percent growth in the general fund are routed to transportation and capital construction projects.

The state's annual general fund growth limit, which is named for its sponsoring legislators, had been long thought to be constitutional in nature. But an opinion by former state supreme court justice Jean Dubofsky earlier this year that indicated the Arveschoug-Bird law merely allocates revenues, and does not limit total state spending, opened the door to a debate about changing or repealing the limit.

General Fund Growth Limit Author Bird Critical of Law's Impact

Former Sen. Mike Bird, R-Colorado Springs, is known as one of the two lead sponsors of the state's annual general fund growth limit. According to a report in today's Denver Post, Bird is not happy with the impact the law has had on Colorado.

According to the article by the Post's Tim Hoover,

"As the bill went along, Arveschoug wanted the specific spending limit," Bird said. "I never wanted a specific limit because I knew that it would not have the flexibiity of tying it to personal income."

Bird, who served in the House and Senate between 1986 and 1994, said the downward ratchet on general fund spending was "an unfortunate byproduct" of the measure.

"It doesn't make any sense to have it (the general fund) go down and then start at the lower level," he said.

He also said the bill was passed at "a time when we weren't worried about an actual decline in the economy."

The article also says that former Rep. Steve Arveschoug, R-Pueblo, thinks that the law has worked as its sponsors intended.

"The perspective I had then and probably still have today," he said, "is that we were trying to look at what the citizens of Colorado could afford so that growth could not exceed taxpayers' ability to pay."

A bill sponsored by Sen. John P. Morse, D-Colorado Springs, would repeal the Arveschoug-Bird general fund growth limit.

GOP Offers Deal: Arveschoug-Bird Budget Growth Limit for Transportation Fee Hikes

Statehouse Republicans, who are steadfastly opposed to motor vehicle registration fees increases proposed as a means to pay for transportation improvements, have offered to support legislation that would eliminate the cap on the growth of the state budget if Democrats drop the fee hikes.

The proposal, which House minority leader Mike May, R-Parker, announced today, comes in the wake of the Senate's approval Thursday of the FASTER bill.

FASTER would result in the average person's motor vehicle registration fee rising by about $40 and provide more than $200 million per year for needed highway and bridge repairs and improvements throughout the state.

May also said Republicans want a portion of the state's general fund dedicated to transportation.

""Traditionally, Republicans have said: 'Thou shalt not touch the 6 percent limit,' " May is quoted as saying in a Rocky Mountain News article. "The important thing (about the new proposal) is it provides a predictable and continuous revenue stream for transportation."

The Democratic House sponsor of the bill, Rep. Joe Rice of Littleton, said he welcomes May's idea but doesn't see how it will provide the needed funds for the state's transportation system.

"That's a good mid- to long-term solution, but we still need something in the next six months," Rice told the Rocky. "And I don't know how you get away from fees not being a part of that."

The limit on the growth of the state's general fund is six percent per year. It was established in 1992 and provides that money over the limit can be spent on transportation and capital improvements.

Retired state supreme court justice Jean Dubofsky recently said that she believes the Arveschoug-Bird limit is not a constitutional constraint on spending, even though the 1992 Taxpayers Bill of Rights appears to place spending limits in the state's legal charter.

Sen. John Morse, D-Colorado Springs, and Rep. Don Marostica, R-Loveland, cited that opinion in comments last week indicating they would introduce legislation to repeal the Arveschoug-Bird law limiting annual growth in the general fund.