Facing our Fiscal Future

Mark Neuman-LeePolicy Analyst

Colorado Fiscal Policy Institute

www.cclponline.org

Budget Squeeze

Colorado doesn’t have the resources to fund the services we expect to receive.

Stagnant revenue combined with increasing demand for services is squeezing all services – public education, health care, human services.

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Stagnant Revenue,Rising Demand

• Between 2001 and 2010, General Fund revenue fell slightly, but Colorado had about:– Over 700,00 more Coloradans– 100,000 new K-12 pupils– 40,000 new students in higher

education– 5,800 more prisoners– 225,000 more residents on Medicaid

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However, resources do not meet need

6.6 5.5 5.5 5.8 6.1 7.0 7.5 7.7 6.7 6.5 7.1 7.34.04.55.05.56.06.57.07.58.0

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Dol

lars

in B

illio

ns

Fiscal Year

General Fund Revenue

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Muddling through

To balance the budget, the legislature has• Taken money from cash funds• Used Federal stimulus funds • Cut services

However,

• Cash fund balances are running low

• Stimulus money is over

• We will rely more on services cuts – K-12, Higher Education, Health Care, Human Services

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FY11-12 General Fund Spending

K-1240%

Higher Ed9%

Health Care24%

Human Sevices

9%

Judicial5%

Corrections9%

Other4%

Data from FY11-12 Appropriation Report

www.cclponline.org

Total K-12 Spending

FY

07

-08

FY

08

-09

FY

09

-10

FY

10

-11

FY

11

-12

$4,600,000,000

$4,800,000,000

$5,000,000,000

$5,200,000,000

$5,400,000,000

$5,600,000,000

$5,800,000,000

$6,000,000,000

$6,200,000,000

$5,068,284,706$5,349,019,294

$5,587,572,003$5,441,603,049

$5,212,694,674

$129,813,999 $381,211,101 $774,414,342

K-12 Spending and CutsCuts from fully-funded School Finance ActCut State and Local

Do

llars

(in

mill

ion

s)

Data from JBC Appropriations Report

www.cclponline.org

K-12 Per pupil spending

FY

04

-05

FY

05

-06

FY

06

-07

FY

07

-08

FY

08

-09

FY

09

-10

FY

10

-11

FY

11

-12

$5,000

$6,000

$7,000

$8,000

$6,074 $6,168 $6,359 $6,661 $6,874 $7,077 $6,813$6,468

$134 $423 $906

Average Per-Pupil Funding in Colorado

Average spending per pupil Cut from Amendment 23

Data from JBC Appropriation Reports

www.cclponline.org

Colorado K-12 spending falling vs. national average

FY07-08 Rankings (most recent)Per pupil 39th ($1,700 below national averageTotal spending per $1000 of income – 48th

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Funding burden shifting to state

State share 2011-12 - 64%State share 1987-1988 – 43%

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Higher Education Cuts

• Not protected constitutionally• FY11-12 Proposal – State will invest

less than FY97-98 • Higher Education cuts cushioned by

backfill from ARRA, but federal stimulus dollars ended last year

• 25,000 more students but $187 million less in state funding FY 2011 compared to FY 2009. $1553 less per student

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Cutting State Support for Higher Education

Graph from JBC Appropriation Report FY11-12

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Falling spending per college student

200

200

200

200

200

200

200

200

200

200

201

201

0

1000

2000

3000

4000

5000

6000

7000

6,3

77

5,8

98

4,9

52

4,1

09

4,0

04

4,3

37

4,6

18

4,8

39

3,8

57

2,0

70 3,6

77

2,9

80

1,0

45

2,4

40

17

4

State support per resident student FTE, adjusted for inflation

ARRA Support per STFE Adjusted

GF Support per STFE Adjusted

Data from JBC, analysis by COFPI

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Financial Aid is helping less

From JBC Appropriation Report FY10-11

We have low taxes

State

Combined State and Local Taxes

Total State Taxes

AZ 30 40

KS 18 27

CO 44 49

NE 14 33

OKWYUT

41221

20324

All rankings per $1000 of income, from FY 08-09

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Taxes Have Fallen

Colorado Tax FY 1998-99 FY 2008-09 Change

Individual Income $23.69 $20.74 -12.50%

Sales/Use $14.73 $10.89 -24.20%

Corporate Income $2.54 $1.55 -39.00%

Gas $4.35 $2.90 -33.30%

Liquor $0.22 $0.17 -22.70%

Tobacco $0.57 $1.02 78.90%

Legislative Council August 2010Per $1000 of Income

Starting the conversation about revenue

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Initiative 25

Senator Rollie Heath’s proposal– Raises $536 million which will go to

preschool, K-12, and public higher education

• Average about $550 for each Colorado student

– Raises state tax rates back to 1999 levels

• Income tax 4.63% to 5%• Sales tax 2.9% to 3%

– Temporary, expires after five years

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Less than a Dollar a Day

A taxpayer with a median income of $55,700 in Colorado will pay about $150 more each year, primarily in income tax.

www.brightcolorado.com

What kind of Colorado do we want?

Mark Neuman-LeePolicy Analyst

Colorado Fiscal Policy Institutemneumanlee@cclponline.org