The Joint Budget Committee on Monday began looking in the couch cushions for $2 billion to $3 billion to cut from the 2020-21 budget. JBC members spent Monday working through budget-cutting recommendations for the first five state agencies plus PERA.
While they made decisions that could drop more than $30 million, they left the biggest decision items on the table for another day.
The most controversial: eliminating the senior property tax exemption, which pays counties for property taxes for seniors 65 and older and who have been in their homes for at least 10 years. It's one of the state's most popular programs.
"This will be very controversial," said the committee's most senior member, Sen. Bob Rankin, a Carbondale Republican.
Cutting the exemption for 2020-21 would free up $163.6 million in general fund revenues, but the committee didn't take action, choosing to have further conversations.
Also left on the table: $225 million in annual payments to the Public Employee's Retirement Association, which were set up under legislation passed in 2018 that attempts to resolve PERA's unfunded liability.
"PERA will have to take a hit somewhere," said JBC staff analyst Alfredo Kem. "This is the cleanest and easiest place" to do it while still leaving PERA whole, he said, noting that PERA will also take a huge hit on its unfunded liability from losses in the stock market.
Among the decisions the JBC did make on Monday:
- $2.5 million cut from an education outreach program tied to boosting the state's vaccination rates, especially for measles, mumps and rubella shots for kindergartens. Colorado ranks toward the bottom nationwide in immunization rates for kindergartners for the MMR shot. The program was a compromise between lawmakers and the governor's office after a controversial bill on vaccinations was shelved in the 2019 session.
- More than $20 million in cuts to the Department of Labor and Employment, with the largest cut, $11 million, from a major medical insurance fund that pays for claims resulting from industrial accidents between 1971 and 1981. The JBC staff analysis proposed tapping the TABOR reserve to cover the cuts. An additional $3.3 million will come from a skilled worker outreach program that had not yet gotten underway. And $5 million will come from a petroleum storage tank fund used to clean up gas spills, for example. The fund is going somewhat unused during the pandemic because of people driving less.
Veterans' services weren't spared either. The JBC voted to take $200,000, and it could grow larger, from a veteran career service fund that is paid for by marijuana cash tax revenues. That money will be shifted into the general fund.
Last week, the JBC staff released 31 budget documents tied to state agencies and other state programs, outlining three scenarios for the committee to consider. The first is to keep spending for 2020-21 at the same level as 2019-20. The second is to seek across-the-board cuts of 10% for most state agencies; the third is a 20% cut.
One thing that didn't come up during Monday's hearings: federal money coming from the Coronavirus Aid, Relief, & Economic Security Act. According to a memo from the Congressional Research Service, Colorado is expected to get $2.233 billion, with the state in line for about $1.7 billion and counties of 500,000 or more getting the rest. However, a JBC staff memo on April 3 said that federal interpretations say those funds cannot be used to address revenue losses but only unanticipated expenses due to COVID-19.
The funds were scheduled to arrive in the state's bank account on April 24.
The committee will work on staff recommendations for the next two weeks as they attempt to find savings to balance the state budget. Their efforts will form the basis for the 2020-21 Long Appropriations bill, which is expected to be introduced when the General Assembly returns on Monday, May 18.
JBC members and staff met in person at the Legislative Services building, with everyone wearing masks except for Rep. Kim Ransom, a Lone Tree Republican. In announcing the schedule, the committee pleaded with the public to stay home and listen to the hearings remotely. They enforced it by removing almost all of the public's seats from the committee room.