After eight years in office, then-Gov. John Hickenlooper left Colorado in a financial lurch when his second term ended in January 2019. The Legislature was awash in cash. The state’s finances seemed stable, but that was an illusion.
State government lacked a secure emergency fund and had some of the lowest budget reserves in the country. Hickenlooper led Colorado’s expensive Medicaid expansion but never convinced the Legislature to budget for a disaster that might jeopardize funding for that and other programs people become dependent upon.
An inevitable crisis came this year in the form of COVID-19, which led Gov. Jared Polis to shut down businesses and forgo the tax revenues they and their employees generate. A state living paycheck to paycheck suddenly lost a massive chunk of its income.
The coronavirus closures mean far more than laid-off workers and inconvenienced consumers with stay-at-home computer jobs. The closures mean a devastating loss of income and sales tax revenues for government.
When the pandemic began, the state had an annual budget surplus approaching $1 billion. Most of that could and should have been locked away in a rainy day fund. Instead, the Legislature fed its insatiable appetite to spend.
A study by Colorado’s Legislative Council Staff predicts annual revenue shortfalls of nearly $7 billion over the next three years and no significant savings to offset them.
“The cuts in state spending will have to be sizable because it’s just such a large amount of money,” said Kate Watkins, chief economist with the Legislative Council, in an interview with The Gazette. “We’re looking at double-digit cuts. It’s going to hurt. We will have a much smaller budget next year.”
Gov. Jared Polis this month ordered $228.7 million in emergency cuts, with 80% coming out of Medicaid.
The Medicaid cuts were an easy place to start for a troublesome reason. Medicaid expenses have dropped sharply because the government’s COVID-19 response stopped elective and routine medical procedures and the costs they generate. The cuts will perpetuate a dearth of care for the unemployed and poor, long after the shutdowns end.
Dr. Scott Atlas, a medical doctor and senior fellow at Stanford University’s Hoover Institution’s Working Group on Health Care Policy, said the shutdowns are “literally killing people” who cannot see doctors.
Our country, he said, averaged 150,000 new cancer diagnoses each month before the coronavirus. Not anymore.
“Most are not getting diagnosed,” he told Fox News on Monday. Atlas said half of the people on chemotherapy are not getting treatments. Two-thirds of women are not getting pap smears to detect cervical cancer.
“The cure is bigger than the disease at this point,” Atlas said. “And that doesn’t mention the massive economic harm. The U.N. is saying the lockdown itself will throw an extra 125 million people into starvation.”
Not poverty. Starvation.
The pandemic has decimated a state government that has long neglected to save for a crisis. It means the state has no good means to help people in need, or even provide life-saving care for Medicaid patients.
Gov. Polis understands the economy and should lead the Legislature to prioritize savings and resist new urges to spend going forward. Bad things happen when we least expect them. Let’s get through this nightmare and then prepare for the next one. Colorado should never again be unprepared and underfunded when its luck runs out.