Gov. John Hickenlooper today delivered the FY 2012-13 proposed budget to the Joint Budget Committee.
"As you will see, the budget reflects the ongoing work of closing the State's structural budget gap and funding the demands of numerous federal and State Constitutional requirements," Hickenlooper wrote in a letter to the JBC. "The proposal also contains several proposals to protect the most vulnerable Coloradans, promote economic growth, continue needed reforms in education and modernize State government."
The FY 2012-13 proposed budget is $20.09 billion, of which $7.39 billion is from the General Fund. These amounts represent growth rates over the last fiscal year of 1.7% ($342.6 million) in total funds and 3.2% ($227.1 million) in the General Fund.
"The General Fund budget (financed by income and sales taxes) is the area of the budget that is most reflective of the overall economic condition of the state," the governor's letter said. "Though there has been a partial recovery from the recent recession, the revenue picture remains unsettled and we expect only modest General Fund revenue growth in FY 2012-13."
Demands for State services and benefits over the past five years have increased substantially and reflect the pressures of a growing population and a weak economy. Specifically:
- Medicaid enrollment has increased by 281,000 (72%),
- Children's Health Plan+ caseload has increased by 11,000 (19%),
- K-12 student enrollment has increased by 52,000 (6.8%),
- Higher Education enrollment has increased 33,600 (20.5%), and
- Annual State Park visits have increased by 766,000 (6.5%).
The largest areas of increase in spending in FY 2012-13 are in mandatory areas of the budget. The new General Fund resources for the Department of Health Care Policy and Financing (HCPF) accounts for more than 81.7 percent of the statewide General Fund increase. This is even after HCPF made $31.9 million of Medicaid budget reductions.
"As the economy has weakened, more people are eligible for the program and we are obligated to finance those costs," Hickenlooper wrote to the JBC. "Please note that while new federal health care rules prevent our ability to restrict eligibility to save money, many of the expanded health coverage populations from recent years are not paid with General Fund dollars. Rather, those expansions are covered by the hospital provider fee established by House Bill 09-1293."
Meanwhile, though the state is experiencing a modest decline in the incarcerated population at the Department of Corrections (DOC), the expected caseload is higher than previously estimated and thus new funds are needed. The combined increases to HCPF and the DOC, account for 91.9 percent of the net General Fund increase in FY 2012-13.
With respect to the total funds budget, absent the increase to HCPF, the overall FY 2012-13 State budget would decline from initial FY 2011-12 levels.
Though the overall budget is increasing, it reflects reductions both large and small across most State departments, including significant reductions to K-12 and higher education. In total, the state's Office of State Planning and Budgeting identified $679 million that could not be financed under currently available resources.
"Though this budget request reflects some difficult choices, we believe there are important policy changes and initiatives that merit your consideration and approval," Hickenlooper's letter said.
The proposed budget includes five key priorities:
- Protect the Vulnerable. The Department of Human Services is requesting $4.9 million total funds ($2.4 million net General Fund) to provide services to 173 additional people with developmental disabilities. The proposed budget also suspends the Senior Homestead Exemption yet expands the existing Colorado Property Tax/Rent/Heat Rebate in 39-31-101, C.R.S, to help the state's neediest seniors.
- Economic Development. The proposed budget seeks to add to the state's available tools with three initiatives: allocating $6 million to the Economic Development Council; allocating $3.1 million to fund the Governor's Energy Office with Limited Gaming funds; and allocating $3 million from Limited Gaming funds to start an innovative loan program to promote film production and location within Colorado.
- Education Reform. The proposed budget includes $7.7 million to begin implementation of Senate Bill 10-191; specifically, the request will fund three critical features of the educator effectiveness evaluation system called for in the legislation.
- Modernizing Government. The proposed budget includes a request to modernize two specific areas: the Colorado Financial Reporting System (the State's accounting system) and a consolidation of more than 30 data servers to two secure centers.
- Long-term Budget Planning. For many years, the State has relied on year-to-year budgeting and spending decisions that are disconnected from the economy and available revenue. Before multi-year budgets can work, future spending and delayed obligations must be kept to a minimum and they must reflect the realities of revenue availability. To that end, it is time to take a fresh look at statutory schedules for new or increased spending.
The entire letter from the governor to the Joint Budget Committee about the FY 2012-13 proposed budget can be found online at http://bit.ly/vnAVZa.