Owens orders budget slashed/ Governor wants 6 percent more cut from

Gazette, The (Colorado Springs), Nov 13, 2002 by Kyle Henley

DENVER - Gov. Bill Owens on Tuesday ordered another round of state budget cuts - an additional 6 percent across the board - and proposed only a modest boost in government spending for the future.

In addition, Owens wants to make some accounting changes - changing state employees' payday and borrowing $171 million from an education trust fund and other cash reserves - to balance the books in the face of a budget shortfall of $550 million to $600 million.

Owens announced the cuts and changes to this year's budget while introducing his proposed $13.1 billion budget for the fiscal year that begins July 1. Lawmakers will consider the budget when the General Assembly session begins Jan. 8.

"This budget is submitted in a very difficult fiscal time," Owens told members of the Joint Budget Committee, the six-member legislative panel that controls budgeting. "Like the budget of a Colorado family, when income drops we simply need to cut back on spending."

It's not clear where the cuts will land because line-item details were not submitted. The budget approved by lawmakers in May was $13.8 billion.

Owens already ordered $220 million in cuts - about a 4 percent cut from each department - and now asked for an additional 6 percent reduction, bringing the cuts asked of most state departments to 10 percent.

Public schools, prisons and health care programs are the only areas exempt from the cost-cutting order, although Medicaid was asked to reduce spending by 3 percent.

Most department heads say it is too soon to say how the latest round of cuts will affect services.

"We just haven't looked at it," said Karen Reinertson, executive director of Colorado Department of Health Care Policy and Financing, of the proposed Medicaid cut.

More details on the initial round of cuts will be made public Friday when Owens sends legislation to the Joint Budget Committee outlining the reductions. He said Tuesday only 40 public employees have been laid off and most departments have frozen hiring.

Cuts aren't the only vehicle Owens wants to use to balance the budget.

State employees are paid at the end of every month. Owens wants to shift payday by oneday, to the first of the month.

This would be done in June and would push that month's payroll into the next fiscal year, effectively saving the state $268 million and 2,500 jobs.

In addition, the governor would grab $51 million from the State Education Fund to offset reductions in state spending on schools. The result is schools' funding levels will remain the same, but the trust fund likely will dip into the red within the next decade.

"I'm concerned we are digging a deep hole in the future in terms of how we fund education," said Sen. Peggy Reeves, D-Fort Collins, a member of the budget committee.

Other reserve accounts would be tapped to get $120 million in extra cash to balance the budget, and $11.5 million would be taken from tobacco-cessation and research grants.

Borrowing from reserve accounts causes consternation among fiscally conservative Republicans who opposed such borrowing in the past.

"It forestalls the inevitable," said Rep. Dave Schultheis, R- Colorado Springs. "It is not the way we should be dealing with our personal budget, and it's not what the state should be doing either.

"We need to look at our expenditures and make cuts in those expenditures."

It is clear there will be real cuts. The budget approved in May was $13.8 billion. The latest round of cuts will reduce the budget to about $13.2 billion.

The budget Owens proposed Tuesday would be $13.08 billion, meaning real government spending would drop in 2003-04. The share of the budget funded by state income taxes, known as the General Fund, would increase 2.7 percent, from $5.9 billion to $6.1 billion.

Although some state departments appear to get significant increases for 2003-04, those amounts won't make up for the cuts in this year's budget.

Areas that Owens doesn't expect to cut this year - prisons, public schools, health care programs - would get significant increases in the proposed budget.

"Despite the tough fiscal times, I am proposing funding in areas that are priorities and are required per statute," Owens said.

Spending on education would go from $2.4 billion to $2.5 billion, and spending on corrections would jump from $495 million to $532 million. Money for health care would rise from $21.6 million to $25 million.

- CONTACT US: (303) 837-0613 or khenley@gazette.com