CO budget plan focuses on investments, not cuts

DENVER -- Colorado Gov. John Hickenlooper's budget proposal released Thursday includes more funding for education, more Medicaid spending, and pay increases for state employees for the first time in five years.

The Democratic governor's budget plan represents something the state hasn't seen in years: no major cuts.

"It is heartening to be on the other side of what has been a steep decline," Hickenlooper said.

As the state economy has begun to improve, Hickenlooper's economists have emphasized a theme of cautious optimism. They point out that the state's economy is growing slowly, and that it has been boosted by taxes on one-time stock sales, not necessarily by more jobs.

"The Colorado economy is rebounding substantially, but we are still not there in total number of jobs," said Henry Sobanet, the governor's chief economist. Sobanet said the state has also benefited from savings lawmakers have made in previous years.

Still, Hickenlooper said the growing tax receipts "gives us the ability to restore some cuts and modestly increase funding in critical areas of the state's budget."

The state general fund that lawmakers have control over will grow to $8.1 billion next year, up from about $7.6 billion last year. The state's total funds budget, which includes the general fund, cash funds and federal money, will be $21.9 billion. It's $1.1 billion more than last year.

Hickenlooper is proposing $201.6 million more for schools, to bring the K-12 budget to $3 billion _ the largest part of the general fund. Hickenlooper is also requesting about $174 million for Medicaid. It brings the total general fund spending for Health Care Policy and Financing, which administers Medicaid, to $2 billion. The governor's office said 51,000 more people are expected to become eligible for the program next year.

Republicans have criticized the increases in Medicaid spending, and have called for greater flexibility over the program from the federal government. Lawmakers will work on the budget and make any changes in the spring before voting on it.

"This budget is close to perfect," Hickenlooper quipped. "I don't anticipate any fights."

Projected revenue increases mean Colorado will exceed the pre-Great Recession peak in tax receipts this year. But the state is still $1.1 billion below the general fund level of 2007, when accounting for inflation and population growth, according to the governor's economists. The economists have also warned they're still uncertainty over the European debt crisis, and potential federal budget cuts as part of sequestration in Congress.

Republican Sen. Kent Lambert, a member of the state's budget-writing committee, said those are some reasons why lawmakers will need to be flexible.

"The economic uncertainty is palpable right now," he said.

He said lawmakers also have to be mindful that the state economy has been helped recently by one-time money, such as people selling their stocks and bonds.

"The state is a short-term beneficiary for that, but it may not be sustainable," he said.

Sobanet said the proposed increase in school funding next year means the state will cover inflation and enrollment growth. Higher education is also receiving more money, $37.5 million, bringing the department's general fund budget to $656.7 million.

Hickenlooper is also asking lawmakers to give all state employees raises of 1.5 percent, and another 1.5 percent in merit-based raises. It would be the first time in four years state employees have gotten raises.

The governor also wants lawmakers to increase the state's savings reserve to 5 percent of the general fund _ or $387.3 million _ in case of any unexpected expenses. The current reserve level is 4 percent.

Hickenlooper also is proposing $13.1 million for services for people with developmental disabilities, $6.8 million in food assistance for low-income families, and $2 million to promote tourism.

More than 90 percent of the general fund budget is spent on K-12 schools, higher education, health and human services, and public safety, the governor's office said.


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