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Photo by Ken Teegardin of Assisted Senior Living courtesy of Wikimedia Commons)

Colorado just cannot cut its way out of a $3.3 billion shortfall in 2020-21.

But that’s the reality facing lawmakers who face the prospect of an unprecedented budget cut, the result of the COVID-19 pandemic and a precipitous decline in state revenues.

So the hope is that the federal government will ride to the rescue, according to Democratic members of the Joint Budget Committee who spoke with reporters Wednesday afternoon.

That news conference followed a grim presentation from JBC staff analyst Craig Harper, who explained one of the options for shoring up the budget: growing the debt to K-12 education, known as the budget stabilization factor.

The factor is currently at $572 million, down from its high point of $1 billion a decade ago. That represents about 7% of the money the state pays for K-12 education. Any increase in the debt, which would result in budget cuts for school districts across the state, would hit rural school districts that don’t have special property taxes for education, known as mill levy overrides, especially hard.

An increase to the budget stabilization factor that puts it at $2 billion would mean a 15% cut to K-12 education, Harper said. That would cause layoffs.

The JBC has worked for the past week to do everything they could to protect K-12 education and public health services to vulnerable populations.

But as Sen. Dominick Moreno of Commerce City, the JBC’s vice-chair said, the committee cannot cut its way out of the shortfall.

JBC Chair Rep. Daneya Esgar of Pueblo said she really hopes that the federal government will find a way to step up and help states and local communities get through this.

Tuesday, U.S. Speaker of the House Nancy Pelosi, a California Democrat, unveiled a nearly $3 trillion stimulus package that would do just that. Colorado’s share of the $500 billion in the package that would be set aside for states would be about $4 billion.

But it’s not something that can be counted on right now, JBC members said, due to the negotiations that will be going on around that package in the coming weeks.

Moreno said there is something of a silver lining in the revenue forecast that came out on Tuesday. It showed that the JBC had taken enough actions to cover the shortfall for 2019-20, if they use most of what’s left of the general fund reserve.

But if the JBC cannot find the $2.5 billion to cut in the 2020-21 budget — the result of actions they took last week — there’s one other option available under the type of disaster Colorado is experiencing, and that’s tax increases. But that’s the last option, according to Sen. Rachel Zenzinger, an Arvada Democrat.

JBC members said if the federal package comes through, they could undo much of the actions they’re considering in the next two weeks to cover the shortfall.

They’re also looking over the state’s $1.7 billion from CARES Act funding to see what can be put toward the shortfall, although federal guidance up to now has been that states could not use CARES Act money for shortfalls, just for COVID-19 expenses.

“We’re doing a full court press on the congressional delegation,” Moreno said.

The other hope: that conversations later Wednesday between Gov. Jared Polis and President Donald Trump, a meeting taking place in Washington, D.C. will bear fruit.

Senate Republicans issued a statement Wednesday afternoon calling on the Democrats to bring lawmakers back sooner than the May 26 date set for their return. 

After reconvening, the statement said, lawmakers should declare an end to the emergency.

"The work to reopen Colorado must be both safe and responsive to the needs and realities of the people of Colorado if it is to be sustainable and widely adopted," the statement said.

"It is clear that our experiment with centralized planning doesn’t work. The voice of the people speaking creative solutions within established safety goals is the clear path to smart, sustainable and socially supported solutions.

"As our state begins to reopen its doors, and with warnings of a second wave at the forefront of our minds, it becomes increasingly important for the Colorado General Assembly to get back to the people’s business. Undoubtedly, the last eight weeks have brought some difficult lessons for many of us, but those lessons must be taken to heart and incorporated into any future action taken on behalf of our governing bodies."

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