Colorado legislators should heed warning on state budget woes

Don’t say she didn’t warn you. Phyllis Resnick, lead economist with the Colorado Futures Center at Colorado State University, has been touring the state to present findings of the Colorado Sustainability Study, which examines challenges facing the state budget.

Resnick has been sounding the alarm about the state budget, including at the Boulder Economic Forecast in January and the Vectra Bank Economic Forecast in Broomfield this month.

State budgetary numbers have improved in recent years, due to a better economy, federal stimulus dollars and significant budget cuts. But the outlook is not so positive in the coming years.

The study predicts that state spending will exceed revenue in the next fiscal year, and that the state will be forced to pay taxpayer refunds, required under the TABOR amendment, beginning in 2016. The budgetary shortfall will reach $1.5 billion in 2024 and $2.9 billion by 2029, the study predicts.

TABOR refunds could be required because of a hospital provider fee enacted in 2009 to fund expansion of Medicaid. Under TABOR, the state is limited not only in how it can raise revenue, but also in how much it can spend. The hospital provider fee will exceed those limits, forcing refunds.

The Colorado Futures Center outlines one possible solution: Capture the hospital provider fee in a state “enterprise,” thereby removing it from the TABOR limits. That would cure about one-third of the coming budgetary shortfalls.

Another solution suggested by the study? Applying a sales tax on services, not just retail sales.
We wholeheartedly endorse the idea of creation of enterprise to resolve the hospital-provider-fee issue. We’re less enamored of applying a sales tax to services.

We urge the Legislature to pick the low-hanging fruit, fix the hospital provider fee and then regroup to tackle the bigger issue.

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