Gov. Jared Polis stood before cameras and a packed House chamber last week to deliver his State of the State address. He began by thanking state lawmakers for last year’s accomplishments.
“Last year, at this great podium, I asked you to join me in taking the bold step of providing free, full-day kindergarten for every kid in Colorado,” Polis said. And with some gusto, he added: “And you delivered.”
The former five-term congressman from Boulder is asking state lawmakers to deliver this year, too. Amid cheers and applause from the balcony above, he laid out policy priorities that include expanding preschool enrollment, reducing healthcare costs and setting aside money in the state’s rainy day fund.
For much of his speech, members of the Joint Budget Committee (JBC) were mostly seated and straight-faced. The governor’s wish list exceeds one key estimate for how much discretionary money is available next fiscal year without making cuts to existing state programs. The committee members, who write the state budget, know that if the governor gets his way, there will be little to no money left for their priorities.
Democratic lawmakers, who control both chambers of the legislature, may agree with some of the governor’s priorities. But in a year when money is tight, the governor’s penchant for announcing first and seeking approval later poses both a fiscal and political bind for Democrats trying to meet their own spending priorities without undermining the governor.
“That’s something that we have to contend with,” Sen. Dominick Moreno, a Democrat from Commerce City who sits on the JBC, after the State of the State address, referencing the governor’s wish list. But, he added, “The legislature writes the budget.”
“If I could offer a piece of advice,” Moreno said, “it’s how we can collectively advance all of our priorities.”
The governor’s predecessor, John Hickenlooper, was more hands-off than Polis has proven to be. In 2018, Hickenlooper told reporters his efforts to interfere in the budget were not always well-received by lawmakers. More generally, he said of lawmakers, “If I stay out of their way, they will do a better job.”
Polis is no John Hickenlooper, said Sen. Don Coram, a Republican from Montrose who was elected as a state representative in 2010, the same year Hickenlooper was elected governor.
“I think that he was in the legislature so long that he wants to make policy rather than react to policy,” Coram said of Polis.
The list of needs and wants in Colorado almost always exceeds the amount of money available. Lawmakers are constitutionally required to pass a balanced budget and must ask voters for permission to raise taxes, which they rarely do. Since 1992, when voters passed the Taxpayer Bill of Rights (TABOR), which sets a limit on how much revenue Colorado can spend, voters have approved just three out of 15 tax increases, according to an analysis of an archive of ballot measures by The Colorado Independent.
But this year, money is particularly tight. At Polis’s urging last year, the state adopted a new, full-day kindergarten program, which is expected to cost $193 million or more in the 2020-2021 fiscal year beginning July 1, and similar amounts in future years. And given continued economic growth, revenue this year is expected to exceed the state’s TABOR cap, triggering constitutionally mandated refunds for any revenue collected above that cap. An effort to eliminate the TABOR cap in the 2019 election failed when voters rejected Proposition CC by a 10-point margin.
Within the state’s $30-plus billion budget, lawmakers have control over how to spend just north $14 billion in general fund revenue, which is collected primarily from the corporate and individual income taxes and the sales tax. But because of the TABOR cap and the adjusted growth of state programs like Medicaid, there isn’t much money left for lawmakers to work with this year. According to one estimate from the nonpartisan Legislative Council, the amount of general fund revenue surplus available this year is as low as $55 million.
The sum of all Polis’s requests made during the State of the State address top an estimated $79 million, more than eating up all of that conservative estimated surplus. Big-ticket proposals from the Polis administration include $31 million to increase the state’s reserve from 7.25% to 7.5%, $27 million to expand access to preschool, $10 million for state parks, $5 million for the Colorado Water Plan, $5 million for pre-trial reforms, and $1 million for a “public option” insurance plan, according to a state budget document.
In addition to his budget request, the governor helped to force the hand of lawmakers on another urgent budget matter. Earlier this month, GEO Group gave the state 60 days’ notice that it would end its contract with the Department of Corrections. The company said this decision was made, in part, because the governor in November said he intended to move inmates out of the private prison. The company says this announcement made it difficult to keep staff. And in October, the governor all but ended negotiating a new contract with GEO Group past June 1, according to Dean Williams, the director for the Department of Corrections. This situation has put lawmakers in the position of spending millions to open a state prison in Cañon City to help make room in the state prison system for about 650 inmates months earlier that once anticipated.
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To help free up money in the budget, Polis said he asked all his state department heads to make 5% cuts in their budgets. Conor Cahill, a spokesperson for the governor, told The Colorado Independent the administration found $238 million in savings by scrubbing the budget, money that can be dedicated to new legislator and governor priorities. Cahill said many of the priorities in the budget are bills being carried by lawmakers who share similar priorities.
Some Democrats are, however, pushing back on the governor’s requests to cut the state’s income tax rate by the end of his first term in office, which Polis said he plans to do in part by closing tax loopholes. Others have raised concerns about the governor’s effort to increase the state’s rainy day fund, or reserve, at a time when he’s also calling for new programs in the state budget.
“All of these things don’t really work in conjunction with one another,” Moreno said.
Republicans, however, have praised the governor for his efforts to increase the reserve and slash taxes.
“He’s an ally on a lot of these things,” said House Minority Leader Patrick Neville.
“He’s definitely a complete, 100% change from the previous administration. Just the open communication. He’s very frank. He’s very open,” Neville said. “I can shoot him a text and get a text back ten minutes later.”
The budget will likely be finalized in late March or early April before going to the House and Senate for a vote. Members of the Joint Budget Committee are weighing whether to deliver the governor’s requests or find creative ways of paying for them. What the budget looks like when it emerges from that process could be quite different than what Polis proposed. Said Rachel Zenzinger, a Democrat from Arvada who sits on the JBC, “There will be a little bit of push and pull.”
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