Schools, roads and parks. The cost of college and healthcare. How much do you pay in taxes.
No matter what issue you care about in Colorado, the state budget is likely to play a huge role in its fate.
The good news: Keeping track of the budget process from home is easier than ever thanks Government meetings are broadcast live And abundance General documents Available online. bad? Understanding how public money is being spent can be challenging even for Capitol veterans.
However, don’t get discouraged if you feel overwhelmed by vague terms like long bill and shape settings. Nonpartisan groups like Colorado Legislative Council employees have In-depth guides For both beginners and experts if you have questions about a specific field. And we have compiled this guide for the basic budget terms you should know first.
This is part of the Colorado Sun Capitol Sunlight A project to help explain the country’s political landscape. If you have questions that we did not answer, Let’s find out here. We will try to answer them.
Long bill It is simply the official name for annual budget legislation, which lawmakers are constitutionally obligated to pass each year. It is literally a Long Draft law detailing state allocations for the year – the 2020-21 version of 396 pages.
And because the document is mostly numbers and legal, we don’t recommend trying to read it. Instead, there are a few other budget documents that provide clearer explanations of how the country is spending your money.
For those who want more comprehensive explanations, the Annual departmental briefings Written by Legislature Budget Officers, such as This For the Ministry of Education, provide a more complete picture of what state departments are doing and how their money is being spent.
For more information on budgeting, you can also read our guide on how the budget process works.
General Fund It is the core of the state budget. The majority of the state’s income and sales taxes flow into the $ 11 billion spending account, which is used to fund many of the state’s major departments and major public services, such as schools, prisons and healthcare.
Unlike many other government funds, where dollars can be earmarked for specific purposes, the legislature largely has complete discretion over how public funds are spent. This has traditionally made it the primary focus of state budget writers, lobbyists, and the general public, even though today the General Fund makes up less than half of the total state budget.
Other major state money comes from sources like federal dollars, user fees, and college fees, which can only be spent for a specific purpose.
Quarterly Economic Outlook
Every four months, the country’s economists and legislators release them Quarterly revenue forecast It tells lawmakers how much money the state expects to collect in taxes based on current and future economic conditions.
Forecasts are just that – projections of what economists think will happen in the future. But these forecasts can have real consequences for what the state actually spends on public services. In most years, two forecasts have been of particular importance: the September forecast, which the state governor uses to craft his annual budget proposal to the General Assembly; And March forecast, used by lawmakers to craft the budget that will become the long bill.
The June and December projections act as slope indicators of sorts, letting budget administrators know if the approved budget is still in balance, or whether they need to make adjustments in the middle of the year due to lack of revenue or an unexpected surplus.
The Six members The Joint Budget Committee It is without a doubt the most powerful state legislature.
JBC writes annual spending plan, with help Non-partisan employees. During what is known as “shaping” in March and April, JBC makes dozens of decisions daily about which departments it funds and which requests it rejects. It also chooses which of my revenue forecasts to use as the basis for the budget, an option that often means hundreds of millions of dollars different in proposed spending.
The full state legislature has the last word on the spending plan – it often goes to marathon sessions overnight to discuss proposed changes – but the vast majority of the document will usually reflect decisions made by JBC.
The Budget Writing Committee also performs a major supervisory function, holding comprehensive departmental hearings each December and submitting new requests for budget changes throughout the year when emergencies and other surprises arise.
It consists of two members from each of the majority party in each room, and one member from each of the minority. Since both the House and Senate are controlled by Democrats at the time of writing, this works for four Democrats and two Republicans.
Among other things, the Taxpayer Rights Act, or TABOR, Limits the amount of tax revenue the state can keep and spend each year.
Under this measure, which was added to the state constitution in 1992, certain types of tax revenue can only increase the rate of population growth in addition to consumer inflation. Any revenue in excess of this amount is refunded to the taxpayer through what is known as TABOR REFUNDS.
You may also hear this referred to as’Ref c coverThis is because voters reset the TABOR limit in the 2005 C referendum, effectively allowing the state to ignore the revenue limit for five years. After that, state government revenues were allowed to grow from a higher baseline.
Only some things are subject to the TABOR ceiling – mainly income and sales taxes, but also some user fees that have not been explicitly exempted by the legislature from TABOR restrictions. However, federal funds, college fees, and most user fees are not calculated within the TABOR state limit.
Corporations are basically companies run by the government, funded by user fees. Common examples include things like parks, water facilities, or toll roads. But while it is found in state and local governments across the country, it is of particular interest in Colorado, due to its unique role under TABOR.
Foundation funds Excluded from TABOR’s spending limits, allowing them to grow at a faster rate than inflation as well as population and this makes it a politically attractive way for lawmakers to fund a new program without raising taxes or cutting spending on other services. Because of TABOR, Colorado has reclassified college tuition and fees as an institution, in addition to the hospital bed fee used to fund the federal healthcare program.
But its political popularity will test in the coming years. Under a ballot procedure approved in November, new businesses that generate at least $ 100 million over five years require voter approval.
General fund reserve
Colorado General fund reserve It is a savings account that legislators are required by law to set aside every year in case of emergency.
The amount required fluctuates from year to year as determined by the legislature. Usually lawmakers build it during the good economic times, and then spend it on the way Economic crises.
For example, before the pandemic, the legislator required the state to keep 7.25% of discretionary expenditures in reserve. In the fiscal year ending in June 2020, lawmakers cut reserve requirements to 3.07%, then again to 2.86% in the current budget.
These reserve levels are based on the revenue forecasts discussed above, which are often wrong. So having a very small reserve runs the risk of imposing budget cuts in the middle of the year, if the country can cover all of its expenditures.
This year, the state was lucky, bringing in more money than forecasters had expected. Legislative Economists We now expect Colorado to end this fiscal year with fund reserves of $ 2.6 billion – or 23.7% of budgeted expenditures. That gives lawmakers some room to increase spending as they return to the Capitol for the 2021 legislative session.
Although it serves a similar purpose, general fund reserve does not technically qualify as Rainy day box, According to some Public budget experts, Making it one of the only states in the country that does not have one. Elsewhere, rainy day money is subject to strict rules that dictate when the money is deposited or how it will be spent.
Also known as’The negative factor, “The Budget stabilizer It mainly refers to the annual lack of funding for the state’s K-12 schools.
In Colorado, schools are funded through a combination of local property taxes and state dollars, and a complex formula determines how much money schools should receive based on things like school size, local cost of living, and the number of students they teach with special needs.
The legislative budget book operating during the Great Recession was created as a way to reduce school funding without conflicting with the state constitution.
Here are the basics of how it works. Constitution under Amendment 23, The state is required to increase funding for the basic school program according to the inflation rate and enrollment growth every year. State lawmakers also use a separate formula to allocate additional funding based on the varying needs of different counties. The budget stabilizer reduces those extra dollars by a specified percentage, while ensuring that the base program funding increases in accordance with constitutional requirements.
Since 2010, state lawmakers have allowed cumulative cuts of $ 9.3 billion in funding for schools using the device, according to Colorado School Funding Project. In the current fiscal year ending in June 2021, the budget stabilization factor was $ 1.2 billion.