We got another dose of bad budget news on Tuesday. There will be significant cuts this year and next. They will be real, and they will hurt.
Perhaps the best that can be hoped for is to minimize the damage, and by that measure, Gov. Bill Ritter and the Joint Budget Committee are off to a positive start.
When the governor unveiled his proposed cuts for 2009-10, he didn’t take the easy way out. He didn’t propose across-the-board cuts or simply roll back every gain made in the last two years. Instead of a hatchet, he used a scalpel to suggest cuts he hopes will do the least harm to vulnerable Coloradans, preserve core services and protect public safety and health.
Thus, Ritter didn’t propose cutting immunizations. He didn’t propose cutting need-based financial aid for undergraduates. He didn’t propose cutting indigent care for the mentally ill. He didn’t propose cutting existing prenatal programs. And he didn’t propose cutting school breakfasts or existing preschool slots for low-income kids.
Setting priorities like that should be the model as the legislature now begins its work. Lawmakers must minimize the impacts on the neediest among us; do the least harm to long-term reforms in health care, education and prison recidivism; and keep alive programs that expand opportunities for kids and working families and help stimulate economic and business activity.
Lawmakers must focus on the real effects cuts will have on families and businesses, on long-term economic competitiveness and on our future prosperity and opportunity.
As they move forward, we offer some principles we think should serve as guideposts. We will be communicating them each and every chance we get to talk to lawmakers, our allies, the media and the general public.
Do no harm to the most vulnerable Coloradans
- Protect access to safety net services like Medicaid, CHIP, food stamps and unemployment insurance. Spend money to process increased caseloads in a timely manner, because these services not only help the people most hurt by the recession but also provide stimulus to the economy. Try not to cut provider reimbursement rates so low that doctors can no longer afford to serve eligible Coloradans.
- Ensure lower-income people do not bear the brunt of fee increases, such as auto registration fees or tuition increases. Look for offsets. If fees are imposed, they should be based on ability to pay.
Take the long view and remember the state we are creating for the future
- Prioritize expenditures that promote long-term opportunity or that research shows produce positive, long-term returns on investment, such as preschool, children’s health programs and need-based financial aid.
- Concentrate economic development spending in areas known to provide long-term economic growth, such as workforce development, access to post secondary education, repairing infrastructure and expanding broadband capacity.
- When possible, use cash funds and reserves to mitigate General Fund cuts in this fiscal year. Budget cuts depress economic activity and counteract some of the stimulus efforts. In addition, maintaining General Fund levels protects the ability to grow back from the downturn in future years.
Make decisions based on facts, not conventional wisdom.
- Be cautious about tax credits or cuts to promote economic development. Research indicates that many of these tax credits are not effective. While some businesses – especially small businesses – may warrant assistance in a bad economy, be careful about giving away scarce revenues to businesses or others for doing something they were going to do anyway.
- Remember that research shows that corporate tax cuts have lower multiplier effects than expenditures that support lower-income families and unemployed workers.
- Look for areas to can gain efficiency without hurting services. Outdated or underperforming programs should be changed or cut entirely.
Take full advantage of the federal economic stimulus funds
Make sure that programs such as Medicaid and unemployment insurance are structured in such a way that they take full advantage of the federal funds available. Let’s not leave any money on the table.
Use the federal stimulus money strategically by making investments that stimulate the economy in the short term and support public structures that underpin our long-term economic growth. For example:
- Repairing or replacing bridges and highways that are in the worst condition stimulates the economy immediately, improves road safety and bolsters our ability to ship goods and products efficiently.
- Expanding broadband technology in underserved areas throughout the state creates immediate economic activity and enhances economic development opportunities in these areas over the long run.
- Modernizing our electric grid, investing in mass transit and training workers for jobs in the renewable energy industry provides short-term stimulus but lays the foundation for more efficient and environmentally sustainable energy use.
Let’s not do this again – let’s learn from our mistakes
The revenue shortfall is hard enough to deal with in its own right. In Colorado we have made matters worse with the many and often contradictory constitutional and statutory provisions that govern how we write budgets. Let’s not wait until the next crisis to fix them. Specifically:
- Colorado needs a realistic rainy day fund. Such a fund would not have prevented these cuts, but the cuts certainly would have been less severe.
- Let’s change or eliminate the so-called Arveschoug-Bird limit on General Fund expenditures. Eventually there will be a recovery. But Colorado’s General Fund (and the public structures it supports) will not be able to rebound with the economy because of Arveschoug-Bird. Current projections show the ratchet in this limit will make permanent at least $1 billion in cuts to the General Fund.
Wade Buchanan and Rich Jones are affiliated with the Bell Policy Center
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