Last week, the Huffington Post sat down for a Q and A session with Governor Ritter's Chief of Staff Jim Carpenter. Carpenter addressed some of your questions and some from the Huffington Post regarding the 2010 elections, education, and the Governor's 2010-2011 budget, which was announced two days after the interview. Carpenter shed some light on the administration's thought process regarding the beleaguered Colorado budget, and how he intends to make the case for reelection in the midst of an economic downturn.
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Huff Post: Given the fact that the state government will only fund 2% of the CU budget, how do you justify continued control over higher education tuition by the legislature?
Well, I think that the governor's commitment to higher ed in the state is to make sure that it stays affordable and accessible. And there have been authorizations over the last few years for increases in tuition. I think CU has gone up 9%. But the Governor feels very strongly that these are public institutions. They have a broad responsibility to be affordable and accessible to families of all kinds of income levels. So, to allow any of those institutions to have complete flexibility for what they charge in tuition when there is, this year, about $750 Million in general fund dollars coming in is just not the right course, the Governor believes. We have a lot of work to do on higher education. We have to be clear on what its mission is and the Governor is shortly to announce a strategic planning effort to really answer some of those tough questions. But he feels very strongly that, as long as we're putting in 500, 600, 700 million dollars of taxpayer money into the system that the legislature and the Governor have some say over tuition rates.
Huff Post: Please explain the reasoning using nearly all of the state's ARRA dollars to back-fill higher education cuts in 2010-2011 as opposed to spreading the funding over two fiscal years. Why was this the right route?
The reason that the governor decided to make that cut that was 100% back-filled in this last week was that we had additional gap in revenues estimated at about 220-some million dollars. Plus we had an increase in the Medicaid caseload of about 28 million dollars. So we had to find that gap somewhere in the middle of a budget year. And in order to avoid making some really draconian cuts in human services or in the department of corrections, we had this opportunity to make this higher ed cut back-filled with ARRA dollars believing that next year we'll have more flexibility to keep that higher ed budget the same.
We have to make sure that the sacrifices that have to get made are really shared among everybody. And so, as we look at the budget choices that the governor made for this current year, when he had to balance the budget after the legislature left, you'll see a number of cuts and a number of budget options that really make everybody have a little bit of a piece of this, and that's what you're going to see in next year's budget as well. There's gonna be some asking for new revenues. There's gonna be some cuts in K12. There's gonna be some cuts to higher ed. Some of that will be back filled, but not all of it. But the pain, if you will, or the sacrifice is really shared and it will be spread around a number of areas.
Huff Post: Where will these new revenues come from?
The largest single exemption, for example, is an exemption on sales tax for component parts used in manufacturing. Every state in the union has that exemption, and for Colorado it's about a $500 million dollar exemption. But you do that, you know, and all of a sudden Colorado would have a tax on every piece of a component part, and we'd be the only state that did that. Well, we'd never manufacture another thing if that were the case. So that's the biggest one. The next biggest one is exemption from sales taxes on groceries. In this economic time, families are struggling. You don't want to put a 2.9% tax on a loaf of bread or a gallon of milk. And that's about a $250 Million per year hit. And then there's exemption from taxes on pharmaceuticals; another direction the Governor felt like you just could not go.
So, what are some of the decisions that he did make? The biggest one is the sales tax on energy used in the manufacturing process. So, you buy a large amount of electricity from one of the utilities and you don't pay sales tax on it right now. That's about $48 Million. There are a series of reforms to the conservation easement program that we believe will save somewhere in the 20-25 Million dollar range. There are some other changes on the enterprise zones to cap the enterprise zone tax credit for a period of two years. It doesn't take it away but it stretches out the time period. There's a couple of other related to the business community. Materials related to direct mail are exempt from taxation. I don't know, 1.5 Million/ year for example. So there are, I think around 15 different actions that would increase revenue. There's one that will, I think... on the food issue... Right now if you go into a grocery store and you buy a pack of gum, you don't pay sales tax on the pack of gum. But if you buy a Snickers bar, you pay sales tax on the snickers bar. So the proposal is to eliminate the sales tax on candy and soda. So, there's a variety of these things that the Governor will propose.
Huff Post: The Governor has spoken in the past about moving to eliminate certain provisions of TABOR. What is the time frame for that?
Ref C passed in 2005 with the bipartisan support of both the business establishment and the political establishment. Everybody was behind Ref C: the Republican Gov. the Democratic Legislature, all of the chambers. Everyone in a sort of business and political organization was behind Ref C. They spent an enormous amount of money; a very aggressive and good campaign and it won with 52% of the vote. And so to try to do any big and responsible fix on TABOR requires a bipartisan atmosphere and we're simply not gonna have that next year. It's gonna be a very partisan atmosphere. We're looking at 2011 before any of these longer term fixes can occur.
Huff: You had announced as part of your budget cuts, to cut funding from the Heat Is On DUI program. And then, after less than 24 hours, you reversed because, as Evan Dreyer said, "serious public health risks" were brought to light. Which concerns were brought to light that you didn't consider before announcing this cut?
So it just became clear that doing something that would take away DUI enforcement was an unintended consequence of [budget cuts], and so what we did was find additional revenue that could back fill, and so those DUI programs are going to continue. Some of it is ARRA money. Some of it is money from that original fee that people who commit a DUI pay. So it was one of those things that we decided pretty quickly had to have a different approach. And those things happen when you're putting together a budget-balancing package of over $830 Million. Sometimes, doing this, you know, you realize there's got to be a better way, and we found a better way.
Huff Post: How concerned are you going into 2010 about earlier disagreements with segments of the Democratic coalition, namely labor and Latino voters?
Well, I'll challenge the difficulty about Latino voters. I think that the Governor's focus on education and opportunity is something that Latino voters value. You know, any time you govern--any time you're in this position--you're going to do things that are going to make people unhappy. It's part of leadership, and Bill Ritter has called these issues based upon what he thinks is right, and based upon the future of Colorado... And so he's made some calls that have angered people in labor and the business side, but he's consistently done what he thinks his right. He'll go out and make his case for what he did, and you know, you can agree or disagree.