Lawmakers stare down long-term cuts as Colorado runs into TABOR’s hard spending cap

Half a million dollars for marijuana growing efficiency? Cut.

Thirty-eight million dollars for school bus electrification? Cut.

Seventy-two million dollars to promote alternate transportation? Cut.

And so on. Dollar by dollar, through programs big and small, whether by “haircut” or outright elimination, Colorado lawmakers have spent months sifting through the state’s $16 billion state budget looking for more than $1 billion in cuts to state spending.

Budget-writing lawmakers have described the decisions as gut-wrenching and compared the cuts to ranking the worst days of their lives. They’ve responded with rage and tears as they try to protect programs for kids, and fretted over what hard caps on spending will mean for education in the state.

The exact nature and scope of the proposed cuts won’t be available until the budget is formally introduced later this month. On Friday, lawmakers delayed the introduction a week, until March 31, so members and staff can have more time to finalize the document — and wrestle with some of the sharpest decisions left to make around education and health care for the most vulnerable Coloradans.

The budget will dictate state spending for the upcoming fiscal year, which begins July 1, but will ripple through for years to come.

“More than any other year, this has been a year of competing values,” Sen. Jeff Bridges, chair of the Joint Budget Committee, said. “… We’ve made some really hard choices and we’ve cut some programs that truly improved people’s lives. But we just don’t have the funds available because of the rationing equation in TABOR.”

The Taxpayer’s Bill of Rights, or TABOR, aims to keep state spending in check through a formula based on consumer inflation and population growth. The costs of government service, especially through medical inflation and mandatory Medicaid spending, have grown faster than the cap allows — in effect shrinking how much money the state has for other programs.

It’s left the budget-writing lawmakers to reckon with a structural spending problem, one divorced from the overall economy, where they have to make massive cuts this year and with little hope the crunch resolves in years to come. It’s led to early conversations about whether a change to the cap should be proposed, or if the state needs to reorient its priorities to grapple with the 30-year-old, voter-approved amendment to the state constitution.

Cuts “likely aren’t coming back”

Bridges contrasted the cuts to this year’s budget to a recession. During sharp economic downturns, the state needs to make deep, immediate cuts — but once the economy bounces back, so can state programs, he said.

“Recessions you can recover from,” Bridges, a Greenwood Village Democrat, said. “Because we know the cuts we make this year likely aren’t coming back unless there is a change to the structural rationing that we have in our budget, we have to be really careful.”

Members of the budget committee said they’ve been trying to give the public and policymakers a longer runway before making harder-to-stomach cuts around Medicaid and child welfare, as well as state priorities like K-12 and higher education.

It’s led to proposed cuts to programs deemed non-vital, minimally used or otherwise less likely to have an immediate impact on the state, like the energy efficiency program for marijuana grows and downtown revitalization grants. In other cases, like school bus electrification, it’s a relatively easier decision because spending through the federal Investment Infrastructure and Jobs Act covers the state’s aims

It’s also led to harder choices, like cutting $1 million from food banks. They’re all decisions with real-world consequences, but ones that don’t necessarily stave off future cuts.

“Next year, there will be more cuts, probably fewer one-time options and, as time goes on, the cuts will lean more to the ongoing programs because there won’t be any more one-time cuts to make,” said Rep. Shannon Bird, a Westminster Democrat. “It’s kind of giving us more time to find what the path forward looks like.”

Rep. Rick Taggart, a Grand Junction Republican on the committee, echoed the sentiment. The committee is aiming for a “softer landing” this year — but that leaves less padding for cuts next year. The sheer size of this year’s gap has already led to discussions about what cuts to Medicaid could look like — and if that would push out health care providers or otherwise keep Coloradans from getting the care they need.

“When you have to trim (human and health care services) back, you know you’re hurting human beings,” Taggart said. “And for anyone who thinks that doesn’t hurt, well, it hurts. But at some point, you just don’t have a choice. You’ve got to find savings.”

Changes to TABOR limits pick up steam — but not without opposition

While this budget is still weeks away from approval, and months from going into effect, lawmakers are already grappling with how to break out of the deficit spiral. Taggart, a former CEO, wants to pivot departments toward zero-based budgeting — essentially building budgets from scratch every year, versus starting from the previous year’s budget — to control spending.

But that also doesn’t address entitlement programs, like Medicaid and education, where the state needs to pay for costs as they crop up. Medicaid, in particular, shot past projections by hundreds of millions of dollars as more people used the services.

“We’ve got to find ways where we make absolutely certain we are not wasting dollars, but at the same time, these are people that need our help,” Taggart said. “There’s a humanity there. So there’s not a perfect answer.”

Bird, the committee’s vice chair, said “thoughtful limits” aren’t necessarily a bad thing, as they force state officials to stay in line with voters’ wishes. But, she added, “How is that limit configured to best reflect the priorities of the people of our state?”

She, like others, raised the idea of exempting some taxes from TABOR limits to pay for Medicaid, though nothing has been formally proposed. Any changes would need voter approval — and voters soundly rejected the last two efforts to change the TABOR formula.