Colorado's Ritter Will Push Three-Tiered Approach to Plugging Gap

DALLAS - Colorado Gov. Bill Ritter Jr. will call for a "three-tiered" approach to covering an estimated $600 million budget gap at the General Assembly session that opens tomorrow, an aide said.

The three tiers are base spending cuts of up to $250 million throughout the general fund, borrowing up to $300 million from cash funds made up of service fees, and dipping into the state's reserve fund for another $100 million, spokesman Evan Dreyer said yesterday.

Under Ritter's plan, if the first tier proves insufficient, he would move on to the second tier, and so on. The governor's office estimates the shortfall at about $230 million, versus $604 million in the legislative estimate. The actual amount of the budget gap will have to be reconciled between the two branches.

Ritter delivers his state of the state address to open the 2009 legislative session tomorrow, highlighting his priorities in a worsening economy.

While he is not expected to discuss budget cuts in detail, the governor will outline his budget priorities, including tax incentives for job creation, education funding, and transportation.

While Colorado has more than $1 billion of "shovel-ready" transportation projects that could be eligible for President-elect Barack Obama's proposed stimulus package, the state is hurting for traditional funding sources, with transportation revenue down 30% in the past year, Dreyer said.

"We're operating under an archaic, arcane funding formula that is not sustainable," he said.

Ritter convened a transportation summit in 2007 that was tasked with finding solutions to the funding crisis. The report that emerged recommended a series of new fees and an increase in the fuel tax to cover a growing shortage of funds.

Despite the recommendations, Ritter did not push any of the recommendations in the 2008 legislative session as new taxes and fees were seen as political deadweight in an election year.

"The 2009 session is the time we think there might be actual legislative action on bills," Dreyer said.

The General Assembly is required to certify by Feb. 1 the amount from Colorado's general fund available for appropriation for the next fiscal year. During February and March, the joint budget committee makes decisions on the level of funding for state government for the next fiscal year beginning July 1. The committee is responsible for funding the operations of the state as well as a required reserve - 4% of the general fund appropriation - out of available general fund revenue.

Currently, the general fund reserve is $320 million, of which $220 million would remain under the third tier of Ritter's plan to cover the shortfall.

The shortfall for the fiscal year beginning July 1 is an estimated $385 million. Though smaller, that gap could be harder to fill because cash funds would already be used and spending cuts could be harder to find, legislative leaders say.

Though Colorado's economy is suffering in the recession, it is in considerably better shape than neighboring Arizona, where drastic spending cuts have left the government still short of funds.

"We're still better off than most other states," Dreyer said.

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