Colorado budget will require adjustments |

Colorado budget will require adjustments

Steven K. Paulson
The Associated Press

DENVER – Colorado’s economy is steadily improving, but you wouldn’t know it based on the state’s nearly empty pocketbook.

On Monday, Gov. Bill Ritter’s budget analysts told lawmakers the governor is going to be forced to declare a fiscal emergency, giving him the power to cut $75 million from next year’s budget after this year’s budget failed to meet a 2 percent reserve requirement.

“Believe it or not, Colorado and the national economy have been in recovery about a year,” budget analyst Kate Watkins told skeptical legislators on the Joint Budget Committee who set state spending priorities.

Budget analysts warned lawmakers more banks are expected to fail this year and the economy will continue to falter because of continuing problems with the construction, real estate, banking and financial industries.

Fewer employees are working longer hours and more people are delaying taxes.

If Congress fails to extend supplemental payments for Medicaid, the federal-state health care program for the poor, the state could be forced to cut another $212 million from next fiscal year’s budget, which begins in just two weeks.

Ritter said he will cover the $75 million shortfall by August. He said deeper cuts will be necessary if Congress doesn’t extend Medicaid relief.

Rep. Mark Ferrandino, a budget committee member, said 30 states currently base their budgets on the extra federal Medicaid money and he expects Congress to pass it.

To deal with the current fiscal emergency, lawmakers expect Ritter to extend cuts he already has made, cutting nearly $2 billion in spending from the state budget over the past three years. That includes more cuts to public education, more furlough days for state workers, elimination of tax breaks and delays for some nonessential state programs.

Before they adjourned in May, legislators passed and Ritter signed an $18.2 billion spending plan for the budget year that begins July 1.

Schools will get $365 million less than they normally would under the law that requires schools funding increases, a 6.5 percent decline.

Much of the extra revenue will just make up for stimulus money that’s running out. That will cause the part of the budget paid for with tax dollars to rise by about $300 million – or 5 percent – by the time all of the budget balancing bills take effect.

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