Joint Budget Committee, 2021

Joint Budget Committee, 2021 session. From left to right, top row: Rep. Leslie Herod (D-Denver), Rep. Julie McCluskie, vice-chair (D-Dillon), Sen. Bob Rankin (R-Carbondale).

Bottom row: Sen. Dominick Moreno, chair (D-Commerce City), Rep. Kim Ranson (R-Lone Tree) and Sen. Chris Hansen (D-Denver).

Gov. Jared Polis met with the Joint Budget Committee Thursday to present his proposal for the state’s 2021-22 budget for $35 billion in spending, reversing most of the major budget cuts handed down to state agencies in the 2020-21 budget.

Not part of Thursday’s discussion: Polis’ mid-year adjustment request for fiscal year 2020-21, which totals nearly $1.3 billion in additional spending.

That mid-year request includes:

  • A decrease of $232.2 million in the General Fund for anticipated supplemental operating requests, including a $148.9 million decrease in appropriations to the Department of Health Care Policy and Financing that was reflected in a recent executive order to transfer General Fund to the Disaster Emergency Fund, and $83.3 million in additional anticipated mid-year reductions. A JBC budget document from Wednesday said the $148.9 million will be used to help pay for the $375-per-person stimulus payments going to unemployed Coloradans.
  • An increase of $302.8 million in the General Fund for anticipated stimulus-related supplemental requests;
  • A placeholder of $200 million for top priorities of the General Assembly related to one-time efforts to promote economic stimulus and recovery; and
  • Proposed transfers of $865.9 million from the General Fund to various cash funds, including $200 million for transportation; $20 million for capital construction; $266.2 million for several economic and workforce development and wildfire-related purposes; and $379.6 million for state emergency reserves.

Polis’ 2021-22 budget submittal, released Nov. 2, did not show the effect of ballot measures that will affect the state budget going forward. That’s the repeal of the Gallagher Amendment, known as Amendment B; Amendment 77, which could lead to changes in betting limits at Colorado casinos and provides funding to community colleges; Proposition 116, which reduced the state income tax from 4.63% to 4.55%; Proposition EE, which brings in dollars for early childhood education; and Proposition 118, which would set up a paid family and medical leave program.

However, Lauren Larson, the governor’s budget chief, said Thursday that when all those measures are taken into consideration, the impact to the state budget is actually $105 million in the black for 2021-22.

What led most of that adjustment was the repeal of Gallagher, which set a 45/55 ratio for property taxes assessed to residential and commercial buildings. Larson said the repeal eliminated a $300 million placeholder that would have been needed to cover property tax losses tied to a reduction in the residential assessment rate, anticipated in early 2021. The state would have been on the hook for that $300 million, which would have largely backfilled school funding cuts due to those lower property taxes. The state is required to backfill K-12 education when property taxes don’t keep up.

Polis’ 2021-22 budget request is centered on a stimulus package that he said Thursday could create up to 15,000 temporary jobs, given that the stimulus is one-time spending.

That $1.3 billion package includes the $168 million for benefits for low- and middle-income workers who are jobless; $105 million for “winter support” for small businesses, largely restaurants and bars, hit by capacity restrictions; $220 million for “shovel-ready public works and infrastructure projects” and the “new outdoor economy”; $160 million for broadband investments, including education and telehealth; $140 million for “upskilling and investment”; $78 million for wildfire response; $50 million for housing eviction prevention; $4 million in grants to pay for body cams for law enforcement and $200 million for “one-time stimulus legislative priorities.”

But the state still needs another stimulus package, too, Larson said: one from the federal government that has been stalled in Congressional negotiations with the White House for several months.

“The economy cannot wait for January,” when a new administration will be sworn in, Larson said. “We will be suffering if there isn’t an additional federal stimulus.”

But Larson also said the state can take control of its own strategy to lift up the economy through the stimulus proposed in the Polis budget.

The budget proposal includes a hefty boost for the state’s general fund reserve, which was tapped to cover some of the budget cuts handed down in 2020-21. Sen. Chris Hansen, a Denver Democrat appointed to the JBC last week, asked why Polis chose 10% as the new reserve level, which will require about $272 million in general funds. According to the budget presentation, the reserve would include a “carryforward” of $1.26 billion that would be on hand in case of large budget cuts in fiscal year 2022-23, when the state is projected to head into another budget deficit.

At 10%, the reserve would be at its highest level since 1985. Polis explained he picked the 10% level as a way to ensure the state doesn’t have to cut like it did for the 2020-21 budget. The stimulus package he’s proposing will help Colorado’s economy recover faster than the rest of the nation, but the reserves are important because “we don’t know how fast the rest of the country will recover.” That level strikes a reasonable balance between those priorities, he said.

Republican Sen. Bob Rankin of Carbondale, the JBC’s senior member, said that Republicans want to make the next budget a bipartisan effort, and he told the governor he is solidly behind the stimulus.

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