Citizens’ Budget Facts

Posted by on Jan 20 2011 | Citizens' Budget, PPC

Citizens’ Budget project director Penn Pfiffner has been sending “facts of the day” to our state legislature every morning. These are little informational nuggets that can be found inside our project, but might get overlooked due to the sheer size of our Citizens’ Budget. I think these factoids are great, so I’m sharing the first four days facts with you all:

The State’s budget problem is not caused by an inadequate tax burden. Compare Colorado, which is modestly below the national average for per capita state & local spending, with high-tax states. New Jersey is the highest and New York comes in second in combined tax burdens. Both are in dire crisis; worse than our state. California has issued I.O.U.s due to running out of funds and suffers the 6th highest burden in the nation. Collecting more taxes does not shield a state from budgetary woes, and counter-intuitively, even appears to exacerbate them.

The Children’s Basic Health Plan (CBHP) began as a small state program funded by “gifts, grants, and donations” in 1990. Vigorous enrollment expansion has added to Colorado’s budget woes. From June 2005 to June 2006, enrollment rose 32.4 percent, the largest percentage increase in the country. CBHP has reached the point where half of the households in the state are expected to bear all the medical expenses for the other half’s children.

We recommend that the legislature move to a “priority-based budgeting” system. It is crucial that the structure for setting a State budget more closely conform to the reality of expected income, not only for the ensuing year but well into the future. Washington State adopted this type of budget reform, and is now being employed in New Jersey to deal with a budget crisis. Washington Governor Gary Locke did not believe his administration or the legislature could or should figure a way to raise enough taxes to eliminate the deficit. The figure stood at $2.8 billion in a state only a little larger than Colorado. By utilizing the new method, Washington state was able to close the budget hole without raising taxes.

The College Opportunity Fund program (stipends) should be retained because it forms an excellent base on which to build changes for funding higher education. It must be expanded and modified to conform to the real needs. Funds currently allocated to higher education from the General Fund, and service contract funding, would be used to fund the stipend plan. A goal of stipends is to create competition among all qualified post-secondary institutions. This stipend-based higher education system would create incentives for institutions to deliver quality education at lower cost. Replacing the current system of direct state funding to higher education institutions with a stipend plan funding students and families will generate public support.

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