DENVER – Colorado’s state government could lose nearly $68 million if Congress fails to reach a budget deal by the new year, legislators were told Wednesday.
Schools and human services would feel the cuts most deeply because they get the most aid from the federal government.
It would be a large, but not crippling, blow to the state budget, said Amanda Bickel, an analyst for the Joint Budget Committee.
The painful treatment to deal with the ballooning federal deficit is known in Congress as “sequestration” or the “fiscal cliff” – a package of tax increases and spending cuts that will take effect automatically at the end of the year unless Congress acts. Congress and President Barack Obama created the fiscal cliff as part of an earlier deal to cut the budget.
Negotiations are stuck on whether to increase taxes for the wealthy. Obama campaigned for re-election by calling for tax increases on people making more than $250,000, but many Republicans oppose the idea.
Colorado’s state budget is in line for its first year of real recovery since the 2008 recession, as long as negotiations in Congress don’t fail. If they do, the Department of Education could lose $34 million when the automatic cuts take effect, and the Human Services department could lose $17 million.
“The Department of Education is one of the places where, if this goes forward, you would really see quite significant cuts,” Bickel said.
Congress pays Colorado for a variety of federally mandated programs, from welfare to education for the disabled.
“If sequestration goes into effect, it doesn’t change what we’re required to do; it just changes what the feds will give us. It’s such a wonderful system,” said Rep. Cheri Gerou, R-Evergreen, a member of the Joint Budget Committee.
The committee is meeting now to draft a budget for 2013-14, but it’s unlikely that the six legislators on the panel will get a good answer anytime soon about how much federal money they can expect. Bickel said it’s hard to imagine that Congress will reach a comprehensive deal by the holidays, and the details could still be up in the air next year.
She advised the panel to get ready for cuts no matter what happens with the fiscal cliff because Congress aims to trim the national budget.
“Whatever happens in terms of sequestration, we are absolutely going to feel the effects of federal budget tightening,” Bickel said.