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Changes to 2011-12 state budget relatively minor, yet Coloradans with low incomes still get pinched

The package of amendments to the 2011-12 state budget that the Colorado General Assembly will consider in the coming days includes only minor changes in spending. Perhaps most significant is what lawmakers are not including in the budget amendments: an attempt stop cuts in services that will hurt low-income Coloradans.

The package of amendments – known as supplementals – includes $13.6 million in new spending, which represents a 0.07 percent increase in the $18.1 billion budget. Most of the changes recommended reflect so-called technical corrections and updates to projections of caseloads and sources of revenue. The amendments appear to lack any significant policy changes.

The legislature’s Joint Budget Committee (JBC) has suggested there might be additional changes to the Fiscal Year 2011-12 budget in March when the next revenues estimates are produced.

Low-income Coloradans hurt
Even though the mid-year adjustments to the state budget are not as severe as cuts experienced in recent years, reductions in services will still hurt low-income Coloradans.

Federal funding for Colorado Works, the state’s Temporary Assistance for Needy Families (TANF) program, has been reduced by $8.9 million through budget-deficit reduction efforts at the federal level. JBC chose to not offset those cuts with state funds. Instead state officials are considering a two-part approach to closing the $8.9 million gap.

First, the Department of Human Services (DHS) plans to cut $3.4 million in spending for the Colorado Works program. JBC members were briefed about those cuts and chose to let them be implemented. Second, the department has asked the General Assembly to allow the state to eliminate a $5.5 million payment to counties when the state hits a threshold for work participation rates.

Work participation rates are an element of measuring the state’s success in implementing TANF. After reaching a threshold on work participation rates, counties get more money from the state under current law. The General Assembly is considering a measure to eliminate that incentive payment.

Medicaid
The Department of Health Care Policy and Financing (HCPF) estimates a larger-than-expected increase in the number of people seeking health care through Medicaid means the state needs to spend an additional $62.4 million on the budget’s primary Medicaid line item to maintain the current level of services. HCPF is expected to release an updated and more accurate caseload estimate in February. JBC members chose to leave that line item unchanged for now, promising to revisit the issue in March when the committee writes the 2012-13 budget.

Public schools
The JBC recommended delaying action on adjusting the kindergarten through 12th-grade (K-12) appropriation for this year. That is good news for schools because in Fiscal Year 2010-11 spending for K-12 was reduced $177 million the middle of the year. And this past year, spending was cut by $193 million in the mid-year.

The only discussion on school funding reductions for Fiscal Year 2011-12 was a $4.4 million cut in state aid to districts, which would be more than offset by growth in local funding for schools. The issue will likely be revisited after the March revenue estimates.

One area of increased spending
The Department of Corrections is the only area that could see a noteworthy spending increase mid-year. In the JBC recommendations, spending on prisons would increase 2.6 percent, or $18.8 million, to adjust for a larger-than-expected prison population.

Next steps

  • The package of supplemental bills will begin working through the General Assembly in the House Appropriations Committee.
  • In February, HCPF is expected to provide updated data on the number of people who are receiving health care through Medicaid.
  • Beginning Feb. 8 and continuing through late March, the JBC will adopt recommendations for the 2012-13 budget, which will influence how the JBC resolves the amendments for K-12 and Medicaid in the 2011-12 budget.
  • On March 20, the Legislative Council Staff will release an updated forecast for state revenue.
  • After March 20, JBC will offer final recommendations for amending the 2011-12 budget and will also finalize plans for the 2012-13 budget.

Contact: Terry Scanlon
Fiscal policy analyst
303-573-5669, ext. 311

Released Feb. 2, 2012

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