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  Home Page » Opinion » Budget Backfill

Budget backfill

Lawmakers looking where they can for options

Facing a $1.5 billion budgetary shortfall over the next two years, Colorado lawmakers are scrambling to find ways to trim spending and backfill the budget with whatever resources are available. It is an exercise in restraint and creativity that is painful for many important state programs whose budgets are not constitutionally protected. The solutions legislators have come up with, though not perfect, are at least alleviating some of the potential pain of such a significant funding gap.

A number of budgetary tricks and maneuvers have given Colorado some breathing room to avoid extreme cuts to essential programs, not least of which is a decision to dip into a $700 million reserve held by the state-owned workers' compensation insurance company Pinnacol Assurance. While raiding a reserve is not an ideal solution, it is more desirable than issuing additional cuts to such line items as higher education, which is already facing considerable shortages, including Wednesday's announcement of a $300 million reduction in state funding in the coming budget year.

That hit will be softened by the workers' compensation money, but in using those funds, lawmakers show just how dire the state's financial situation is. Like a family dipping into savings accounts to make ends meet, using the reserve is not a long-term solution to the funding mess that faces Colorado and most other states. Instead, it is a one-time fix that will, hopefully, provide the stopgap funding necessary to weather financial storm while the economy recovers. It is hardly ideal, but it is preferable to making the cuts and not replacing them somehow.

Wednesday's decision to tap the workers' compensation reserve is one in a string of creative maneuvering to avoid the full brunt of a $1.5 billion shortfall over two years - $786 million in the 2010 budget. Much of that burden has fallen on education - both colleges and universities as well as K-12 funding - and is being made up for with a combination of tactics including a suspension of the fee paid to businesses for collecting state sales tax, a hiatus on the "homestead exemption" that gives seniors a break on property taxes, transferring funds from a water project account and smoking cessation and prevention programs, and an increase in tuition for state colleges and universities.

These changes will leave no Coloradan untouched by the budget shortfall, and are indicative of the breadth and depth of the difficult financial climate. Students, seniors, business owners, teachers and state employees are all affected by the cutbacks lawmakers are enacting. Federal stimulus money is likely to soften the blow somewhat, as will the backfilling from the workers' compensation fund and other reserves. These fixes will not, however, eliminate all the discomfort. It is a problem with no perfect solution.

Nevertheless, lawmakers are doing the best they can with a fundamentally bad situation. Facing a staggering shortfall, combined with constitutional mandates to fund education, health care and prisons, Colorado's budget has little wiggle room even in good years. In bad years like this one - and the one to come - things get downright ugly. Raiding reserves where they are available eases that pain to some degree. It, like most things budget-related today, is hardly ideal but is preferable to the alternative of simply making cuts.