Colorado Republican lawmakers plan to introduce a bill to restore a funding formula benefitting transportation construction that was repealed under 2009 legislation.
The measure that is ready to be introduced in the state House of Representatives would overturn Senate Bill 09-228, which was passed with bipartisan support when revenues were falling sharply, according to House Speaker Frank McNulty.
Now that trends indicate revenues are growing again, House Republicans are in favor of restoring the so-called 6% Arveschoug-Bird rule.
The rule dictated how the state appropriated general fund dollars, according to the Colorado Fiscal Policy Institute. Passage of the formula in 1991 lowered a cap on annual growth in general fund appropriations to operating budgets to 6% from 7% .
“The provision, named for its legislative sponsors, is usually referred to as a spending limit, but it is actually a provision on appropriations, not spending,” the institute explained in its analysis of the issue. “It is better understood as a spending formula because it directs where money can be spent rather than limiting how much can be spent.”
General fund revenues collected above the 6% were still spent by the state but not for operating expenses, such as educating students or paying for medical care. Arveschoug-Bird required that revenues over the 6% limit largely be used to fund transportation and capital construction needs.
The current formula provides additional capital construction funding after per-capita personal income in the state rises 5% year over year.
At this point, Colorado is not expected to hit that level until 2013, according to state economists.
At a meeting of the Colorado Competitive Council’s investor and steering committees Wednesday, McNulty said that transportation and construction funds should be restored now because they were they were the first budget items cut in the recession.
Opponents of the Arvschoug-Bird rule see the funding formula as a threat to education because it creates a year’s delay in setting funding for schools.
General fund budgets are based on the revenues taken in during the previous fiscal year.
“In periods of recovery, when revenues often showed their greatest growth, the formula placed an arbitrary brake on the ability of our public systems to recover,” Wade Buchanan, president of the non-partisan Bell Policy Center in Colorado, said in testimony to the House Finance Committee last April.
“It was known as the Arveschoug-Bird formula, and our experience with it over nearly two decades provides ample evidence that this bill is a very bad idea,” Buchanan said.