Publication Library

Browse by tag

referendum c state budget tabor fmap recovery act 2010 colorado legislature health reform medical loss ratio taxes jobs and economic security transparency and accountability revenue annual report colorado center on law and policy snap food stamps health coverage health affordability earned income tax credit children health law and policy update child tax credit exempla hospitals colorado benefits management system public benefits weston v hammons election 2010 poverty health insurance work supports self-sufficiency standard jobs and economy unemployment insurance health access mental health high-risk pool health co-ops pre-existing conditions medicaid aiming for the middle gallagher amendment amendment 23 public option 2009 colorado legislature grandfathered health plans cobra health insurance exchange income 2007 colorado legislature arveschoug-bird tobacco securitization federal budget rainy day fund refund anticipation loans 2008 colorado legislature welfare reform colorado works deficit reduction act citizenship referendum d 2010 colorado legislatutre old age pension tax credits tax exemptions tax deductions provider rates state of working colorado government election 2008 education income tax single sales factor state children's health insurance program social security early retiree reinsurance program hospital provider fee insurance access sustainable growth rate formula recission prescription drugs medicare false claims act colorado all-payer health claims database insurance affordability 2011 colorado legislature election 2011 immigration child health plan plus health law and policy refugees family economic security economic self-sufficiency hospital conversion sidebar newsletter elder economic security long-term care accountable care collaborative 2012 colorado legislature

Sign Up

Receive email updates

Thanks To Our
Generous Donors Like:

Aloha Foundation

2011-12 budget presents a test for new leadership: Don’t fail Colorado communities

Gov. Bill Ritter’s 2011-12 budget proposal offers an outline for a fourth year of cuts that will continue straining services Colorado families depend on.

In his November 1 submission to the Joint Budget Committee, Ritter outlined $714.5 million in budget-balancing measures and identified $379.4 million in obligations for employee pay and education funding that would have historically been funded but are not included in the proposal because of the revenue crisis. Those unmet obligations, combined with the budget-balancing measures outlined by the governor, amount to a nearly $1.1 billion budget-reduction plan.

Not including the “Reappropriated Funds” category, the total state budget in Ritter’s plan is $19.1 billion. The total state budget would grow $945.6 million, or 4.8 percent, from fiscal year 2010-11. That net increase in state spending should not be considered “growth” because although the state will be spending more it will not be providing the same level of services to the state’s growing population.

In September, the Colorado Fiscal Policy Institute identified a $1.1 billion revenue shortfall for 2010-11. Even though that analysis included a projection that revenue will be larger in 2011-12 than it was 2010-11, the shortfall represents the difference between the revenue that the state expects to collect in 2011-12 and the amount needed to provide the same services for a growing population

Before evaluating the changes Ritter proposed, it is important to note this is the starting point of a six-month budget-adoption process, and the budget adopted as law will likely to be significantly different. Ritter’s budget is based on a revenue forecast developed by his team at the Office of State Planning and Budget (OSPB) that is more optimistic than a similar projection from the legislative branch. The General Assembly is expected to amend the budget to meet the forecast provided by its economic advisers, the Colorado Legislative Council staff. Currently, Legislative Council projects the state will have $283.1 million less revenue for 2011-12 than OSPB projects. Regardless of the difference, those projections will change twice — in December and March — before the legislature approves a final budget. In addition, Gov.-elect John Hickenlooper will have an opportunity to offer amendments to Governor Ritter’s proposal shortly after Hickenlooper takes office in January.

Budget-balancing actions
The governor’s plan projects the state will open the 2011-12 fiscal year with $44.9 million in the bank after including the yet-to-be approved budget-balancing plans Ritter offered in August and October that met his responsibility to keep the 2010-11 budget balanced. In addition, the governor has suggested reducing the statutory reserve fund to 2.03 percent from the current statutory requirement of 4 percent of General fund spending, capturing $157.5 million for FY 2011-12 spending. Lowering the Reserve Fund can create cash-flow problems for the state at the end of the fiscal year. Earlier this year, as the 2009-10 fiscal year was winding down, the state had to delay some Medicaid payments until after the start of the new fiscal year, July 1, to ensure having sufficient funds to pay its other bills.

Spending cuts
The governor outlined reductions in services in several key areas. Highlights:

Education, $123 million. The governor proposes an increase in General Fund spending on education of $51.3 million in 2011-12. Still, because that falls short by $123 million of what would be needed to fully fund the education formula, based on student population growth and inflation, that amounts to a $123 million cut to kindergarten through 12th-grade classrooms. Spending per student would decline nearly $40.

State workers, $21 million. The governor proposes $21 million in cuts to benefits for state workers. His plan calls for continuing another year requiring state employees to take on a greater share of support for the state’s retirement system, PERA, to allow the state to decrease its support for the system by the same amount, 2.5 percent. That shift means not only will state workers be asked to go another year without salary adjustments, but they will be asked to continue for a second year a 2.5 percent pay cut, to help the state save $19.6 million. The governor’s plan would also pro-rate benefits for employees who work less than half-time to save another $1.4 million.

Medicaid, $14 million. The governor proposes 13 changes that would reduce services by $29 million for Medicaid, saving the state $14 million from the General Fund. The changes include reducing:

  • oral nutritional benefits
  • payments for some diabetes supplies
  • payments for inpatient renal dialysis
  • payments for uncomplicated cesarean sections deliveries
  • mental health programs

Child Health Plan Plus, $1.6 million. The governor proposed five changes to the CHP+ program that would reduce services and save the state $6.8 million in 2011-12, including a $1.6 million savings from the General Fund. The changes include:

  • Out-of-network non-emergency care would no longer be reimbursed.
  • Coverage for new patients would begin at the beginning of the month and patients would no longer be able to get coverage for any period before that, ending a practice known as retroactive enrollment.
  • Reducing the mental health spending per client rate by 3 percent and allowing HMOs to decide whether to achieve the savings through administrative efficiencies, utilization controls or case management.
  • Eliminate coverage for inpatient services during the presumptive eligibility period for pregnant women who are not later enrolled in Medicaid or CHP+.

Health Care Policy and Financing payment delays, $8.4 million. The governor’s budget plan would save $21.4 million, including $8.4 million from the General Fund, to defer payments into the next fiscal year. There are two types of delays included in the Ritter budget plan. The first delays provider payments by three weeks, which would essentially be a continuation of the three-week delay the governor proposed in June and October for the 2010-11 budget. The second type would make payments to managed care providers after the work is done, or retrospectively, rather than making the payments concurrently.

Department of Human Services, $2.7 million. The plan would reduce county tax base relief that goes to counties with low property tax values and high social services costs.

Revenue enhancements
The governor outlined four proposals for boosting revenue that included extending a couple of current, yet temporary, policies. They are:

  • $71.6 million to extend the suspension of the sales tax vendor administrative allowance.
  • $31 million to extend the suspension of the sales tax exemption for cigarettes.
  • $2.7 million from a $1 increase for state park day passes to help offset a cut in General Fund support for parks
  • $2.2 million from more aggressively collecting delinquent sales tax.

Transfers
As in previous budgets, the governor’s proposal for 2011-12 relies heavily on transferring money from cash funds — special accounts that raise revenue from dedicated sources to pay for specific services. The governor’s cover letter to the Joint Budget Committee identifies at least $205.3 million in transfers. That includes:

  • $50 million from the Hospital Provider Fee to backfill an equivalent General Fund reduction for Medicaid.
  • $35 million from the Amendment 35 tobacco tax revenues.
  • $27 million from the Local Government Severance Tax Trust Fund to the General Fund.
  • $21.8 million from the Limited Gaming Fund.
  • $20 million from the High Cost Administration Fund, which pays to support telephone service in rural areas, to the General Fund.
  • $15 million from the Local Government Mineral Impact Fund to the General Fund.
  • $10 million from the Medical Marijuana Program Cash fund to the General Fund.

Higher education
Higher education has been widely discussed as a possible target for General Fund cuts, but the governor’s proposal does not include cuts to colleges and universities. Colorado’s colleges and universities would get the same $555 million in General Fund support in 2011-12 as they do in 2010-11.Note that this is less than the $740 million in General Fund support that it received a decade ago (2001-02). Higher education will lose $89 million in federal American Recovery and Reinvestment Act funds in 2011-12 that had been used to pay for colleges and universities in 2010-11. Ritter’s budget assumes a tuition increase of 9 percent next year, effectively offsetting the lost Recovery Act money. The College Opportunity Fund Stipend for 2011-12 is unchanged from 2010-11, $1,860 per full-time student.

General Fund growth
As Colorado’s economy grows slowly, General Fund revenue, which consists largely of income and sales tax revenues, is projected by OSPB to grow by 8.7 percent in 2011-12. (The Legislative Council staff projects a 1.3 percent growth in General Fund revenue.) The governor’s budget proposal is based on the OSPB forecast and therefore calls for General Fund spending to increase $563.6 million from 2010-11 to 2011-12.

The largest portion of the growth in General Fund spending, $422.3 million, or 75 percent of the new General Fund spending, will go to Medicaid to make up for the end of the Recovery Act, which had allowed the state to take on a smaller portion of the total Medicaid bill in the past three years. The next larger increase in General Fund spending is K-12 education, will grow $51 million.

Also, to help meet the growing demand of food stamps, which are federally funded, the governor has proposed spending $5.4 million, which includes $2.5 million from the General Fund, to help ensure that staff and resources are available to help serve Colorado families seeking food assistance during the recession.

Looking ahead
The public portion of the budget development process begins in earnest next week as the Joint Budget Committee meets with the governor on November 10 to discuss the initial budget proposal. The committee will then spend the next two months discussing all aspects of the budget with agency staff as they prepare for the start of the 2011 General Assembly session on Jan. 12.

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

| More
 

View PDF Document