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The strangest budget year yet -- really

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By Greg Romberg

Have you ever noticed how every year is the most amazing something in people’s memories? We’ve never had a drier winter. We’ve never had a hotter summer. That’s the best team we’ve ever had. I’ve never seen someone behave so badly. It’s usually not true. Time has a tendency of evening things out.

But I don’t think we’ve ever seen a more volatile budget process at the state of Colorado. It all started when last fall’s economic crash required Colorado’s 2008-09 (the state fiscal year is from July 1 through June 30) spending plan to be slashed. Before the legislature even came back in January, Gov. Bill Ritter ordered spending cuts. When the legislature got back, budget amendments totaling more than $600 million were made in February, and additional changes worth over $150 million were enacted after the March 20 revenue forecast showed tax receipts were continuing to tumble.

Despite all the work to this year’s budget, the legislature’s main job in 2009 is to develop the budget for the year that begins July 1. Even knowing money would be short, when it came time to introduce this year’s spending bill, there was an $800 million gap to address. The budget was introduced in conjunction with 22 other bills to get the budget to balance. The biggest ticket items were bills to take $500 million from excess reserves from Pinnacol Assurance, a quasi-public insurance company that provides worker compensation insurance to almost two-thirds of Colorado’s employers. The Joint Budget Committee said that without the money from Pinnacol, the only option would be to take an additional $300 million from higher education, which would lead to devastating cuts, including closing several community college campuses.

The Senate passed the package, but there was plenty of drama. At one point, the Senate president sent the JBC back to rework the budget. After a short meeting, JBC members said no, and the package, including taking the money from Pinnacol, passed. When the package got to the House, it all unraveled after Ritter declared that neither the Pinnacol nor higher-ed options were feasible. In less than two days, a variety of cuts were approved, and the House passed a budget package that left Pinnacol’s reserves untouched and made no further cuts to higher education. Within another week, both the House and Senate adopted a final plan and sent a 2009-10 budget to Ritter for final approval.

In the middle of it all, the Supreme Court ruled that last year’s mill levy freeze that allowed additional property taxes to be kept by school districts to free up state funds for other state programs was legal. Upon further review, it was concluded that the decision also allows the legislature to revoke tax exemptions as long as total revenues do not exceed the prior year’s total tax revenues. Prior to the decision, it had been believed that such changes were unconstitutional under TABOR provisions. Several exemption eliminations are currently under consideration.

Conventional wisdom suggests there are few options when things are bad. Who would have thought three entirely different budget proposals would emerge in less than a week and long-held beliefs about what is constitutional would dissapate under those conditions? It’s not hyperbole this time: 2009 is the strangest and most volatile budget year Colorado’s ever seen.

Greg Romberg is president of Romberg and Associates, a government relations and public affairs firm. He lives in Evergreen with his wife, Laurie, and three daughters.