Policies can strain a state’s budget

The state’s economic forecast was just delivered to the legislature and there were no real surprises that I could see.

These are tough times and the numbers bear that out. From what I know from talking with people in my district, including family and friends, we all know firsthand the stories that the numbers also tell.

Where we are on the timeline of this economic downturn isn’t clear. According to the state’s economist, we may be in the middle of this recession, or it may get worse. One thing that seems certain is that it’ll be a while before we’re back in good financial times. However, anyone who has lived in Colorado for any length of time has ridden these ups and downs before, so while it’s still painful, it’s not necessarily new to us.

The economist’s report includes breakouts on the state by region and there were some Southwest Mountain region specifics in the report. According to the report, in La Plata County, residential building permits were down in 2008 by 43 percent and commercial permits were down by 83.8 percent. Being married to a builder, I know the impact of these hard times on many who are in the construction trades. Statewide, the number of jobs in natural resources and mining, education, and health services as well as government was up in 2008, while all other sectors were down.

We learned with the forecast that, under the state’s current funding formula, there will not be any money over the next couple of years for road construction. The vehicle registration fee bill that was passed and signed by the governor this session will be a drop in the bucket for what is needed for roads. One of my big concerns about that bill was that people will be paying new fees to register their vehicles and they’ll think that it’s going to make a significant difference in the budget for roads. But, overall, it will do very little. Colorado’s share of federal dollars from the stimulus package is woefully inadequate overall, including in transportation funding.

Other disturbing news from the forecast is the condition of Colorado’s Unemployment Insurance Trust Fund. In the economist’s vocabulary, it is “under considerable strain.” To the rest of us, we’d probably say it’s in danger of going broke. This is particularly troubling given that many of us know that the real wave of applicants for unemployment benefits has not yet hit.

For all of the bad news, the real question becomes, where do we go from here with this information. To me, it is clear that we have to be as fiscally conservative as we can, while not cutting so deeply that when our economy rebounds, we can’t recover as a state. The forecast made it clear that we will not be taking in enough revenue in the next several years to exceed the 6 percent spending limit, which suggests to me that the bill that lifts that spending cap, as currently written, is premature. The legislature can already temporarily lift the spending cap with a 2/3 vote and I’m guessing that many legislators would be open to having that conversation.

The Legislature, as well as the people of Colorado, need to consider the fiscal policies embedded in our Constitution and seriously debate and address those policies because they are strangling our state’s budget. The best way to describe it that I’ve heard is to think of it as if you are pushing equally hard on a car’s brake and the accelerator at the same time. The car spins its wheels mightily, but goes nowhere and eventually runs out of gas. That’s the problem that faces us today and it’ll only become more obvious during this recession. This is a complicated and likely heated conversation that we’ll have to have with each other in the state and the sooner the better.