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Legislative Year: 2018 Change
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Colorado Eyes & Ears »

The 2017 legislative preseason officially kicked off Tuesday with release of Gov. John Hickenlooper’s proposed state budget for 2017-18.

The proposal includes some fancy financial footwork, including transfers from cash funds, a reduction of Hospital Provider Fee income to avoid TABOR refunds to taxpayers, an increase in the K-12 negative factor and reductions in General Fund transfers to longines replica transportation.

The governor’s plan also contains tweaks to rebalance the current 2016-17 budget, but those don’t include cuts in current school funding.

The key driver behind the plan is “a marked slowdown in overall General Fund tax revenue growth,” according to the governor’s letter to the Joint Budget Committee. “And recent forecasts reflect dampened expectations about the future.”

The letter continued, “The basic economic assumption underlying our request is for continued but modest economic expansion. Though this is the likeliest scenario, there are both upside and downside risks to this view. We are closely monitoring monthly revenue collections and if the December revenue projection weakens, additional balancing measures will be needed. Because downside risk remains a possibility, we are prioritizing restoring the General Fund reserve to 6.5 percent of appropriations. As we are seeing now, even slight deviations from expectations can result in using reserves. Thus, it is imperative to remain prepared ahead of an actual recession.”

Some of the governor’s ideas won’t be popular with the legislature. And some of his plans will require changes in state law – a dozen of them. If history is any indicator, the legislative budget that finally jells next spring will be significantly different, regardless of whether Democrats win the Senate or split partisan control continues at the Capitol.

But legislators face the same limitations as the governor does – the balanced-budget requirement, only modest revenue growth and earmarked spending requirements for certain programs.

About 90 percent of the budget is spent on just five program areas (in order of size) – K-12 education, Medicaid and related programs, public safety and courts, higher education and human services.

Here are key points from the governor’s plan.

2016-17 adjustments

Transfer of $31.7 million from severance tax funds to the general fund and reduction of the planned $158 million general fund transfer to the HUTF to $79 million. 

2017-18 overview

The budget proposed total funds spending of $28.5 billion, up 3.3 percent. General fund spending would be $10.9 bill, 3.7 percent.

The administration calculated there was a minimum $500 million gap between general fund revenues and required spending. The governor proposes a variety of mechanisms to close that gap. (Read on)

The budget would:

  • Transfer $79 million to the HUTF instead of $109 million
  • Reduce Hospital Provide Fee collections by $195 million to eliminate TABOR refunds of of the same amount
  • Transfer $46.9 million from something called the State Employee Reserve Fund (interesting acronym - SERF) to the general fund
  • Take $15 million from the BEST school construction fund and put it in the Public School Fund to reduce the need for general fund spending on K-12 GF by the same amount

 K-12

Total program funding of $6.6 billion, up $200 million. Average per-pupil funding of $7,606, up 2.4 percent

“After reducing the negative factor by $180.8 million over the past four fiscal years, we are disappointed that fiscal circumstances require us to increase the negative factor, even modestly, in FY 2017-18. Our request increases the negative factor from $830.7 million in FY 2016-17 to $876.1 million for FY 2017-18.” (A year ago Hickenlooper proposed increasing the negative factor in the 2016-17 budget, but the JBC figures out a way to avoid that. It may not be so easy this time.)

Health Care Policy and Financing

$9 billion total funds, $2.8 billion general fund, both increases

The budget assumes a 7.1 percent rise in caseload

Public Safety/Courts

$847 million total funds, up 2.1 percent, and $759 general fund, up 1.6 percent

The budget assumes stable prison caseloads.

Higher education

$4.2 billion total funds and $898 million general fund, the latter up 3.1 percent

“With this modest General Fund increase, it is anticipated that tuition increases will average around 6.0 percent statewide, with variation amongst the institutions ranging from 5.0 percent to 7.7 percent.”

Human Services

$1.9 billion total funds, up 2.7 percent, and $831 million general fund, up 4.1 percent

Significant increases are requested for staffing in the Division of Youth Corrections (80 new FTE staff for security and 16 new FTE for 24-hour medical care), and for 58 more child welfare caseworkers. 

Dig into the details

 

- Todd Engdahl

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