The recession hit Colorado hard, and simply trimming budgets won’t be enough to avoid a catastrophic loss of services or crippling debt, speakers told the Strategic Issues Program panel on Oct. 21.
Don Marostica, executive director of the Colorado Office of Economic Development and International Trade, said that despite shrinking resources, the state has few places left to cut. The biggest cash outlays go to four departments which are obligated by law to remain funded: corrections, K-12 education, Medicaid and health and human services. The biggest piece of the budget left to cut, he said, may be state funding for higher education.
The state already faces a huge deficit, and it’s about to get worse as the state borrows to cover unemployment payments and as federal stimulus money runs dry next June, he said.
“The state government is shrinking, but at what point does that become a detriment? I think we’re at that point right now,” he said. “The only way we’re going to come out of this deficit is to grow business.”
To run the state well would take about $11 billion a year, Marostica said. The current budget is about $7 billion. What’s being left uncovered is road and building maintenance, including maintenance to the crumbling State Capitol, he said.
“We’ve got $20 billion in assets that we’re not taking care of,” he said.
If the state can’t bring in enough new business to cover shortfalls, then tax increases may be the only way, said State Rep. Jack Pommer, a member of the Joint Budget Committee that develops Colorado’s economic blueprint each year.
Two possible sources of new money, he said, could be higher state income taxes and a slightly higher sales tax.
The bottom line, Pommer said, is that the state is compartmentalized into individual, unconnected departments all struggling to move ahead independently. With less and less money to spend, the state is left doing lots of things poorly instead of focusing on doing some things well and dropping other things entirely.
The SIP program, he said, may be one of the best ways to find solutions. Groups working from the outside may have more success finding solutions than lawmakers who are beholden to the public’s whims.
Without doing something, states are in for a struggle from coast to coast, said John Thomasian, director of the Center for Best Practices at the National Governors’ Association. Appearing via teleconference, Thomasian said all states — and businesses — are being damaged by ever-increasing health care costs. In the near future, non-mandated programs such as higher education, early childhood education, and quality-of-life programs such as parks and festivals may be casualties of the budget-draining health costs.
“Controlling those health care increases is going to be the battleground,” he said.
The nonpartisan SIP panel is comprised of leaders in government, academia, business and public service. The panel will explore all facets of state governance in the coming year, from expenditures and funding to states’ relationships with federal and municipal governments. Additionally the panel will study the way sub-national governments work in other countries. Panel Director Jim Griesemer says he expects to have findings and recommendations by next summer.
The Strategic Issues Panel’s next meeting will be Nov. 4 from 8 a.m.–noon on the sixth floor of DU’s Daniels College of Business. The public is invited to attend.