DALLAS — As he begins his last full year as governor of Colorado, Bill Ritter is providing lawmakers a roadmap to close a $1 billion budget shortfall when they open their 2010 legislative session in Denver today.

Ritter, a Democrat who announced last week that he would not run for a second term, has worked with the Democratic-controlled General Assembly for three years, the last two of which have offered increasingly difficult fiscal challenges.

To balance the upcoming fiscal year’s budget, Ritter has proposed more furloughs for state employees and a pay cut of 2.5%, closing two facilities for juvenile mental-health and developmental disabilities, and early release of some ­prisoners.

The governor would also cut spending on public education by $260 million and higher education by $56 million. On the revenue side, he would suspend 13 tax credits and exemptions along with a property tax break for senior citizens. This would be the second year in which the senior tax break was suspended.

As serious as the shortfall appears, lawmakers say there is a possibility it could get worse before the session ends. State officials announced last month that revenues were off from projections by $40 million, bringing the deficit for the current year to about $600 million.

Senate Minority Leader Josh Penry, R-Grand Junction, said Republicans probably would counter the Democratic agenda with a proposal to combine some state agencies and expand a hiring freeze while fighting moves to raise more tax revenue.

Cuts to public education could be the toughest to sell politically, some lawmakers indicated. Under Colorado law, state funding for K-12 schools is required to keep pace with the rate of inflation at the minimum.

However, Democrats are relying on a legal memo from Republicans that such cuts are permitted under the law.

With Ritter steering toward the sidelines, Denver Mayor John Hickenlooper announced yesterday that he would run for governor as a Democrat. Colorado is seen as a key swing state for the party that has held the legislature and the governor’s mansion since the 2006 ­elections.

Economic recovery remains the overriding issue in the state, which has not been as hard hit by the recession as neighboring Arizona.

“Due to the recession’s late arrival, Colorado’s recovery may lag the nation’s,” an economic forecast from Wells Fargo reported yesterday. “However, a healthier housing market and better all-around credit quality suggests the duration of the downturn in Colorado will likely not be as long as that for the nation.”

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.