DALLAS — Colorado Gov. Bill Ritter starts his second year working with the General Assembly today amid different economic circumstances than last year.
With home foreclosures at record levels and unemployment rising, lawmakers are tiptoeing around tax increases for ambitious projects and programs under a proposed $7.5 billion general fund budget.
House Speaker Andrew Romanoff, D-Denver, said the legislature will try to make better use of existing revenues, and majority Democrats have no plans to seek a tax increase. Ritter, also a Democrat, said in November that he was considering calling for a tax increase for some projects, though he did not identify which ones.
Education, health care, and transportation are considered priorities in the 120-day session.
A transportation finance and implementation panel appointed by the governor recommended spending $1.5 billion a year to expand transportation corridors, improve other forms of transit, and support increased oil and gas drilling.
To support the increased spending, Ritter is likely to call for an increase in the gas tax, which has not risen in 17 years. To increase the tax would require a vote under the state’s Taxpayer Bill of Rights, which limits increases in revenues. Since 1992, the state’s fuel tax has lost 70% of its value, according to state estimates.
The TABOR amendment to the state’s constitution, passed in 1992, limits any tax revenue increase to the combined rate of population growth and inflation. However, voters approved Referendum C in 2005, providing a five-year exemption from TABOR. The state is in the third year. Although Referendum C was originally expected to add $3.7 billion in revenue, updated estimates show the five-year total to be $6.2 billion due to the earlier economic rebound.
The most recent economic and revenue forecast released in December predicts slower but continued growth in the current fiscal year. Growth is expected to continue through 2012.
“Modes, but steady growth has been the story for much of 2007 for the Colorado economy,” said Todd Saliman, director of the Office of State Planning and Budgeting. “To the extent to which there is weakness in the national economy, it will likely begin to impact Colorado toward the end of 2008.”
Richard Wobbekind, head of the business research division at the University of Colorado’s Leeds School of Business, called 2008 “the most difficult year we’ve ever had to forecast.”
Nonetheless, Wobbekind called for continued job growth, with the subprime housing crisis having less of an impact on the state than the nation as a whole.
Wobbekind expects the state to add 43,300 jobs in 2008, an employment growth rate of 1.9%. That compares with a projected U.S. job growth rate of 1.1%. Colorado’s unemployment rate is expected to be 4.2% in 2008, compared with 4.9% nationwide.
Lawmakers will also be considering a recent economic development report that says that Colorado’s competitive advantage is eroding because the state has not invested enough in higher education, transportation and health care.
Other states in the region have progressed at a much faster rate in making those investments, though Colorado has fared well in creating new jobs and expanding key industries, according to the study, “Toward a More Competitive Colorado,” from the Metro Denver Economic Development Corp.
The report said the state ranked 48th in higher education spending per full-time student and 32d in high school graduation rates.
In 2007, Colorado allotted 6.2% of its budget to transportation, down from 12.7% in 1980, the report said.
