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Rollie Heath

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The State Budget Crunch and Colorado's Future

Posted: 01/25/10 04:58 PM ET

Faced with some truly troubling fiscal projections, the Colorado General Assembly authorized the formation of a Long-Term Fiscal Stability Commission in 2009. I chaired the LTFSC, and one of our most important overarching questions was, "What kind of state do we want?"

The question itself is simple, but finding answers that most Coloradans will agree with is quite a challenge. Still, there are huge issues facing the state, and I believe we must consider the costs of inaction along with the costs of action.

For example, the LTFSC learned from the Colorado Fiscal Policy Institute that Colorado ranked 48th in the nation in spending on higher education and highways, and 49th on Medicaid. I also learned that state funding for CU's School of Medicine, an incredibly valuable asset, ranked 77th out of 79 public schools of medicine.

We have many things to be proud of in Colorado, but these rankings are not among them. In fact, the Metro Denver Economic Development Corporation (EDC) released a report called Toward a More Competitive Colorado, saying we are in danger of losing our edge in economic competitiveness, partially because of our funding for higher education and infrastructure.

Is that really the kind of state we want? In my opinion, if we want job creation and a recovery, we'll need a system of higher education that can produce skilled employees, inventors and entrepreneurs. We'll need a system of transportation that is safe and relatively free from gridlock. We'll need to attract and retain businesses, so we'll need people and strategies to sell Colorado in the national and international marketplaces.

Education spending plummets

Instead, we've all seen reports on how state support for public higher education has declined - from about 20 percent in FY 1989-90 to roughly eight percent in FY 2009-10. At CU, its students actually voted for an increase in student fees to help pay for the new $46 million Wolf Law Building, since the law program faced loss of accreditation due to substandard facilities. The state had also refunded $3.6 billion in previous years under the Taxpayer's Bill of Rights (TABOR).

Meanwhile, many people believe we have structural roadblocks to fiscal flexibility in place. The EDC report and other sources say we have a classic "Gordian Knot" of provisions in our Constitution - TABOR, the Gallagher Amendment and Amendment 23. In a nutshell, TABOR caps revenue retention, and it mandates refunds if revenue collections exceed the cap. Amendment 23 mandates increased yearly expenditures on K-12 education, and Gallagher set a property tax collection ratio between residential and commercial properties.

The "Knot" has been described as a conflicting set of provisions, with revenue limits on one hand and mandated spending on the other, and it's all in the Constitution so it can't be amended without a vote of the people. Also, we have a "single-subject" rule for ballot initiatives, so a future measure that fixes one provision might pass while another measure that attempts to fix a different provision could fail.

Commission proposes actions

Re-enter the LTFSC. We approved Senate Concurrent Resolution 10-001 for the General Assembly's consideration, which would refer a measure in 2010 asking voters to approve the formation of an appointed Fiscal Policy Constitutional Commission. The FPCC would study our fiscal situation, hold at least one public meeting in every congressional district, and draft a ballot measure(s) for the 2012 election that could amend our Constitution. It would also have a temporary exemption from the single-subject rule.

The SCR-001 process would give the public many opportunities to learn the issues and weigh in. The FPCC could draft a comprehensive solution, and it could be proposed as one 2012 ballot measure as opposed to a series of unconnected initiatives. And if the General Assembly doesn't pass SCR-001, we could still see similar citizen initiatives.

Unfortunately, we will also see initiatives in 2010 that could devastate our level of services. Together, Proposition 101, Amendment 60 and Amendment 61 could cost state and local governments billions of dollars, and prevent entities from incurring debt for important projects. Passing these measures would be an enormous step backwards for a state that needs to compete in the future - and while most state departments are already facing shortfalls, our higher education system is in a precarious situation.

Spending on prisons, Medicaid to grow

Funding for higher education is not protected under our Constitution. A report from the University of Denver, "Colorado's State Budget Tsunami," projects that three areas - K-12, prisons and Medicaid - will consume 91 percent of our general fund within five years at current rates. The Referendum C timeout from TABOR is about to expire, as is the federal stimulus program that is currently shoring up higher education budgets. Tuition rates continue to increase, and many young adults graduate with a heavy debt load.

Yet we rely on our research institutions for the technological advances that will lead to new and better Colorado-based corporations. Our schools are major economic and social centers for the cities, towns and regions that they're located in. To short-change higher education in our modern society is akin to farming without adding nutrients to the soil. You'd save money at first, but you'd also wind up with substandard crops and little to sell.

I don't expect miracles, and I fully understand that we're all mired in our local, state, national and worldwide economic downturns - but you won't find a cheering section at any campus chanting "We're number 77," either. I'm a fan of Colorado, and we need to set our sights much higher.


State Sen. Rollie Heath, D-Boulder, holds a bachelor's degree in Business Administration and a Juris Doctor degree from the University of Wisconsin. He served as a commissioned officer in the U.S. Army, spent decades as a private-sector executive, started several businesses of his own, founded the Denver World Trade Center and ran for governor of Colorado in 2002.