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Projected revenue decline underscores the crisis facing Colorado families and lawmakers

The Colorado Legislative Council staff released a report today that projects the continuing slow economic recovery will further aggravate the state’s revenue crisis, likely prompting two more rounds of steep budget cuts.

Natalie Mullis, the chief economist for the Colorado Legislative Council, said lower than previously projected tax revenue, combined with inflation, the growing demand for state services and the loss of federal aid, means the state faces roughly a $1.1 billion revenue shortfall for the 2011-12 budget year.

“The new projections underscore the severity of the state’s revenue crisis,” said Terry Scanlon, a budget analyst for the Colorado Fiscal Policy Institute. “As lawmakers stare at yet another billion dollar shortfall, it’s critical that they take a balanced approach to balancing the state budget that must include considering ways to raise more revenue.”

Even if lawmakers raise more revenue, the 2011-12 budget will almost certainly mark the fourth consecutive year that lawmakers cut critical services that not only help Coloradans survive the recession but also help boost our economy.

“It is important that the governor and the legislature take a balanced, efficient and responsible approach to closing the gap – one that mitigates harm to struggling Coloradans and protects our fragile economy,” Scanlon said.

But even before lawmakers tackle the 2011-12 revenue crisis, Gov. Bill Ritter also announced Monday he plans to offer a budget-balancing plan by the end of October for the budget that began in July. Ritter called for nearly $60 million in cuts and transfers for the current budget last month.

In a separate report Monday, the director of the governor’s Office of State Planning and Budgeting (OSPB), Todd Saliman, said the state faces a $257 million shortfall for the 2010-11 budget. OSPB’s forecasted shortfall for 2010-11 is much higher than the $50 million shortfall projected by the Legislative Council staff, but the OSPB estimate is especially important because it is likely to represent the size of the governor’s budget-balancing plan in October.

The Colorado Fiscal Policy Institute is a project of the Center on Law and Policy, a nonprofit, nonpartisan research and advocacy organization seeking justice and economic security for all Coloradans. The Colorado Fiscal Policy Institute will release a more detailed analysis of today’s reports later this week.

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

Perry Swanson
Communications director
303-573-5669, ext. 306

Released Sept. 20, 2010

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