Gov. Bill Ritter today announced a new plan to re-balance the state’s Fiscal Year 2010-11 budget and close a nearly $60 million revenue shortfall. Higher-than-anticipated June revenue and additional Medicaid funding from the federal government kept the budget gap from being significantly wider.
Gov. Ritter will hold a media availability in his office at 3:45 p.m. today to talk with reporters and answer questions about the balancing plan.
The plan includes several steps to cut costs, reduce expenses and utilize available funds to keep Colorado’s budget balanced. Over the past three fiscal years, Gov. Ritter and lawmakers have closed recession-induced shortfalls of $4.3 billion.
“Today’s balancing plan continues the same strategies we’ve utilized throughout the downturn,” Gov. Ritter said. “We are preserving essential services, protecting the safety net, minimizing pain and requiring shared sacrifices and shared solutions from everyone. This is a responsible plan that continues to position Colorado for a healthy and sustainable recovery.”
Key elements of the balancing plan:
· Cutting $1.3 million from the Department of Corrections and imposing a $4.9 million, or 1 percent, across-the-board reduction in personnel costs by keeping positions vacant and delaying hiring. The plan does not include furloughs for the current fiscal year.
· Transferring $53 million from other accounts into the state’s General Fund to cover operating expenses, including:
o $9 million from the Medical Marijuana Program Fund. The state anticipates ending the year with 150,000 applicants for medical marijuana cards – up from 41,000 in 2009. A marijuana card costs $90 per year.
o Transfers of $20 million from accounts that support local communities with discretionary grants funded by severance tax and federal mineral lease (FML) revenues, along with $11.4 million from a grant reserve fund. Gov. Ritter has specifically protected the direct-distribution grant program and those funds are not being used to help balance the budget.
The Governor’s plan allows the state to maintain a 2.1 percent, or $150 million, General Fund reserve in case of worsening revenue conditions. The next revenue forecast is due out Sept. 20.
Gov. Ritter noted that $76.8 million in higher-than-estimated individual and corporate income tax revenue, and $144 million from a six-month extension of the Federal Medical Assistance Percentage, helped ease this round of budget balancing. Gov. Ritter also praised Congress and the President for providing schools with additional education funding, including $160 million for local districts in Colorado.
Looking ahead to the September revenue forecast, Gov. Ritter said he is preparing for the possibility of additional cuts to the FY10-11 budget. Therefore, he has placed a hold on $40 million in local grants funded by severance tax and FML revenue.
The September forecast also will be used to help shape Gov. Ritter’s FY11-12 budget proposal, which will be submitted to the Legislature’s Joint Budget Committee on Nov. 1. Previous forecasts have indicated a $500 million to $1 billion shortfall in FY11-12, meaning that more tough decisions must be made.
“While Colorado’s economy is showing signs of stability and encouragement in areas like the New Energy Economy, tourism and healthcare, we face more struggles and more difficult choices in the months ahead,” Gov. Ritter said. “All options must be on the table in order for us to keep our budget balanced.”
