New Colorado law frees up money for colleges, prisons
Denver, CO Colorado
DENVER, Colorado ” State lawmakers said Wednesday they plan to go after Colorado’s remaining budget restrictions after Gov. Bill Ritter approved a bill changing a spending limit on general fund growth, making it easier for the state to pay for colleges, prisons, welfare and other big-ticket items.
Ritter signed a measure Wednesday that does away with a requirement that any increase in the state’s general budget over 6 percent a year has to go to highway construction and other building projects. Lawmakers replaced it with limits based on personal income growth, which opponents say all but eliminates the limit.
Some Republicans opposed the plan, saying it doesn’t guarantee enough money for transportation.
But Rep. Don Marostica, a Republican from Loveland and a member of the Legislature’s Joint Budget Committee, which sets the state’s spending priorities, said lawmakers now plan to seek reform of Colorado’s other spending limits, including the Taxpayer’s Bill of Rights, or TABOR, which limits the growth of government revenue and spending; the Gallagher Amendment, which limits residential property tax increases; and Amendment 23, which requires increased spending for public education.
“The great recession we are now in shined a light on why that didn’t work. Colorado is now on a track for some really sound fiscal management. We’ve got some other things, though, that we’ve got to work on,” he said at the bill-signing.
“I’m going to say it right now, (this) is the first step. Gallagher needs to be worked on, Amendment 23 needs to be worked on, and the sacred cow, TABOR, we’ve got to work on that, because if you put all those together, they do not work mathematically,” Marostica said.
Sen. John Morse, D-Colorado Springs, said reversing the remaining spending limits is not only going to be a political battle, it will also be a philosophical battle.
“This is a fight for the very soul of Colorado and it’s just beginning. We are not done. We will win the soul of Colorado back for the people of Colorado so that Colorado is everything that it can be,” Morse said.
Previously, state law allowed the total general fund budget ” which covers big-ticket items like public schools, prisons and higher education ” to grow by 6 percent a year. Any leftover revenue had to be spent first on highway construction and then other building projects. That generally happened only when tax revenue was up in good economic times.
Under those limits, no money was expected to be transferred to transportation until at least July 2010.
Under the new law, the existing 6 percent allocation formula was replaced with a new 5 percent limit based on personal income growth.
The law guarantees that 2 percent of the general fund is dedicated to transportation for five years, beginning in 2012, if personal income from the previous fiscal year grows more than 5 percent. The five-year period begins in any year after that if the conditions are met.
The state also will increase its 4 percent general fund reserve to create a 10 percent rainy day fund to protect critical state services from any future recessions.
Opponents of the change said that if the economy roars back, transportation will lose hundreds of millions of dollars that would have been transferred under the old system.
Ritter said that system was unreliable and the new law will give the state a reliable, stable source for transportation funding.
Jon Caldara, president of the conservative Independence Institute think tank and an opponent of the measure, said voters showed they don’t want changes when they rejected an initiative last year that would have eliminated some refunds to taxpayers under TABOR and instead used the money for education.
“This jihad against TABOR has been going on for a long time,” Caldara said.
He said it’s unfair to blame TABOR for the state’s budget problems because it’s on hold under a voter-approved plan that allowed the state to keep surplus tax revenues for five years to recover from the last recession.
He said it’s time for the other budget limits to go through the same voter review as TABOR.
“We already beat up on TABOR. It’s time for the others to be pulled back,” Caldara said.
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